Former employee sues Office of Auditor of Accounts

McGuiness, senior staff accused of violating whistleblower protection
June 8, 2022

A former chief administrative auditor has filed a civil lawsuit against the Office of Auditor of Accounts, alleging State Auditor Kathleen McGuiness and McGuiness’ senior staff harassed her and violated her whistleblower protections before terminating her employment.

Kathleen Davies filed the lawsuit May 31 in Kent County Superior Court, one week before McGuiness was indicted by a Kent County grand jury on felony theft, felony intimidation, official misconduct and other charges related to awarding state contracts and payments. A trial against McGuiness was supposed to begin May 31 in New Castle County Superior Court, before McGuiness’ attorney made a motion for change of venue and prosecutors agreed.

Davies began working at the auditor’s office in 2010 under former State Auditor Tom Wagner, who eventually promoted her to his second-in-command when he needed help with office management. Wagner, however, terminated her employment in 2017 after several employees complained about her. Her position was reinstated in 2019 following a decision by the Merit Employee Relations Board, although the board agreed that Davies should have been suspended without pay for two months for withholding information from Wagner and exceeding her authority.

After losing to McGuiness in the Democratic primary for state auditor in 2018, Davies resumed her auditor position in January 2019. 

According to the lawsuit, shortly after McGuiness was sworn in as auditor, Davies noticed irregularities in the execution and administration of auditor office functions. In the spring of 2019, the lawsuit states, McGuiness contracted for hotel facilities five blocks from the auditor’s office for multi-day training events. “The state auditor disregarded the budget and accounting manual’s prohibitions with respect to food and drinks and snacks for the multi-day event. The amount of food and drinks purchased were well in excess of what was required for the session, and the excess was used to supply the break room with snacks and drinks,” the lawsuit states.

One other occasions, the lawsuit states, McGuiness would play cornhole games in the office outside of scheduled breaks and lunch periods. “[Davies] refused to participate in behavior that amounted to a waste of taxpayer dollars during working hours,” the lawsuit states.

After McGuiness tried to force Davies to sign off on improper auditing policies and standards, the lawsuit states, Davies raised concerns with First Deputy Auditor Elizabeth Vasilikos and then requested the Whistleblower and Workplace Violence reporting contact for the State of Delaware from then-Chief of Staff Spiros Mantzavinos. Mantzavinos is now a state senator – a seat he won over Anthony Delcollo, Davies' attorney in her civil lawsuit.

“[Mantzavinos] ultimately failed to take any action to address [Davies’] efforts to report unlawful activity and facilitated or assisted in carrying out the campaign of harassment against [Davies],” the lawsuit reads.

Abusive conduct against Davies continued and included damage to Davies’ professional credentials by not paying for her license renewal, records state. 

By September 2019, the lawsuit states, Davies went out on short-term disability because of the abuse she received from McGuiness and her management team. According to the lawsuit, abuse leading up to her short-term disability included isolating her from the rest of the office; denying her access to a computer; ignoring requests for additional work assignments; and regularly admonishing and berating Davies.

The lawsuit states McGuiness would enter Davies’ office “on multiple occasions per week for the sole purpose of screaming, yelling and hurling verbal abuse at [Davies], screaming at [Davies] within inches of [Davies’] person such that [McGuiness’s] breath struck [Davies’] face and in such a manner that caused [Davies] to fear physical injury or assault.”

Davies was terminated from her job in April 2020 for allegedly violating a nonexistent policy regarding sending evidence of [McGuiness’s] illegal activity and retaliation to a personal email address, the lawsuit states.

The lawsuit claims that Davies’ protections under Delaware’s Whistleblowers’ Protection Act were violated after she informed McGuiness that she intended to blow the whistle in connection with McGuiness’ improper auditing policies, fragmenting contracts in derogation of public procurement law and deviating from accounting standards promulgated under state law.

Davies is seeking reinstatement to her position in the auditor’s office; payment of back wages, fringe benefits, and seniority rights; expungement of disciplinary records; and damages that include attorney fees and any relief the court deems just.

Jury selection for the state’s trial against McGuiness is scheduled Monday, June 13, in Kent County Superior Court. If the jury is seated that day, court officials say the trial could begin Tuesday, June 14.


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