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Former Hogan chief of staff indicted on charges of secretly recording governor on phone calls, embezzling funds

Maryland Gov. Larry Hogan’s former top aide, Roy McGrath, faces dozens of federal and state criminal charges that he misled officials into paying him a six-figure severance, embezzled funds for personal purposes and illegally recorded phone calls with the governor and other members of Hogan’s staff.

A federal grand jury indictment and a state criminal information against McGrath were filed Tuesday, alleging a broad range of illicit behavior. The state charges describe four phone calls in which Hogan was recorded in March, April and May of 2020 without his “knowledge or consent.”

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McGrath resigned from his job in August 2020 and moved out of state after The Baltimore Sun reported on his severance from the Maryland Environmental Service.

Thomas J. Sobocinski, the special agent in charge of the FBI’s Baltimore field office, described McGrath’s actions as a “self-serving and ultimately self-sabotaging.”

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McGrath said Tuesday in an email to The Sun that he had no comment on what he characterized as “political persecution.” His attorney, Bruce Marcus, said in a brief statement that his client hadn’t yet seen the details of the charges.

“Mr. McGrath vigorously and categorically denies any criminal conduct. He looks forward to clearing his good name and reputation at a trial on the merits,” Marcus said.

Mike Ricci, a spokesman for Hogan, said in a statement that the charges are “very serious and deeply troubling.” He said the governor’s office has “actively assisted” in the criminal investigations.

“Marylanders deserve to know that their public officials are held to the highest ethical standards,” Ricci said.

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McGrath, 52, served as the Republican governor’s chief of staff for 11 weeks in the summer of 2020, resigning just days after The Sun reported that he’d negotiated a lucrative payout when he left his prior state job.

It was subsequently revealed that as McGrath departed the environmental service to head Hogan’s staff he led the service’s board members to believe the $233,650 payout had the governor’s blessing. He also was paid more than $55,000 in expense reimbursements shortly after he left.

The federal indictment says McGrath “falsely represented that the Governor knew of McGrath’s request to the MES Board of Directors for a ‘severance payment’ in the amount of his yearly salary as MES Executive Director.”

Roy McGrath speaks during a State House news conference in 2020.
Roy McGrath speaks during a State House news conference in 2020. (Pamela Wood)

The federal indictment also accuses McGrath of defrauding MES by obtaining more than $14,000 to attend a program at Harvard University following his resignation, and for failing to take leave when he took a vacation cruise to Spain, Italy and France in August 2019 and another vacation to Florida in December of that year.

He also used MES funds to make a personal pledge to the Academy Art Museum in Easton, the indictment says.

The state’s criminal information, filed in Anne Arundel County Circuit Court, also charges McGrath for his allegedly misleading statements about severance, describes time sheets as falsified, and includes the use of MES funds for the art museum payments and for his enrollment in the Harvard program after he left the environmental service.

The state charges also include multiple counts of “unlawful intercept” — wiretapping — and misconduct in office for recordings of conversations allegedly without consent of the other parties.

The illegally recorded conversations took place over the spring and summer of 2020, and included conversations with Hogan, leaders on his staff, the governor’s chief legal counsel, political consultants, Maryland Environmental Service employees and others. None knew they were being recorded, the criminal information alleges.

The last one covered by the charges occurred Aug. 17, 2020, the day McGrath resigned, and included Hogan’s chief legislative officer, chief counsel, a senior adviser and two political consultants.

If convicted on the federal charges, McGrath faces a maximum sentence of 20 years in federal prison for each of the four counts of wire fraud, and a maximum of 10 years for each of the two counts of embezzling funds. In the state case, misconduct in office carries a penalty only described by law as any sentence that is not cruel or unusual, while the wiretap and theft charges carry a maximum of five years each.

McGrath was defiant in a statement announcing his resignation in August 2020: “For me, this entire topic is simply the sad politics of personal destruction, and right now, we cannot afford unnecessary distractions from the critical work the governor and his team are doing. For this reason, I have advised the governor that I am exiting state service.”

The severance payout spurred criminal and legislative investigations, and caused Hogan to distance himself from an aide who had been in his orbit since the 1990s. As McGrath left his service, Hogan said: “I have always known Roy to be someone of the highest character, and I wish him well in his future endeavors.”

Bruce Marcus, left, counsel for Roy McGrath, as McGrath, right, testifies during a Maryland General Assembly Joint Committee on Fair Practices & State Personnel Oversight meeting.
Bruce Marcus, left, counsel for Roy McGrath, as McGrath, right, testifies during a Maryland General Assembly Joint Committee on Fair Practices & State Personnel Oversight meeting.

State lawmakers called on McGrath to give back the money and passed a law making reforms at the environmental service.

For their investigation, which is ongoing, lawmakers took the rare step of issuing subpoenas to compel McGrath and others from the environmental service to testify, though McGrath offered little information as he invoked his Fifth Amendment right against self-incrimination.

Based in Millersville, the Maryland Environmental Service is an independent agency of the state with more than 800 employees. It carries out environmental and public works projects, such as operating sewage plants and dredging waterways, primarily for local and state government agencies. Ninety-five percent of its budget comes in payments from state and local governments.

McGrath had defended his severance payment and how he led the environmental service, which he said operated more like a business than a government agency.

The environmental service’s former top financial officer testified before lawmakers that McGrath routinely exceeded spending limits and missed deadlines for expense reports.

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Maryland Environmental Service headquarters in Millersville.
Maryland Environmental Service headquarters in Millersville. (Kevin Richardson / Baltimore Sun)

When Hogan hired McGrath as chief of staff in May 2020, the governor praised him as “an experienced public and private sector leader with a proven track record of managing at every level of government and a passionate commitment to public service.”

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A chief of staff is typically a right-hand assistant to a political executive, responsible for managing staff and making sure the executive’s priorities are carried out.

In choosing McGrath, Hogan picked someone right at hand, as he’d already borrowed McGrath from the environmental service to help with buying supplies and negotiating contracts as part of the response to the coronavirus pandemic.

Hogan credited McGrath with “spearheading” the $9 million purchase of coronavirus tests from the South Korean company Lab Genomics. However, the tests couldn’t be used because they were shipped with an ingredient that wasn’t the same as one approved by federal regulators. The state had to spend $2.5 million more to replace them, spurring a scathing audit report that found contracting rules weren’t followed.

McGrath, in his testimony before lawmakers last December, sought to downplay his involvement, which he said was limited to the logistics of getting the tests to Maryland.

“I think Governor Hogan was very generous in his praise of me and the work that I did,” he said.

McGrath sold his Edgewater home, overlooking The Golf Club at South River, in December for $1.29 million and has moved to Naples, Florida.

State lawmakers are likely to pause their oversight investigation while the court cases play out.

“This is a vindication of the efforts that the General Assembly undertook to further examine Mr. McGrath’s behavior at the Maryland Environmental Service and as the governor’s chief of staff,” said Del. Marc Korman, a Montgomery County Democrat who played a key role in the investigation. “It certainly points to the fact that there was enough information and red flags here that warranted further investigation.”

Sen. Clarence Lam, a co-chair of the oversight committee, said the investigation shows the legislature’s important role in ensuring state agencies and officials conduct their work properly.

The oversight investigation “was able to get as much of the truth as possible, to the extent that we could. It was important to laying the groundwork for these indictments to come forward today,” said Lam, a Democrat representing parts of Howard and Baltimore counties.

“It really shined a light on the fact that oversight is really important, and what happened back in the summer of last year was not OK,” Lam said. “And that public officials will be held accountable when they defraud taxpayers or mislead state agency boards.”

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