Former auditor chief testified McGuiness told him to pay consultant with state credit card

Editor's Note: This story has been clarified to note that Steve Wood was speaking about other state agencies when referring to accounting errors like those involved in the state's case against Kathy McGuiness. 

Questions about lies under oath and a relationship with a co-worker may have tarnished the testimony on Thursday of a lead prosecutor witness testifying against his former boss, Delaware Auditor Kathy McGuiness.

Prosecutors called the auditor’s former chief of staff Thomas Van Horn to tell the jury how McGuiness ordered him to pay a political consultant with a state credit card.

The transaction is at the center of the prosecutors' case that McGuiness rigged the consultant’s contract and payments to avoid regulatory scrutiny, a misdemeanor crime referred to as structuring.

The structuring charge is one of the three public corruption misdemeanors and two felonies that McGuiness, a statewide-elected Democrat, is currently fighting at her trial in its second week.

The portion of Van Horn’s testimony relevant to the structuring charge started with a September 2020 invoice from My Campaign Group, a consultancy firm owned by political strategist and issues expert Christie Gross of New Castle County.

The invoice came as Gross was at the end of a $45,000 no-bid contract to conduct work for the auditor’s office and right as a new firm she started, known as Innovate Consulting, had been awarded a new contract for similar work with the auditor’s office.

The final invoice for the My Campaign Group contract was received by the auditor’s office in September 2020 and totaled $11,250 owed for work in August.

Center to prosecutors’ allegations related to the charge is that payments to such contractors above $5,000 must get an extra approval from Department of Accounting officials.

Evidence has shown that approximately $9,250 of that was routed through and ultimately approved by Department of Accounting officials that month.

The payment caused the total spent on the contract to eclipse the $45,000 allocated for the service. Van Horn sent an email saying that the office would need to file a document, generally known as a change order, seeking approval from accounting regulators because of that.

The payment also left $1,950 still owed. As September went on, emails involving Van Horn, McGuiness and another staffer showed Gross was looking for payment.

In questioning Van Horn, Deputy Attorney General Mark Denney showed the jury emails regarding My Campaign Group’s September invoice in which McGuiness tells Van Horn to pay the remaining balance via PayPal in an email that did not explain the motivation behind the command. Gross has testified that she simply wanted the past-due money fast.

Van Horn testified that McGuiness stood over his shoulder as he used his state credit card to pay the balance. The payment was later incorrectly applied to money allocated to Gross’s second contract.

Earlier in the trial, Jane Cole, the director of the state’s Department of Accounting testified that the September payments, both the normal payment that exceeded the amount allocated for the contract and the state purchase card payment, violated procedures mandated by the state’s accounting handbook.

Prosecutors also contend that McGuiness orchestrated the payment this way to avoid regulatory scrutiny, making the handbook violation a crime, an argument that has not been backed up by evidence through two weeks of testimony.

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During Cole’s testimony, Steve Wood, McGuiness' defense attorney, pointed out several other instances where similar infractions occurred in other state agencies involving far more money that were rectified with after-the-fact change orders and without anyone being indicted.

Cole testified that if the appropriate corrective paperwork is done, there is nothing inherently wrong about using a purchase card to pay a state expense, running over a contract’s purchase order amount or coding a payment through a different contract.

Wood has also argued that the situation simply doesn’t amount to a violation of the law, is a paperwork error, and that prosecutors can’t show evidence that McGuiness knowingly and willfully violated the accounting provisions.

Whistleblower brings concerns to investigators

Van Horn said the command to pay the consultant made him uncomfortable, so he spoke to a state civil attorney that represents the auditor’s office, who led him to criminal investigators.

Prosecutors played the November 2020 phone call he made to Department of Justice Investigator Frank Robinson in court on Thursday.

In the call, he said he was looking for other work, notes that Gross’ first contract was awarded with no bid, that the second one was awarded through the bidding process that he regarded with suspicion because McGuiness used an executive assistant to craft the document seeking bids instead of the longtime employee who normally conducted that task.

“Some of the advice she is getting is totally political,” Van Horn told Robinson in the phone call.

Upon questioning from Denney, he would later tell the jury that he was one of the employees that helped score the proposal submitted by Innovate Consulting, recommending Gross get the contract because he was told to do so by McGuiness through one of the auditor’s executive assistants.

He did not mention that in his initial phone call to Robinson, nor did he mention the state purchase card payment he was ordered to make and told the jury was the impetus for him seeking out authorities.

Cross-examination delves into sex and lies

As a way of impeaching his honesty and credibility, Wood pointed out that Van Horn, under oath, told a grand jury evaluating whether to bring criminal charges against McGuiness, that he left the office because of a disagreement with McGuiness.

In court Tuesday, he told the jury that the reason McGuiness gave for forcing him from the office was that “Delaware is a small state” and “rumor was going around that you have an inappropriate relationship with someone in the office.”

Van Horn told the jury that he had indeed had been involved in what he first described as a “romantic” relationship with a woman who worked in the auditor’s office.

He said early in his time working at the office, he asked McGuiness’ permission to take the woman out for drinks and that McGuiness encouraged it as a “great idea” that could get her on their “team” for future campaign purposes.

He testified that McGuiness knew of the relationship, approved of it and the two “hung out” at McGuiness’ Rehoboth home. When their "romantic" relationship ended in August 2020, they remained cordial, he said.

That was months before he first spoke to investigators and half a year before he was forced from the office in March 2021.

Wood played snippets of his recorded statements with prosecutors starting at that time. In the recordings, he said McGuiness told him that there was a rumor that he was in a sexual relationship with someone in the office. He also said he felt like she was starting that rumor.

Wood asked him if he lied when he called it a rumor and Van Horn said yes, prompting Wood to play more statements. He asked him if he had lied to the grand jury evaluating criminal charges against McGuiness when he said he left of disagreements with McGuiness. Van Horn said yes.

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As Wood was asking him about a litany of what he was characterizing as lies, Van Horn interjected that he actually never had sex with the woman, prompting Wood to ask if they had a “sexual relationship."

He replied, “I mean, no” adding that they went to a few happy hours together, made out a few times, but did not engage in intercourse.

“How do you define sexual relationship?” Van Horn asked Wood, prompting a private conversation among attorneys and the judge and the end to that line of inquiry.

When Denney was allowed to continue his questioning, Van Horn was asked to explain why he said he lied to the grand jury and said that he actually didn’t remember what he told the grand jury.

Van Horn’s testimony is also relevant to the conflict of interest charge faced by McGuiness for hiring her daughter. That daughter testified Wednesday that Van Horn interviewed her for the job. He testified Thursday that he had not.

Testimony will continue for half the day Friday with prosecutors far behind their schedule in presenting their case. The trial is now likely to run through most of next week.

Contact Xerxes Wilson at (302) 324-2787 or xwilson@delawareonline.com. Follow @Ber_Xerxes on Twitter.

This article originally appeared on Delaware News Journal: Former auditor chief testifies about purchase cards, sex and lies