Delaware State Auditor indicted for fraud, nepotism, misconduct

Delaware State Auditor Kathy McGuiness

Delaware State Auditor Kathy McGuiness was indicted by a grand jury Monday afternoon as part of an ongoing criminal investigation into multiple claims of misconduct while in office.

A press conference was held outside the New Castle County Courthouse where Attorney General Kathy Jennings said their investigation confirmed a “clear and disturbing pattern.”

“The investigation has confirmed a clear and disturbing pattern of behavior that was not only unethical, but it was against the law,” Jennings said. “We uncovered corruption, nepotism, fraud, and misconduct that implicated thousands of taxpayer dollars.”

The investigation, which Attorney General Jennings stressed remains ongoing, comes after several whistleblowers came forward to inform the state Department of Justice (DOJ) of the alleged misconduct.

The Division of Civil Rights and Public Trust was able to obtain an indictment following a full-scale investigation involving witness interviews and document reviews that officials say prove the allegations.

McGuiness was indicted on charges of conflict of interest in violation of the state’s code of conduct, felony theft, non-compliance with procurement law by structuring state payments, official misconduct, and felony witness intimidation.

Attorney General Jennings said the investigation uncovered a “sweetheart deal” to avoid oversight of State Auditor McGuiness’ state contract with campaign vendor ‘MyCampaignGroup.’

“She informed them of a loophole that would allow them to avoid a competitive bidding process by keeping the initial contract amount below $50,000,” Jennings stressed. “The bidding process exists to protect taxpayers. It’s there to prevent this exact behavior. A month later, the defendant entered into a contract with MyCampaignGroup, which was never submitted for public bidding whatsoever. In total, the State Auditor’s Office paid MyCampaignGroup $49,900, just $100 shy of the public bidding threshold thus avoiding public oversight.”

McGuiness illegally structured a series of payments, according to the DOJ, to MyCampaignGroup in order to remain under the state approval threshold. She later approached the company a second time, according to Jennings.

“It’s important to keep this in mind, this was done by the State Auditor, whose job is literally to protect your tax dollars from this very kind of spending.”

The investigation also uncovered what Attorney General Jennings said was “clear nepotism.”

McGuiness’ daughter and a friend were employed by the office, neither of whom were interviewed, according to the investigation.

As the pandemic triggered record unemployment across the country, Jennings said McGuiness fired an employee citing lack of work hours and two others left under the same premise, but despite that she still hired her daughter and her friend.

“The defendant’s daughter enrolled in a college in South Carolina. For months, despite not coming into work, never logging in remotely, barely ever sending so much as an email, her daughter continued to receive taxpayer checks. Those paychecks were deposited into an account co-owned by her mother, the defendant,” Jennings said. “As of August, 2021 the defendant still employs her daughter on the state payroll.”

McGuiness’ daughter has been paid over $19,000 in taxpayer dollars, according to the investigation, in addition to $8,000 paid to her daughter’s friend.

“She used her power to hire her daughter no questions asked,” Jennings said. “She paid her daughter thousands of tax dollars even when her daughter wasn’t showing up to work. And when her staff discovered her misconduct, and did the right thing by speaking up, the Auditor, whose job is to be a government watchdog, engaged in an extensive pattern of surveillance and intimidation against those whistleblowers.”

During the course of the investigation, officials discovered that McGuiness allegedly monitored and intimidated real or perceived whistleblowers.

Over three dozen requests were submitted to monitor employees emails, including at least one former employee at a completely separate agency, according to the DOJ.

Jennings stressed that the investigation remains ongoing and requested anyone with any pertinent information related to the investigation to come forward by calling (302) 577-5400.

Multiple requests to reach McGuiness for comment have went unanswered.

“If anyone should know better, it is the State Auditor,” Jennings said. “Instead, as our investigation has shown, Kathleen McGuiness carried out the very misbehavior that she was elected to stop.”

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