BALTIMORE (WJZ) -- Gov. Larry Hogan's former chief of staff, Roy McGrath, was indicted on federal fraud and embezzlement charges Tuesday after he received a severance payment of more than $200,000 to leave his job as CEO of Maryland Environmental Service for the governor's office, and allegedly represented that Hogan had approved it.
McGrath is charged with four counts of wire fraud and two counts of embezzlement.
According to the indictment filed in the U.S. District Court, prosecutors allege McGrath falsely told the board of directors at Maryland Environmental Service that Hogan was OK with a severance payment of $233,647.23, his salary as chief executive, and falsely claimed he was taking a pay cut to work for the governor.
McGrath was set to receive roughly the same salary working in the governor's office, prosecutors said.
According to the indictment, a member of the board texted McGrath about the payment to confirm the governor had approved it. "Hi, the HR committee wants to make sure that the governor would be OK with you receiving severance equal to one year's pay," the board member texted. "They are worried about the optics and don't want to do anything to make the Governor look bad. I told them that I thought the governor was aware and was OK with it. Correct?"
McGrath responded, "It's anticipated, yes."
Additionally, McGrath allegedly had a subordinate at Maryland Environmental Service, a state-owned company providing water and wastewater management, composting, recycling and other services, pay $14,475 to cover his tuition in the Harvard Kennedy School Executive Program for classes that were scheduled to occur after he left his job. The subordinate was later reimbursed by the organization.
Prosecutors also allege McGrath submitted timesheets that said he was working when he was really on vacation.
Hogan appointed McGrath to serve as his chief of staff on May 26. Two days later, the board of directors at Maryland Environmental Service unanimously approved paying McGrath a severance of one year's salary plus an additional $5,250 to cover tuition expenses. It also allowed him to keep using his agency-issued laptop and cell phone.
In June, following the meeting, McGrath allegedly proposed the minutes from the board's meeting be changed to say that a motion was made "that the Board enter closed session to discuss the compensation of a specific employees [sic] of Maryland Environmental Service," according to the indictment.
When Hogan asked about the severance payment in August, McGrath allegedly told him it was part of Maryland Environmental Service's usual practice, according to the indictment.
On Aug. 17, McGrath resigned days after it was learned he accepted the severance package. At the time, he dismissed the stories about the payment as "simply the sad politics of personal destruction." He said he resigned because "we cannot afford unnecessary distractions" from the governor's work."
Mike Ricci, Hogan's spokesman, said in a statement Tuesday: "These charges are very serious and deeply troubling. Marylanders deserve to know that their public officials are held to the highest ethical standards."
Ricci said the governor's office assisted law enforcement agencies with their investigations.
"We commend both federal and state prosecutors for their diligence and professionalism," he said. "As this case moves to the courts, we are confident that the justice system will uphold the public trust."
In a statement, Thomas J. Sobocinski, special agent in charge of the FBI's Baltimore field office, said McGrath's alleged actions were self-serving and ultimately self-sabotaging."
State Prosecutor Charlton Howard III said his office filed a criminal information against McGrath that also alleges he illegally recorded private conversations with state officials. In Maryland, it's illegal for someone to record a private conversation without first getting permission from everyone who's part of that conversation.
"Our office will seek to hold accountable any public official who abuses the privileges of their office for corrupt reasons or illicit personal gain," Howard said. "The Office of the State Prosecutor will continue to work collaboratively with our partners to ensure the public's interests are protected."
If convicted on 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 for each of two counts of embezzlement, Howard's office said.
He faces five-year sentences on theft charges and for each violation of the Maryland Wiretap Statute in the state case, Howard's office said.
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