Former EDA Treasurer Addresses Responses to His Initial Analysis of the ‘Financial Scandal’ Numbers

In response to my recent letter explaining some of the work of the Front Royal-Warren County EDA cleaning up the mess left by Jennifer McDonald, the former EDA executive director, I have received good questions from members of the public. All of the relevant information for answers is freely available, but the situation is more than a little complex. I’ll do my best here to summarize the financial impact of the McDonald thefts, and where we are today from my perspective. Rather than attempt to cover all the litigation, I want to focus on the money.

It has been established in court that the EDA lost approximately $21 million as a result of unlawful conduct by a group of individuals and entities working with Jennifer McDonald. Some individuals and entities admitted their culpability, while others reached financial settlements without admitting wrongdoing. Still others contested liability and were found liable by Warren County juries. Many claimed they were also duped by McDonald. McDonald herself confessed to a judgment of $9 million, which I understand cannot be discharged in bankruptcy. That amount will hang forever over McDonald’s life, until she pays back the citizens of the Town of Front Royal and Warren County.

The situation is indeed complex. How could it happen? In fairness to all who were around McDonald, at the heart of her schemes were a series of forgeries, some of which were very clever, and using the latest in online technology for the time. That’s something difficult for the best of us to keep up with.

The EDA filed lawsuits and claims against more than two dozen individuals and companies. In each case that went to trial, the EDA won, although one defendant’s debt was discharged in bankruptcy. Numerous defendants settled out of court either ending or avoiding a lawsuit. In some of those settlements the terms of the payments remain confidential. That kind of confidentiality is common in these types of financial settlements but perhaps not very satisfying to the public. In the interest of recouping as much public monies as feasible, the EDA has taken cash over the smug – but brief —  satisfaction of seeing a “scarlet letter” painted on the proverbial bad guy’s forehead in a public shaming.

To date of my leaving the EDA (April 2024) about $7.9 million in cash or property has been recovered from the EDA’s claims. Some of the recovered amount is cash, some is figured in the value of real estate returned to the County that can now be sold. Another $20 million was awarded by the court but has not yet been collected. Some of that amount is subject to appellate court review. Specifically, Truc “Curt” Tran” and IT Federal, LLC, the company he owns, are appealing the civil court judgments of more than $12 million in liability. And as a practical matter, some amounts awarded may never be collected.

In other twists and turns, amounts owed to the County by the Town of Front Royal are in dispute over issues including construction of the Town’s police station and improvements to Leach Run Parkway. (Together about $875,000.)  Also, interest costs continue to accrue related to loans which were tied to the original McDonald schemes. Potential disputes with banks have not yet been resolved. But for the sake of simplicity here, I will focus only on the McDonald-related misappropriations.

The cost of all this in legal fees paid by the County? Extremely high, but we are told that they are due to the length of litigation and its complexity, which the County wanted to pursue because of the impact of the McDonald actions. In my view, these were necessary expenses. Legal costs, including the forensic accounting to figure out what had happened, were about $9 million. It’s important to note that there would be no recoveries at all – we would not even know what happened – without the excellent legal representation by the firm of Sands Anderson. Pandak & Taves has represented the EDA in daily matters. Together, they have been brilliant. As I have stated before publicly, my personal view is that the County should continue to pay for the best lawyers and pursue these cases to their end.

Sands-Anderson legal team of Cullen Seltzer and Kimberley Paulsrud outside the WC Courthouse where they have pitched a shutout on civil liability cases related to the EDA financial scandal. Royal Examiner File Photo

So, the addition of amounts stolen, and spent to find the losses, amount to about $30 million. Legal recoveries noted above are roughly $9 million. Yep, your math is right – that leaves a big hole of about $21 million blown through our public budgets. With additional recoveries after appeals the losses might be “only” $15 million.

I want to again applaud our Warren County Supervisors for moving toward tax increases. As a true Reagan Republican, I am not in favor of high taxes. But I am in favor of good government. Good government – like freedom – is not free. We cannot ignore the McDonald mess, and we cannot just sweep it under the rug. The cost to our teachers, our firefighters, our children, and our fellow citizens will be too high. Replacing much of the losses must come in the form of tax revenues.

The wheels of justice turn slowly, but exceedingly fine. At least that’s how the popular phrase goes. Here, our work may never be complete. Speculation runs rampant about other connections to the McDonald case. Rumors aside, I fear there were other related illegal acts that may never come to light.

And the lessons from all this? From my perspective, be vigilant. Be a good citizen. Pay attention to facts (alternative facts aren’t – they’re fiction). Take a little time to read and go to public meetings. Get to know your representatives at all levels of government. We can have smart economic growth in Warren County. I know some don’t want any growth – but that’s not happening. In my opinion, the only alternative to good economic development is bad development. That would mean ugly strip malls, silly proposals for deafening racetracks inside the Town, McLean slumlords running things, and maybe your grand-kids living on the dole for lack of local jobs after we are gone.

Warren County – and you – deserve a better future than that.

Jim Wolfe
Front Royal, VA

(The author served as treasurer of the EDA from April 2020 through April 2024, when he stepped down at the end of his term. Jim Wolfe is an Associate Professor of Management at George Mason University. He is a former consultant to the Prime Minister of Estonia on economic development, and previously was an aide to Republican US Senator Dan Quayle.)

Disclaimer: The opinions expressed in the letters published on this page are solely those of the respective authors and do not necessarily reflect the views or opinions of the Royal Examiner’s editorial team, its affiliates, or advertisers. The Royal Examiner does not endorse or take responsibility for the accuracy, completeness, or validity of any statements made by the authors. The Royal Examiner has not independently verified the statements and claims presented in the letters. Readers are encouraged to exercise their judgment and critical thinking skills when evaluating the content. Any reliance on the information in the letters is at the reader’s own risk.

While the Royal Examiner makes every effort to publish diverse opinions, it does not guarantee the publication of all received letters. The Royal Examiner reserves the right to edit letters for clarity, length, and adherence to editorial guidelines. Moreover, the Royal Examiner does not assume any liability for any loss or damage incurred by readers due to the content of the letters or any subsequent actions based on these opinions.

In submitting a letter to the editor, authors grant the newspaper the right to publish, edit, reproduce, or distribute the content in print, online, or any other form.

We value our readers’ engagement and encourage open and constructive discussions on various topics. However, the Royal Examiner retains the right to reject any letter that contains offensive language, personal attacks, or violations of any legal regulations. Thank you for being a part of our vibrant community of readers and contributors, and we look forward to receiving your diverse perspectives on matters of interest and importance.