McGuiness trial: Prosecutors and defense rest their cases; auditor will not testify

Delaware Auditor Kathy McGuiness will not testify in her ongoing criminal corruption trial.

Both prosecutors and defense attorneys have now completed their presentation of evidence with closing arguments set for Thursday morning followed by jury deliberations.

McGuiness has sat silently at the defendant's table throughout two and a half weeks of trial testimony. She briefly rose Wednesday to address Judge William C. Carpenter Jr., who asked whether she wished to take the stand.

"I am confident my team has conveyed reasonable doubt, so, no thank you, your honor," McGuiness stated.

Over the course of the trial, state prosecutors called 25 witnesses aimed at convincing a jury that McGuiness is guilty of three public corruption misdemeanors and two felonies. The witnesses were a mix of state officials in charge of records like payroll and accounting logs tied to the state's evidence as well as employees that worked under McGuiness.

Those employees testified about McGuiness' daughter working in the office; the auditor spying on employee emails, issuing an order to delete text messages and emphasizing confidentiality in all office matters; and McGuiness' office being rife with conflict among employees.

An ever-present feature of that testimony was defense objections to prosecutors eliciting testimony about what defense attorney Steve Wood characterized as "unindicted misconduct" that he argued was not relevant to the specific criminal charges against McGuiness, a statewide-elected Democrat who is the only such official in Delaware history to be criminally indicted.

The specific allegations that prosecutors contend were criminal consist of McGuiness hiring her daughter and giving her special privilege in the office, structuring payments to a consultant to avoid approval by regulators and intimidating those positioned to bear witness to her misconduct.

McGuiness is fighting each of the charges with a defense that characterizes the Delaware Department of Justice investigation as biased and unfair and spurred on by employees that didn't like how she was trying to make the auditor's office more relevant to everyday Delawareans by issuing special reports about the spending of taxpayer dollars. Her defense case featured four witnesses aimed at cutting at prosecutors' specific theories of wrongdoing.

Following the final state's witness Tuesday, Wood asked the judge to acquit McGuiness on each of the charges, arguing that prosecutors had not presented the legally required evidence to send the charges to the jury for evaluation.

That motion was taken under advisement by Judge William C. Carpenter, who told the parties he intended to wait for the jury's verdict to decide on the motions, meaning he could hypothetically toss some of the charges even if a guilty verdict is returned.

The following is a summation of where the case stands as it relates to the three actions prosecutors contend are violations of the law.

Conflict of interest and theft

McGuiness has never denied her daughter worked in the auditor's office, and Elizabeth "Saylar" McGuiness testified that she continues to work in the office to this day.

Elizabeth McGuiness, 20, told the jury that she began the part-time job in the spring of 2020 as she was graduating high school and preparing to start college in South Carolina.

She told the jury she continued to work in a limited fashion while at school starting that fall. She was paid $17.50 an hour for a maximum of 29.5 hours per week, a cap she said she reached on average, according to testimony.

Elizabeth McGuiness told the jury she didn’t remember how she found out about the job, that she believes she was interviewed by the office’s then-chief of staff but doesn’t remember the content of the interview. That chief of staff testified he did not interview the auditor's daughter.

She was hired around the same time as her childhood friend, Virginia Bateman, who also testified that the two had similar job duties, which included editing office paperwork, creating social media content, organizing the office and accompanying the auditor to and setting up public events.

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Elizabeth McGuiness also testified that she worked at the Delaware State Fair, causing her to go over the number of allotted hours that week. She said she was instructed by her mother or another high-level office official to “bank” the hours, meaning she logged the extra hours in subsequent weeks or months.

She also testified about her authority to drive the auditor's state vehicle, telling the jury that there was no occasion she used the car by herself and she typically rode from her Rehoboth home with Bateman and her mother in the vehicle.

In order to convict the auditor of the conflict of interest misdemeanor, prosecutors must convince the jury she exercised her power to put her into the job, which had benefits unavailable to similarly situated workers or that was to those workers' detriment.

To that end, prosecutors called two witnesses who were also part-time workers that departed the auditor's office around the time Elizabeth McGuiness began work in spring 2020.

Both stated they had some similar job tasks, were paid slightly less per hour than Bateman and Elizabeth McGuiness, and were not allowed to “bank” hours. Both said they left the office for family reasons and that a lack of available work factored into that.

At the close of the state's case, Wood questioned the state's lead investigator on the case about misrepresentations in the document that charged Kathy McGuiness and a search warrant filed ahead of that indictment, including that one worker was laid off, but evidence showed that she technically resigned.

That woman testified during the defense case, stating that she had communicated her plans to leave the office in June 2020, but the auditor's then-chief of staff told her one day, halfway through May, that day was her last. However, internal records show her as having resigned. On the stand, she said the circumstances were confusing to her but confirmed she had planned to leave the office anyway at the end of the month.

Wood also called a woman who worked alongside Elizabeth McGuiness to testify. She testified that she worked similar hours for the same pay and had the same job duties as the auditor's daughter, striking at prosecutors' assertions that the auditor's daughter received special treatment.

The woman did say that her employment ended when she went to college, so prosecutors are likely to say that Elizabeth McGuiness' remote employment at college was a special privilege.

Prosecutors also accuse Kathy McGuiness of felony theft based on the fact her name is attached to the bank account into which her daughter was paid. Wood referred to the bank account as a "starter savings account," which Elizabeth McGuiness said she opened in her early teens.

Upon cross-examination from Wood, Franklin Robinson, the case's lead investigator, also noted that the state has no evidence the auditor ever withdrew money from the account. Wood argued to the judge the charge should be tossed for this reason.

Structuring

Prosecutors have made multiple conflicting statements about what the auditor did and why they think it is a crime related to the misdemeanor structuring charge.

The charge centers on a $45,000 no-bid contract the auditor's office awarded to political consultant and issues strategist Christie Gross to work in 2020. With their case now presented, prosecutors can point to two payments to Gross in September 2020 that a state financial expert testified didn't comply with the state's budgeting and accounting manual.

That month, Gross billed the auditor's office $11,250. Financial records show that balance was paid in two disbursements to Gross.

The first was for $9,250. That included $4,350 that remained of the budgeted contract value and $4,900 submitted as what is known as a direct claim, which is a payment not coded to a specific contract and that is only to be used in certain situations.

Evidence showed that officials in the auditor's office first tried to pay the entire amount, but that order was kicked back because there was only $4,350 remaining on the $45,000 total budgeted for the contract.

Email traffic involving McGuiness shows her being pressured by Gross for the past due payment, asking a financial employee in her office whether they could pay part of it, stating this is not her "wheelhouse," and asking if waiver paperwork is necessary.

Ultimately, the payment went through in a manner that didn't comply with the accounting handbook and was mistakenly approved by accounting officials, Jane Cole, the head of Delaware's Division of Accounting testified.

Court testimony also showed that the employee at the time responsible for filing waiver paperwork that corrects such issues had gone on vacation and would resign her job without returning.

The payment still left $2,000 due and more emails show Gross asking for payment. Emails showed McGuiness ordering her chief of staff to pay the amount due using his state credit card directly to Gross' PayPal account.

This payment was later incorrectly budgeted to a second, subsequent contract Gross had competitively bid for and won to provide the same services for the auditor's office.

Cole, the accounting, testified that the PayPal payment was not done in compliance with accounting procedure. She also testified that the accounting mistakes prosecutors are leaning on are not uncommon in state government and are regularly rectified by corrective paperwork, which the auditor's office did not file.

Wood has argued the payments are simply paperwork errors attributable to haste and confusion within the office and don't amount to violations of the law. He called a former financial official in the auditor's office to the stand Wednesday. She stated she accidentally applied the PayPal payment to Gross' second contract and that she was not directed to do that by anyone.

Evidence and testimony have left unclear what prosecutors believe McGuiness' motive was for ordering two payments that were not rectified with corrective paperwork.

Intimidation

Felony intimidation is the most serious charge McGuiness faces. Prosecutors called several witnesses to testify about their time working in the auditor's office. Some testified that they had reached out to law enforcement officials with concerns about conduct in the auditor's office as early as spring 2020.

Exhibits introduced by prosecutors show that McGuiness had filed paperwork to review and monitor emails by some of those employees and others dating back to that time.

Testimony by whistleblowers included allegations that McGuiness snapped at an employee for questioning her charging some $60 to a state credit card for satellite radio, that she told a supervisor to instruct employees under her to delete text messages and that she had employees chant "confidentiality" at the start of staff meetings in a way that some questioned.

However, in response to Wood's motion to acquit on the charge, Judge Carpenter seemed to state that he will somehow seek to limit the jury's consideration related to the witness intimidation charge to actions that occurred after June 2021 despite the state having already presented evidence that predates that time.

Wood has argued in pretrial motions and during the trial that prosecutors can't prove that McGuiness knew she was under investigation when she took actions that prosecutors are now saying was aimed at dissuading potential witnesses from participating in such an investigation. This is a requirement of the witness intimidation charge.

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The most convincing evidence prosecutors have been able to present regarding when McGuiness might have known she was under investigation occurred in June 2021 when Robinson, the investigator, called and interviewed Virginia Bateman, Elizabeth McGuiness' childhood friend that also worked in the auditor's office.

Bateman testified that she contacted both the auditor and her daughter directly after. Evidence showed that McGuiness called Robinson from a blocked phone number, but he didn't take the call. An official in McGuiness' office also called Robinson in order to make sure he was who he told Bateman he was and to try to inquire about the purpose of his call.

He did not tell Bateman or the official that McGuiness was under investigation in the calls, but Carpenter said the calls were enough to "would give a reasonable indication that she was under investigation."

Evidence showed that McGuiness submitted requests to review two employees' emails, Skype messages and other files for two employees who had been speaking to investigators since the date of that call. One had left the office by that time.

Officials in the auditor's office also 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. Prosecutors contend the circulation of that office policy was meant to intimidate.

Wood has argued that prosecutors also can't show that McGuiness knew the employees involved in these alleged acts of intimidation were witnesses, something he contends is required for the charge.

Carpenter indicated that the intimidation count was "in play" to be thrown out on Wood's motion for acquittal, but reserved his decision until after the jury's verdict.

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

This article originally appeared on Delaware News Journal: McGuiness will not testify as prosecution and defense rest their cases