The criminal corruption case against Delaware state Auditor Kathy McGuiness is in the hands of the jury.
In closing arguments Thursday, Deputy Attorney General Mark Denney stated that McGuiness “ruled with iron fist,” ran the office like a “family business” and tried to conceal state payments to a political consultant.
“The public official designed to ensure compliance with Delaware’s fiscal rules was instead the one breaking those rules,” said Denney, who heads the Department of Justice office responsible for policing corrupt politicians.
Steve Wood, McGuiness’ defense attorney, spent a large part of his closing statements focusing on the misstatements by investigators, questions prosecutors didn’t ask of witnesses and evidence he said the state tried to conceal in an investigation he called “biased, incompetent and incomplete.”
“It was not an investigation designed to ferret out the truth,” said Wood, who worked for decades as a Delaware prosecutor before moving into private practice. “Early on, the state decided Kathy McGuiness was guilty.”
Jurors deliberated for about two hours after closing arguments Thursday. The trial saw nearly 30 witnesses testify over three weeks at a Kent County courthouse just steps away from the state offices occupied by McGuiness, a Democrat who is the first statewide-elected official ever indicted in Delaware’s history.
She faces three public corruption misdemeanors and two felonies that together carry a maximum of 13 years in prison. McGuiness entered court Thursday with Wood and her daughter at her side.
She is charged with a conflict-of-interest misdemeanor as well as felony theft based on hiring her daughter to a part-time position and, prosecutors allege, affording her special treatment compared to other employees. Her daughter signed what prosecutors have referred to as an “immunity agreement” and has not been accused of any crime.
Her daughter testified that she began work in May 2020, continued to work remotely while enrolled in college and continues to work there as of last week when she testified.
In his closing, Denney emphasized that the auditor’s daughter was hired with no public job listing, no legitimate interview, was allowed to work more hours than some other employees and was allowed to work while she was at college in South Carolina. He noted the auditor also signed employment paperwork as her daughter’s supervisor and acted on complaints by her daughter regarding how other employees treated her.
Wood emphasized that email evidence showed the auditor’s daughter did indeed work in the office and evidence showed that workload decreased while she was in school.
To convict McGuiness of conflict of interest, prosecutors must convince a jury that her daughter received benefits not available to similar employees.
Prosecutors called two other part-time employees to the stand. They described having similar job tasks as the daughter, though they split weekly workloads and indicated their jobs also included staffing the public front desk of the office. They were paid slightly less than McGuiness’ daughter and, unlike the daughter, were not allowed to work over their weekly limit and charge the state for that time in subsequent weeks and months.
Both left around in Spring 2020, as their work hours were reduced because of the pandemic. Both said they left the office because of family reasons and a lack of available work factored into that.
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Wood leaned on the possibility that other part-time employees who were not called to testify or questioned by prosecutors received similar benefits.
“You know nothing about them,” Wood told the jury. “Is that the whole truth if you don’t know how much they made, how they were hired or what they did?”
He also argued that there is “zero” evidence that McGuiness shared in the paychecks that her daughter received. Those checks were deposited into a bank account jointly controlled by the auditor and her daughter that was set up when the daughter was a child.
Denney argued it is only necessary that prosecutors show McGuiness intentionally exercised control of state money in order to find her guilty of felony theft.
McGuiness also faces a felony charge of witness intimidation.
Much of the trial was spent hearing testimony from former employees who described an office that Wood conceded had “a lot of tension” and did “not sound like a fun place to work.”
Some of these employees raised concerns to investigators about potential misconduct as early as Spring 2020.
Records introduced into evidence show McGuiness requested access to review and monitor some employees’ emails and other electronic media from state technology officials that summer. Denney called it an “overwhelming pattern of email surveillance of key people who knew key things.”
Wood noted that McGuiness had reason to believe confidential work information was leaking from the office.
“Is it creepy to think your boss is reading your email? Yes,” Wood said. “Is it a crime? No.”
Other evidence showed McGuiness pulling emails for the deputy attorney general responsible for representing the auditor’s office in civil matters and being granted access to monitor communications for some employees in real time.
To convict McGuiness of witness intimidation, the jury must be convinced that McGuiness at some point knew she was under investigation and maliciously took action against witnesses for the purpose of preventing their cooperation in the investigation.
Denney’s closing arguments largely focused on alleged acts of intimidation following a June 2021 phone call investigator Frank Robinson made to Virginia Bateman, the childhood friend and coworker of McGuiness’ daughter.
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Denney said the phone call set off a “flurry of activity,” including McGuiness trying to call the lead investigator by blocking the number on her cell phone. In the months after, McGuiness submitted requests to review two employees’ emails, Skype messages and other files for two employees who had been speaking to investigators.
Officials in the auditor’s office recirculated its social media policy barring the posting of photos with current or former employees after whistleblowers were pictured together with employees still working at the office during a day at the beach, Denney said.
At some point before the Bateman call, one of those employees was put on a performance improvement plan and the other was reprimanded. Both testified that they felt those actions were not necessary. Called by the defense, the official who oversaw those employment actions said they were necessary.
Wood said such employment actions shouldn’t be seen as intimidation.
“She intimidated (the employee) by putting a piece of paper in her employee file,” Wood stated with sarcasm.
McGuiness also faces the misdemeanor charge of structuring based on prosecutors’ allegation she improperly routed payments tied to a $45,000 no-bid contract the auditor’s office awarded to political consultant and issues strategist Christie Gross in 2020.
In closing arguments, Denney pointed to two payments Gross received in September 2020 that Jane Cole, the director of the State’s Division of Accounting, testified were not made in compliance with the state’s budget and accounting manual. Emails show Gross asking for her past due payment for an $11,250 invoice and finance officials trying to pay the full amount, but having that payment pushed back because the budgeted total for the contract would have been eclipsed by the payment.
Emails show McGuiness asking if they can pay a portion of the total, which prosecutors contend is structuring. Other emails show officials noting after-the-fact approval paperwork, referred to as a waiver, would be necessary and McGuiness asking if one would be necessary. Eventually, part of the bill is paid in a way that didn’t comport with the budgeting handbook and was mistakenly approved by Department of Accounting regulators, Cole testified.
Another series of emails shows McGuiness ordering a staffer to pay the rest of the bill with a state credit card to Gross’ PayPal account, a payment which was later budgeted to a subsequent contract that Gross had competitively bid with the auditor’s office. Cole said this was also a violation.
The employee who incorrectly assigned that payment to Gross’ contract was called by the defense, testified she was not directed to do so and said it was a mistake. The employee was not interviewed by prosecutors during the investigation.
“Is that an incompetent or incomplete investigator or is it a biased investigation that is afraid of the truth?” Wood asked the jury.
Cole said waivers would have made both of the payments in compliance.
In closing, Wood emphasized that the employee responsible for filing after-the-fact waivers had gone on vacation and, at the time, McGuiness and other officials didn’t know she would quit her job and never return. He said the infractions were paperwork mistakes caused by ignorance and haste in paying the past-due bill.
Wood pointed to waivers that showed similar accounting errors made by Delaware Department of Justice officials that involved more money. One, involving the Delaware Department of Correction, was for a $7.6 million contract.
Denney told the jury this was not a “simple paperwork error.” He said the lack of a waiver filing for the payments was an attempt to conceal, noting that copies of such waiver paperwork are shared with the Delaware Department of Justice.
“Kathy McGuiness knew just how to play the system and she did,” Denney said. “The fact that it would have been simple to do it the right way, tells you what you need to know.”
Leading up to trial, prosecutors made multiple conflicting statements about what the auditor did and why they think it is a crime related to the structuring charge. Some incorrect statements were included in a search warrant affidavit made under oath and later in McGuiness’ initial indictment.
Wood has used those mistakes to batter the credibility of the entire investigation.
“We tell you with reservation and with a tinge of sadness that when the state tells you she is guilty, you simply cannot trust what they say,” Wood told the jury.
Denney admitted mistakes, but implored jurors to look at the evidence.
“The state was wrong,” Denney said. “That does not mean this entire prosecution is based on a falsehood.”
Contact Xerxes Wilson at (302) 324-2787 or xwilson@delawareonline.com. Follow @Ber_Xerxes on Twitter.
