Roy McGrath, Hogan’s former chief of staff, indicted for federal, state charges

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Roy McGrath, the former chief of staff to Gov. Lawrence J. Hogan, Jr. (R) and ex-head of the Maryland Environmental Service, faces more than 30 state and federal criminal charges for wire fraud, misconduct in office and improper use of state funds, according to indictments filed Tuesday.

Among the details revealed by prosecutors in the indictments are that McGrath misrepresented his compensation to Hogan and the Environmental Service’s board of directors, recorded phone calls between top public officials without consent, and directed state funding to a Talbot County museum where he sat on the board.

McGrath’s attorney, Bruce L. Marcus, issued identical statements in response to both of the indictments on Tuesday afternoon: “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.”

McGrath’s tenure as Hogan’s top aide ended abruptly in August 2020, after just 11 weeks, following media reports that he received a $233,647 severance when he voluntarily stepped down as the self-styled “CEO” of the agency to work for the governor.

When the report first surfaced in The Baltimore Sun, McGrath attempted to defend the payment, saying it was customary practice for the environmental service (MES) and a reward, of sorts, for stellar performance. He also said Hogan (R) “anticipated” the payout, a claim the governor denied.

Ultimately, McGrath resigned within days of the Sun story to avoid becoming a “distraction.”

On Tuesday, Hogan spokesperson Michael Ricci called the charges against McGrath “very serious and deeply troubling.”

“Marylanders deserve to know that their public officials are held to the highest ethical standards,” Ricci said in a statement. “Over the last year, our office has actively assisted law enforcement in these ongoing investigations. As this case moves to the courts, we are confident that the justice system will uphold the public trust.”

The federal grand jury indictment — which includes four counts of wire fraud and two counts of improperly converting government funds for his personal benefit — was filed in Baltimore on Tuesday.

McGrath is facing 27 charges in the state case, which was filed Tuesday in the Circuit Court for Anne Arundel County, including nine counts of illegal wiretapping, 14 counts of misconduct in office, three counts of theft between $1,500 and $25,000, and one count of embezzlement for misappropriating state funds.

Matters of money

According to the federal indictment, McGrath is charged with defrauding money and property from MES from March 2019 through December 2020 by submitting false timecards while on vacation and directing agency funding to the Academy Art Museum in Easton, where he sat as a board member.

State prosecutors say that McGrath claimed he worked a combined 73 hours across multiple vacations — accruing $8,200.09 — and gave $15,000 of agency funding to the museum.

The indictments also detail McGrath’s salary negotiations as he sought to move from MES to the governor’s office. At the time, McGrath told Hogan that he would have to take a “substantial” pay cut to become his chief of staff, according to the federal indictment.

According to state prosecutors, McGrath told Hogan’s former chief of staff that he intended to match the salary he received at MES — about $28,000 more than the current chief of staff brought home annually. McGrath justified the high salary by saying that he would be forgoing bonuses he would receive at MES.

Days later, McGrath received a letter from the governor’s office confirming his $233,647.23 salary as chief of staff. According to the state charges, in spite of making the same salary, McGrath also told board members and multiple MES employees that he was taking a pay cut.

The federal indictment states that McGrath did not tell the governor he also intended to seek a $233,647.23 severance payment — the equivalent of his annual salary — from the environmental service.

The agency’s board of directors, however, was reluctant to authorize such a large payment unless it was approved by the governor.

The federal indictment reports that McGrath “falsely represented” to board members that Hogan approved of the severance payment, which was ultimately paid. According to federal prosecutors, a member of the MES board of directors was concerned about the optics of such a large severance payment.

“I told them that I thought that the governor was aware and OK with it. Correct?” the board member wrote in a text exchange with McGrath.

“It’s anticipated, yes. Not to mention the precedences [sic],” McGrath responded.

McGrath then attempted to delete any mention of the $233,647.23 compensation from public minutes, according to federal prosecutors.

The federal indictment also states that, when confronted about the severance by Hogan, McGrath said that the board of directors offered him the payment “in accordance with their usual practice.”

In addition to the severance payment, the board of directors also approved tuition reimbursement of over $5,000 and continued use of his agency-issued laptop and cell phone while serving as Hogan’s chief of staff.

Additionally, McGrath sought reimbursement of roughly $14,475 in tuition for his attendance at the Harvard Kennedy School Executive Training program, which went into session after he left MES.

According to state prosecutors, the MES director of operations paid McGrath’s tuition with a personal credit card and submitted an expense report to the agency.

Matthew Sherring, who was questioned during a legislative probe earlier this year, held the position at the time.

McGrath, who was the director of operations direct supervisor, approved Sherring’s reimbursement.

According to state prosecutors, McGrath attended the training program sporadically and was contacted by a program facilitator, who suggested that he withdraw and attend during a different session.

In addition to charges relating to McGrath’s alleged embezzlement of state funds, state prosecutors also allege that McGrath, as a member of the state’s Coronavirus Response Team, illegally recorded phone calls between Hogan and high-level officials.

Maryland law requires that all parties consent to the recording of any conversations.

Among conversations recorded without consent were discussions between Hogan and:

  • His former chief of staff and the secretary of the Department of Health;
  • The chief legislative officer for the governor’s office;
  • The secretary of the Department of General Services and the secretary of the Department of Transportation; and
  • His former chief of staff, an advisor to his administration and the Department of Health’s deputy secretary for public health and deputy secretary for operations.

McGrath also illegally recorded conversations between himself and the deputy director and director of strategic communications for MES; the communications director for the Governor’s Office of Community Initiatives and the Department of General Services’ secretary and director of procurement; the governor’s former chief of staff; the secretary of the Department of Budget and Management; and Hogan’s chief legislative officer, chief counsel, a senior advisor and two political consultants.

Legislative oversight

The indictments come after the legislature’s Joint Committee on Fair Practices and State Personnel Oversight started a formal probe of MES last year.

During those hearings, members of the MES board of directors told lawmakers they felt queasy about the payment, but they went forward with it to avoid crossing an influential member of the governor’s team.

Lawmakers, particularly Democrats on the committee, expressed concern not only with the severance McGrath received, but also with the $55,000 in expense reimbursements he successfully sought as he headed for the exit.

Many of the expenses he incurred — for international travel, meals, posh hotels, executive trainings and boardwalk ice cream — struck the committee as excessive, particularly since nearly all of the service’s revenue comes from state agencies and local governments.

During a phone interview Tuesday afternoon, Sen. Clarence K. Lam (D-Howard), co-chairman of the Joint Committee, pointed to the Hogan administration, questioning how the governor put so much misplaced trust in McGrath and “how someone of that mindset was able to rise to that level of state government … while being able to betray the public trust.”

“I think it’s still incumbent on the administration to clean their own house … and focus on the culture of corruption that this case made evident,” Lam said. “As the leader of state government, I think the governor has the responsibility to make sure that this culture of fraud and playing fast and loose with the rules doesn’t continue, because they have the responsibility to make sure that taxpayer money is used wisely.”

In 2021, lawmakers passed a bill to reform the environmental service, including by removing agency leadership from voting positions on the board of directors and limits severance packages and contract spending, among other reforms.

If convicted of the federal charges, McGrath faces a maximum sentence of 20 years in federal prison for each of four counts of wire fraud; and a maximum of 10 years in federal prison for each of two counts of embezzling funds from an organization receiving more than $10,000 in federal benefits.

The state theft, embezzlement and illegal wiretapping charges carry maximum penalties of five years in prison. Misconduct in office is a common law offense with no set maximum penalty.

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