Judge hears McGuiness arguments to drop structuring charge

A Delaware Superior Court judge is weighing a decision on whether to drop a charge of structuring contracts levied against State Auditor Kathy McGuiness.

Judge William Carpenter heard arguments in Wilmington April 27 on whether McGuiness structured taxpayer-funded contracts in order to avoid public accounting regulations. The Attorney General’s Office alleges McGuiness gave contracts for the firm My Campaign Group that were designed to be just below the $50,000 threshold to require a competitive bid process. According to the state’s indictment, My Campaign Group had worked with McGuiness on her 2016 run for lieutenant governor, and after she became auditor, McGuiness, a former Rehoboth Beach commissioner, hired the firm for “communication services.”

As the April 27 hearing began, Carpenter called prosecutor Matthew Denney to clarify what the state is alleging because the state’s indictment is not clear on what the structuring is – the contract for My Campaign Group or the payments.

Denney said it was both, adding that McGuiness had paid My Campaign Group for its services to avoid public accounting by using a purchasing card to pay the money into a PayPal account. Those payments came out to more than the $49,900 the contract was for. He said McGuiness’ actions were a deliberate attempt to avoid detection for structuring payments to avoid public accounting.

McGuiness’ attorney, Steve Wood, said the state’s indictment does not make clear what crime McGuiness committed or what state statute was violated. He said the state alleges McGuiness violated the rules and regulations of the state’s budget and accounting manual, but that in and of itself is not a crime.

“I don’t know what the crime is with this indictment,” Wood said. “I can’t think of another indictment that alleges violations of Delaware code without specifying the statute.”

Wood asked Carpenter to throw out the entirety of the state’s reindictment of McGuiness, which was filed in February, and he has filed a subsequent motion to do so. Denney said that indictment was filed in order to answer questions asked by the defense, which the state did not have to do, and adds even more details of possible criminal conduct by McGuiness. 

Wood said McGuiness has been the victim of unfair, prejudicial treatment, with the General Assembly seeking to remove her from office without facing trial, assembly members asking her to resign and through extensive media coverage of the case. 

Denney said the defense has not disproved any of the allegations against McGuiness and the state will demonstrate to a jury how McGuiness structured the contract with My Campaign Group to avoid compliance with the law.

This was the second hearing this month on defense motions to drop charges against McGuiness, who is facing charges of felony theft, intimidation, structuring, misconduct and conflict of interest. She has pleaded not guilty to the charges and a trial is set to begin Tuesday, May 31.

A hearing on whether to drop the intimidation charge was held April 7. Here, McGuiness is accused of trying to conduct email surveillance on employees who were aware of her misconduct. Wood argued the charge is vague and not specific on what McGuiness did to intimidate potential witnesses. 

Prosecutors claim employees within the auditor’s office became concerned about what they viewed as potential misconduct by McGuiness, who then took action that constituted intimidation. Specifically, prosecutors say McGuiness submitted eRecords requests, which would have allowed her to view the content of employees’ email accounts, in addition to discriminating against employees who were aware of her conduct.

Carpenter said April 27 he was hoping to have a ruling on the intimidation charge shortly. He did not have a timeline on a decision to drop the structuring count. The judge indicated he would like to make a decision on briefs when it came to the motion to drop the second indictment, but a hearing on the matter could still be scheduled. Jury selection for McGuiness’ trial is scheduled to begin Thursday, May 26, in Wilmington.