More than a year after questions were raised about a severance package and other spending related to Gov. Larry Hogan’s former chief of staff Roy McGrath, federal and state prosecutors have charged McGrath with dozens of counts of fraud and other misconduct.
Here are five things to know about the new charges:
Investigators found nothing to implicate Hogan or his staff
The fraud charges related to McGrath’s six-figure payout explicitly stem from the governor not being involved, with McGrath representing to Maryland Environmental Service board members that Hogan had been apprised.
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.”
Hogan previously asserted that he didn’t approve the deal and only knew generally that McGrath was working out financial matters before moving to the State House.
“I knew nothing about the details of what his discussions were with his current employer or the board members of MES,” Hogan said in August 2020. “I mean, I didn’t discuss it or approve it or know anything about the amounts of it or anything.”
Mike Ricci, a spokesman for Hogan, said in a statement Tuesday that the governor’s office had “actively assisted” in the investigation and called the charges “very serious and deeply troubling.”
There are dual federal and state charges
Like the case against former Baltimore Mayor Catherine Pugh, the FBI and Office of the State Prosecutor teamed up and filed charges in both federal and state court. The feds are taking on wire fraud and embezzlement of funds from an organization receiving more than $10,000 in federal benefits, while the state case incorporates some of the federal allegations but adds wiretapping and misconduct in office, after it was discovered McGrath had recorded state officials and others without their knowledge.
In the Pugh case, federal prosecutors charged the former mayor with fraud related to her Healthy Holly book deals, for failing to pay taxes and double-selling some copies of the self-produced children’s books. The state charged her with perjury for willfully omitting the book business from the financial disclosure forms she filed as a state senator. She pleaded guilty in both cases and is serving three years in federal prison.
“It is an honor and privilege to serve one’s community, and public officials are entrusted to place the interests of citizens above their own,” Acting United States Attorney Jonathan F. Lenzner said in a statement about the McGrath case. “Our federal and state law enforcement team in Maryland will always hold accountable public officials who betray the public trust for their personal gain. Maryland residents should always demand honesty and integrity from those in government, and hopefully this indictment offers the public some level of confidence that we are committed to prosecuting those who violate that trust.”
Added Maryland State Prosecutor Charlton Howard: “Our office will seek to hold accountable any public official who abuses the privileges of their office for corrupt reasons or illicit personal gain. The Office of the State Prosecutor will continue to work collaboratively with our partners to ensure the public’s interests are protected.”
An investigation of fraud led to the discovery of recorded conversations
While The Sun reported on — and legislators held hearings about — McGrath’s severance payout and other spending by MES related to McGrath, the criminal investigation unearthed what prosecutors say were illegally recorded conversations involving McGrath and state officials, including the governor.
Maryland has a strict wiretapping statute, and the charges filed in Anne Arundel County Circuit Court allege that he recorded nine conversations from March 2020 to August 2020.
The recordings were made on McGrath’s iPhone and included conversations with Hogan, top advisers to Hogan, state cabinet secretaries and Maryland Environmental Service employees, according to the state court documents.
The final recording was made Aug. 17, 2020, the day that McGrath resigned from his position as Hogan’s chief of staff. The recording included the governor’s chief legislative officer, the governor’s chief counsel, a senior adviser and two political consultants.
Prosecutors have not detailed the contents of the recordings or why they believe McGrath made them.
McGrath remains defiant
The investigation has been simmering for a year, but McGrath remains adamant that he didn’t do anything wrong. Though he declined to comment, he added in an email that he believes the investigation is a “political persecution.”
His defense attorney, Bruce L. Marcus, said McGrath “vigorously and categorically denies any criminal conduct. He looks forward to clearing his good name and reputation at a trial on the merits.”
McGrath has defended his actions ever since his severance payout was made public in The Baltimore Sun in August 2020. Even when he resigned days after the first article, he said, “this entire topic is simply the sad politics of personal destruction.”
The legislative investigation is in limbo
State lawmakers quickly moved to open an investigation into McGrath’s actions, spending hours questioning witnesses — including McGrath — in public hearings. They also hired an attorney, Ward B. Coe III, who led questioning at some of the hearings and investigated out of the public eye, reviewing documents and speaking to witnesses.
The legislative investigation has not yet produced a report or findings. Legislative leaders indicated Tuesday that their work may now be put on pause while the court cases play out.
The investigation has been “left open,” said Del. Marc Korman, a Montgomery County Democrat who has been deeply involved.
“I think we’ll probably largely leave it to the criminal justice system from here,” Korman said.