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Former Hogan chief of staff indicted on federal fraud charges

Roy C. McGrath, former chief of staff to Gov. Larry Hogan and executive director of the Maryland Environmental Service, has been indicted on federal fraud charges. (The Daily Record/File Photo)

Roy C. McGrath, an ex-chief chief of staff to Gov. Larry Hogan, was indicted Tuesday on charges of fraudulently obtaining more than $275,000 from the Maryland Environmental Service, where he had served as executive director.

The federal indictment accompanied related state charges in which McGrath is accused of misconduct by a public official, misappropriation and violating the Maryland Wiretap Statute by recording private conversations with state officials without their consent.

McGrath “vigorously and categorically denies” any criminal conduct, his defense attorneys, Bruce L. Marcus and Sydney M. Patterson, stated via email with regard to the federal and state charges. “He looks forward to clearing his good name and reputation at a trial on the merits.”

Marcus and Patterson are with MarcusBonsib LLC in Greenbelt.

According to the indictment, McGrath fraudulently secured a $233,647.23 severance payment from MES by falsely telling the board that Hogan had approved the payment. McGrath had also filed false attendance reports with MES during times when he was actually on vacation, according to the indictment, which covers alleged activities between March 2019 and December 2020.

Click this image to read the indictment.

Other fraudulent acts alleged in the indictment include causing MES to pay a museum money that McGrath had pledged to donate and to pay $14,475 in tuition benefits for McGrath to attend a Harvard Kennedy School Executive Education program after he had left MES.

When Hogan asked about the severance, McGrath said it was part of MES’ usual practice. McGrath also tried to delete his request for the severance from the public minutes of the MES board’s meeting, according to the indictment.

“According to this indictment, Roy McGrath misappropriated public money for his own benefit. From personal travel to even obtaining a certificate from one of the most prestigious universities in the nation, McGrath’s alleged actions were self-serving and ultimately self-sabotaging,” Thomas J. Sobocinski, special agent in charge of the FBI Baltimore field office, said in a statement announcing the indictment. “The FBI and our law enforcement partners are committed to rooting out public corruption and holding officials like him accountable.”

In less than three months, McGrath became the center of a political storm and a series of legislative hearings involving a severance package equal to a full year’s salary and his spending while at the helm of the environmental service. He resigned on August 17, 2020.

Sen. Clarence Lam, D-Howard and Baltimore counties and Senate co-chair of the joint panel that held hearings on McGrath and his involvement at the environmental service, said Tuesday that the charges vindicate the legislature’s review.

“After hearing what our investigation had uncovered none of this surprises me anymore. I think we recognize that Mr. McGrath ran pretty fast and loose with the rules,” said Lam. “So the fact that he was billing for time he wasn’t actually at work doesn’t seem surprising to me. He was billing taxpayers for a lot of questionable expenses. There were very little checks and balances to make sure this type of misspending wasn’t going on.”

Michael Ricci, a Hogan spokesman, called the charges “very serious and deeply troubling.”

McGrath led the quasi-public agency from December 2016 until May 31, 2020, when he resigned to become Hogan’s chief of staff. McGrath took over as Hogan’s top adviser the next day, earning a salary of more than $233,000. McGrath resigned on Aug. 17 after his severance package from MES became public.

At the time of his resignation from MES, McGrath issued a statement describing the legislative review as a political witch hunt and characterizing it as “simply the sad politics of personal destruction.”

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

If convicted, McGrath faces a maximum sentence of 20 years in federal prison on each of four counts of wire fraud and 10 years for each of two counts of embezzling funds from the MES, which receives more than $10,000 in federal benefits, according to the Maryland U.S. Attorney’s Office, which is bringing the federal charges.

“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 U.S. Attorney Jonathan F. Lenzner said in the statement. “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.”

If convicted in the state case, McGrath faces a maximum sentence of five years in prison for each of his nine alleged violations of the Maryland Wiretap Statute, including four alleged calls with Hogan, according to the office of Maryland State Prosecutor Charlton T. Howard III.

McGrath, 52 and living in Naples, Florida, also faces up to five years in prison for each of the four counts of theft or misappropriation. These charges involve his alleged receipt of tuition when no longer an MES employee and his allegedly bogus attendance reports in which he clocked in 73 hours on the job when he was actually on vacation, a period of time prosecutors have valued at $8,200, Howard’s office stated.

For the 14 counts of misconduct in office, McGrath faces a maximum penalty of any sentence that is not cruel or unusual, Howard’s office added.

Howard lodged the state charges in a criminal information filed in Anne Arundel County Circuit Court and signed by Deputy State Prosecutor Sarah R. David.

Howard said in a statement Tuesday that “our office will seek to hold accountable any public official who abuses the privileges of their office or corrupt reasons or illicit personal gain.”

No dates have yet been set for McGrath’s initial appearances in U.S. District Court in Baltimore and Anne Arundel County Circuit Court in Annapolis.

Lam said he and other lawmakers would like to hear what was said in the phones calls between McGrath, Hogan and other top state officials.

“I would like to know what is on the recordings so that we can make sure we have a complete and accurate picture of what transpired between the governor and Mr. McGrath,” said Lam.

Testimony at legislative hearings and public records revealed that McGrath began to engage in telling both his former agency and the governor differing stories about the severance package.

Federal court records allege that at the same time McGrath was assuring members of the board at MES that Hogan had approved the severance package, the incoming chief of staff was telling the governor and his staff that the board offered the payment on its own.

After McGrath’s resignation and lawmakers’ outrage over his severance package, Hogan issued an executive order creating a panel to look at quasi-independent agencies. The legislature passed its own reforms, altering the makeup of the board of directors, requiring the panel to enact additional policies and limiting the circumstances under which a severance package may be offered.

“There may still need to be more cleanup that needs to be done by the administration to ensure that the environment that was created that allowed this to happen doesn’t happen going forward,” said Lam, adding that lawmakers may also weigh in on additional reforms after the final disposition of the charges against McGrath.