Defense says auditor not to blame for contract payments

DOVER, Del. (AP) — Evidence presented Friday in the corruption trial of State Auditor Kathy McGuiness suggests McGuiness expected an employee to handle a controversial contractor payment at the heart of her criminal case, not knowing the employee would quit while on vacation.

Defense attorney Steve Wood showed jurors a series of emails exchanged in September 2020 among McGuiness, former chief of staff Thomas Van Horn, and administrative officer Shequanna Cousin about paying a past due invoice to My Campaign Group. The firm had received a no-bid communications services contract from McGuiness in 2019.

The auditor’s office had submitted the $11,250 invoice to the state Division of Accounting for approval, but it was sent back because the purchase order for the contract, which allocated a total of $45,000, had a remaining balance of only $4,350.

McGuiness then asked Van Horn and Cousin if it was possible to pay $4,900 of the $6,900 excess as a “direct claim” voucher outside the purchase order. Such payments are allowed if a change order or “after-the-fact waiver” request is submitted. The $4,900 amount, meanwhile, meant that the auditor’s office would not have to wait around for approval from the Division of Accounting because the payment approval threshold was $5,000.

“Yes, it is possible to do,” Cousin responded in an email, asking if Van Horn and McGuiness wanted to proceed with paying $4,350 under the purchase order and $4,900 as a direct claim, for a total of $9,250.

Five days later, McGuiness sent another email telling Van Horn and Cousin, who was out of the office on vacation, that she was getting calls from My Campaign Group owner Christie Gross about getting paid. With Cousin out of the office, McGuiness asked Van Horn to verify whether any payment had been made.

Van Horn told McGuiness and Cousin that he had already sent the $4,350 under the purchase order, and that they would have to do a waiver for the remainder.

McGuiness replied that Cousin was authorized to make the $9,250 payment but indicated that she was unsure about the process “since this is not in my wheelhouse.” She questioned whether the $4,900 needed to be a direct claim and whether the remaining $2,000 required a waiver.

As part of her duties, Cousin was responsible for paying purchase orders, payment vouchers and submitting waiver requests. Unbeknownst to McGuiness and Van Horn, however, Cousin had decided to quit and would not be returning from vacation.

“They didn’t know you were gone, and they were sending the email to the person who is charged with doing the after-the-fact waiver, right?” Wood asked. “And you didn’t do anything … because you were gone.”

“Correct,” said Cousin, who agreed with Wood that if she had filed a waiver request “the payment would have been fine.”

McGuiness, a Democrat elected in 2018, is responsible as state auditor for rooting out government fraud, waste and abuse. She is being tried on felony counts of theft and witness intimidation, and misdemeanor charges of official misconduct, conflict of interest and noncompliance with procurement laws. McGuiness is the first statewide elected official in Delaware to face criminal prosecution while in office.

Prosecutors allege, among other things, that McGuiness orchestrated the no-bid contract for My Campaign Group, a firm she had used as a campaign consultant when running for lieutenant governor in 2016, then deliberately kept the contract payments under $5,000 to avoid having to get them approved by the Division of Accounting. They claim that splitting up the funding sources for the final invoice and making two payments — one for $9,250 and another for $1,950 using a state credit card — was a deliberate attempt to avoid regulatory scrutiny and amounts to illegal financial “structuring.”

Despite those allegations of concealment, the auditor’s office sought approval from the Division of Accounting for a single payment of $11,250, more than double the $5,000 reporting threshold, and actually received approval from the accounting division for the $9,250 payment. The director of the Division of Accounting testified that employees in her agency made a mistake in granting that approval, but no one in that agency has been charged with a crime.

Prosecutors also allege that McGuiness hired her daughter and her daughter’s best friend as temporary employees in 2020, even though other temporary employees had left because of the lack of available work amid the coronavirus pandemic. Authorities allege that in hiring her daughter and exercising control over taxpayer money with which she was paid, McGuiness engaged in theft of state money and conflict of interest.

Authorities also allege that when employees in her office became aware of McGuiness’ misconduct, she responded by trying to intimidate the whistleblowers, including monitoring their email accounts.

The trial resumes Monday.