Maryland Gov. Larry Hogan’s former chief of staff, Roy C. McGrath, was indicted in federal court Tuesday, charged with defrauding a quasi-governmental agency he previously led.
Correction: A previous version of this article misstated Roy C. McGrath’s age. He is 52, not 57. The article also misstated the history and status of the Maryland Environmental Service. It was not created as an independent agency but now is. The article has been corrected.
McGrath, 52, of Naples, Fla., became the subject of a joint investigation last year by state and federal law enforcement probing the payout and the other expenses. He also faces state charges.
Attorney Bruce Marcus, who represents McGrath, said his client became aware of the federal charges on Tuesday morning. He said he had not seen the state charges that have been filed but denies any criminal misconduct.
“Mr. McGrath vigorously and categorically denies the allegations” in the federal indictment, he said in a statement. “He looks forward to clearing his good name and reputation at a trial on the merits.”
Acting U.S. attorney for the District of Maryland Jonathan F. Lenzner, Maryland State Prosecutor Charlton T. Howard III and Special Agent in Charge Thomas J. Sobocinski of the FBI’s Baltimore Field Office announced the indictment Tuesday.
The federal and state charges allege that from March 2019 through December 2020, McGrath personally enriched himself by “using his positions of trust” as the executive director of MES and the chief of staff for Hogan to cause MES to make the large payout and pay other expenses.
According to the indictment, MES funds were allegedly used to make a personal pledge on McGrath’s behalf to the Academy Art Museum, where McGrath was a member of the board of directors; to pay the one year’s severance payment to McGrath of $233,647.23; and to cover a $14,475 tuition bill for a Harvard Kennedy School program he took after leaving MES.
Prosecutors also allege that McGrath falsified time sheets, recording that he was at work while he was on two separate vacations to Europe and Florida in 2019.
“Roy McGrath misappropriated public money for his own benefit,” Sobocinski said in a statement. “ . . . McGrath’s alleged actions were self-serving and ultimately self-sabotaging.”
The state charges involve illegally recording state officials without their knowledge, a violation of the state’s wiretap statute. The state alleges that McGrath secretly recorded a call in March 2020 with Hogan, the secretary of the Department of Health and the then-chief of staff. The call was one of several in which McGrath recorded the governor, according to the charges.
During a special legislative hearing last year to inquire about the severance payment, several board members of MES told the panel that McGrath assured them that Hogan was aware of the payment. Hogan has denied knowledge of the severance package and is not accused of any wrongdoing.
Michael Ricci, a spokesman for Hogan, said the governor’s office has been working with law enforcement on the cases for the past year.
“These charges are very serious and deeply troubling,” he said in a statement. “Marylanders deserve to know that their public officials are held to the highest ethical standards. . . . As this case moves to the courts, we are confident that the justice system will uphold the public trust.”
The federal indictment alleges that McGrath falsely told a member of the MES board that he was taking a pay cut to join the Hogan administration and lied when he said the governor was aware of the severance payment.
In an email to The Washingon Post last year, McGrath said he did not seek the payout.
“It was offered to me, and I accepted,” he said.
The indictment alleges that McGrath attempted to delete any mention of the amount of his severance payment from MES’s public minutes.
McGrath resigned from MES on May 31, 2020, and assumed his position on Hogan’s executive team the next day. He quit as chief of staff in early August of the same year after the public revelation of the severance payout.
The Maryland Environmental Service, whose revenue comes overwhelmingly from state and local tax dollars, was approved in 1970 by Gov. Marvin Mandel. One of the nation’s first state-operated organizations to handle waste disposal problems, it was placed under the umbrella of the state Department of Natural Resources but now operates separately.
Senate President Bill Ferguson (D-Baltimore City) said the indictments “sadly confirmed what the legislature learned during the last year through oversight hearings.”
During the hearings, lawmakers were provided text messages between McGrath and Hogan.
In one message, McGrath alluded to conversations he says he had with Hogan about the severance and pleads with the governor to intervene on his behalf.
“Can you please say something about us discussing severance? That it was ok for me to handle with MES,” McGrath texted the governor the morning after the committee’s first hearing.
“Only what we agreed. Without your support, it looks like I mislead MES,” the text continues. “I did not. I’ve been one of your loyalist supporters from the beginning. Never asked for anything, but need your help now, please.”
The governor did not reply.
Hogan’s chief counsel, Michael Pedone, released the messages to the legislative committee. In transmitting the texts to the lawmakers, Pedone wrote: “Obviously, the Governor’s merely having received these messages does not, in any way, constitute his acceptance of their content.”
This year the General Assembly passed legislation to reform MES and to impose strict compensation protocols. Ferguson said he is hopeful that judicial and legislative process will cause a similar situation to “never happen again in Maryland.”
McGrath, if convicted, could face maximum sentences of 20 years in prison for each of four counts of wire fraud and 10 years for each of two counts of embezzling funds from an organization receiving more than $10,000 in federal benefits. If convicted of the state charges, he could face up to five years in prison for felony theft, felony theft scheme, misappropriation, and for each violation of state wiretap law.
Read more:
