Prosecutors: State auditor 'castigated' employees after she was criminally indicted

The felony intimidation charge pending against Delaware Auditor Kathy McGuiness was updated Monday with prosecutors claiming she had employees answer "confidentiality" when asked what her office motto is.

A New Castle County grand jury issued a re-indictment on Monday in McGuiness' case containing the same charges, but including new information claiming that since her initial indictment in October, McGuiness and her top aides have "castigated" employees they deemed "disloyal" — employees the indictment indicates could be witnesses in her criminal case.

Last year, McGuiness became the first statewide elected official in Delaware history to be indicted when prosecutors accused her of theft and official misconduct for hiring her daughter to a job in the Auditor's Office, structuring a state consulting contract to avoid regulatory scrutiny and felony intimidation for allegedly taking steps to surveil and discriminate against employees positioned to question her potential misconduct.

The intimidation felony charge is the most serious one she faces in terms of potential punishment if found guilty.

After this story published, McGuiness noted in a written statement that the reindictment comes about a week before a judge will hear pending motions aimed at compelling evidence from prosecutors and her effort to have the court throw out the intimidation charge. She stated the new indictment is an "attempt to remedy significant deficiencies in the (original) indictment."

"Despite the changes in the new indictment, those deficiencies in the charges remain. We look forward to the April 7 hearing on our pending motions," McGuiness wrote.

The Delaware Department of Justice, which is prosecuting McGuiness, declined to comment for this story.

The new information in the re-indictment appears to center on reports from employees in the office. It states that on Feb. 11, there was a staff meeting in the Auditor's Office in which prosecutors claim McGuiness was "displeased that, in her belief, information was leaking" from her office.

Days before, McGuiness was subjected to pointed questioning by state lawmakers on Delaware's Joint Finance Committee regarding her office's spending decisions as well as a contract she awarded to a woman who would later become a staffer in the office.

At the staff meeting that followed that committee questioning, McGuiness told staffers that she used to have staff "yell out loud, 'confidentiality'" and that "confidentiality" means "what happens in this office, stays in this office." Near the end of the meeting, she warned employees "we are gonna have zero tolerance for negativity," Monday's updated indictment states.

THE LATEST: In defense of her criminal charges, auditor claims nepotism widespread in state government

Six days after that meeting, an employee, whom the indictment describes as a witness, received a formal reprimand from McGuiness' office.

The reprimand was partially for the employee "implying or directly stating" that someone in the office was involved in "illegal conduct," as well as for asking another employee if they were leaving the office because of the pending charges against McGuiness and stating that the "front office was shady and everything done in the front office is a cover-up" centered on McGuiness' pending trial.

The employee was told, by a person the indictment does not identify, that their statements were "dangerous to morale" and that they were "hereby notified that it is inappropriate to discuss certain topics," including individuals' court cases and their opinions on the legality of "an individual's employment," in the Auditor's Office, according to the updated indictment.

The indictment also states there was an office meeting called earlier this month in which McGuiness chastised staff for watching a recording of the Joint Finance Committee meeting during which she was needled by legislators. The indictment states McGuiness and her senior staff started the meeting by having employees respond "confidentiality" when asked what the office's motto is.

The indictment states that the episodes made employees "feel uncomfortable" and believe they were "warnings not to continue to report wrongdoing."

The new allegations pertaining to the intimidation charge come on top of prosecutors claiming in her original indictment, that McGuiness used the state's technology office to monitor employee emails as well as correspondence by a former staffer in the Auditor's Office who at the time was working in a different branch of state government. It also claims she discriminated against employees who questioned her conduct.

The updated indictment also includes more specific allegations pertaining to how McGuiness ordered the payment of a consulting contract. Payments for that contract are at the center of the misdemeanor violation.

While not adding new charges, the updated indictment provides more insight into what prosecutors will try to prove to a jury if the case makes it to a trial, which is scheduled for May.

The updated indictment also comes as a judge is considering a request by McGuiness' attorney to toss out the intimidation charge as well as ongoing efforts by her attorney to build a defense against the charges by claiming nepotism is common in state government.

Wood has asked the court to toss the intimidation charge, arguing the indictment fails to include legally required specifics about the crime, particularly that McGuiness knew she was under investigation and knew she was taking action against potential witnesses of an investigation.

Prosecutors, writing in an opposing brief to the court, argued that Wood has misconstrued the law and that it does not require McGuiness to know of any current investigation into her, only that she knew the effect of the actions she took.

Oral arguments on the pending motions will be held in front of Judge William C. Carpenter Jr. on April 7.

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

MCguiness Reindictment by Xerxes Wilson on Scribd

This article originally appeared on Delaware News Journal: Prosecutors: McGuinness 'castigated' employees after she was indicted