On Monday evening the Front Royal Town Council gathered for the first time without Mayor Hollis Tharpe present in the wake of his self-imposed administrative leave pending resolution of a misdemeanor solicitation of sexual contact charge. See Related Story:
Vice-Mayor William Sealock did an admirable job in keeping a multi-faceted work session with a variety of crucial topics to be discussed moving toward council consensuses on courses of action.
Among those topics crucial to the Town’s economic, utility and infrastructure future were:
1 – a controversial Crooked Run West request for the extension of Town central water-sewer service to an altered North Corridor mixed residential-commercial development planned outside the town limits; a 5-1 consensus, Meza dissenting, against extension of Town water-sewer service to the planned Crooked Run West project, particularly considering the developer wants in-town service rates for as many as 1,025 residential units and the Town is committed to providing water-sewer service to over one thousand planned homes inside the town limits. While acknowledging that the county board of supervisors has yet to weigh in, it was noted that the county planning commission has just recommended denial of the necessary rezoning to facilitate the Crooked Run West project which would require alterations to both county and town comprehensive plans.
2 – funding variables that could see the Town lose as much as $800,000 in VDOT grant ($650,000) and ITFederal-committed money ($150,000) to Phase One of the West Main Street Extended project (OUCH!); with dramatic reductions – one 10,000 square-foot building to be marketed as rental space resulting in perhaps as few as 10 jobs – from what was announced by then Sixth-District U.S. Congressman Robert Goodlatte in 2015 as Truc “Curt” Tran and ITFederal’s $40-million investment creating 600 or more, high-paying tech jobs by which a VDOT Economic Development Access Grant of $650,000 was qualified for; and Tran’s decision not to relocate ITFederal to the town site perhaps negating his $150,000 commitment to the project, the Town’s anticipated costs of about $300,000 for Phase One of the western connector road could climb to the full price of over a million dollars;
3 – continued discussion of how long a bond issue, 20 or 30 years, and consequent annual debt service – estimated at $691,548 at 20 years and $563,822 for 30 years – to take on to pay off construction of the new Front Royal Police Department headquarters now planned for occupancy by May; while a consensus favored the shorter 20-year bond term that would save significant money in the long term, the immediate reality of almost $130,000 of additional annual debt service to achieve those savings was decisive in achieving a staff and council consensus for the 30-year bond issue;
4 – final details and conditions of the Special Use Permit for United Parcel Service’s expanded overflow parking lot at its town distribution center; the UPS overflow parking lot permit will be forwarded for approval with the nine conditions recommended by the planning commission, including limits on the hours when the lot can be used for truck loading and unloading and parking of the larger trucks in proximity to nearby residences among other restrictions the applicant agreed to;
5 – Councilman Jacob Meza’s suggestion the Town hire outside legal counsel to represent it regarding council’s FOIA request for EDA forensic audit materials and any consequent litigation that might become necessary; by a 5-1 consensus, Meza again the odd man out, the Town will not take on the additional expense of outside counsel regarding the EDA audit FOIA and the Town’s financial position regarding the EDA, including the finance director’s discovery of nearly a decade of debt service overpayments of more than $291,000 to the EDA. Asked if he needed legal assistance at this point in the process, Town Attorney Doug Napier replied, “No.”
6 – and direction for administrative staff on how hard a line to draw against Comcast’s plan to close its Front Royal Customer Service Center on North Royal Avenue on June 1st while seeking a new franchise agreement for cable service and utility pole use in town. The existing agreement expired on May 13, 2018. Council concurred with Town Manager Joe Waltz that a hard line should be taken to prevent Comcast from closing what was described as a heavily-used customer service center. Waltz told council Comcast officials said the town closing is part of a business model change in which five or six such local customer service centers are planned for closing.
Meza again bucked the consensus, saying, “I don’t want to lose Comcast – they’re restructuring; it’s a change in their business model.” While Waltz agreed with the business model observation, he again pointed to the heavy local use of the center, noting many town citizens use cash to pay bills that way. The town manager said a new RFP could be issued to put the cable franchise up to bid; but suggested that Comcast might have “too much inventory here” to just pack up and leave.
While Waltz said Comcast has taken the stance that the closing is non-negotiable, he believes maintaining the Front Royal service center should be a key point in the franchise agreement negotiation.“Tell them to take their lines and cable and move on,” Councilman Tewalt suggested if the non-negotiable stance was maintained.
Stay tuned to your favorite local cable access station for further updates; – and watch the Royal Examiner videos for each topic discussion from the April 15 town council work session.
Town Planning Commission Meeting May 15, 2019: Dog kennel, daycare & new subdivision
At the May 15th Town of Front Royal Planning Commission meeting, one public hearing on a special use permit, submitted by Fianna Litvok, for a dog training facility, with a kennel, at 650 W. 11th Street, Ste A in Front Royal. The Commission also reviewed a preliminary plan application, submitted by Ramsey, Inc. for a 33 lot subdivision within the R-1 district.
The proposed dog training facility/dog kennel would be called Tip Top K9. It would offer obedience training for dogs. The applicant Fianna Litvok states that most training would be done off-site at the pet owner’s house or other location. However, there would be “doggie bootcamps” on-site. Commercial kennels are described as secondary and relate only to the “doggie bootcamps”, where pet owners would leave their dogs at the facility for 2-4 weeks. Litvok says initially hopes to be able to have 1-4 dogs housed at the site, but with a potential for up to 10 dogs. Click here to download complete application and photos.
Chris Ramsey of Ramsey, Inc submitted a preliminary plan for a 33 lot subdivision at the end of Ewall Street and and the end of Happy Ridge Drive to be called Happy Creek Knolls.
The daycare application was extended to the next Planning Commission meeting in June.
Jeremy Camp, Town Planning and Zoning Director gave his report to the Commission.
The Royal Examiner‘s camera was there:
Town of Front Royal Receives Certificate of Achievement for Excellence in Financial Reporting
The Certificate of Achievement for Excellence in Financial Reporting has been awarded to the Town of Front Royal by the Government Finance Officers Association of the United States and Canada (GFOA) for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2018. The Certificate of Achievement is the highest form of recognition in the area of governmental accounting and financial reporting, and its attainment represents a significant accomplishment by a government and its management. The Town has received this award consecutively for 32 years.
An award of Financial Reporting Achievement has been awarded to the designated by the Town of Front Royal as primarily responsible for preparing the award-winning CAFR.
The CAFR has been judged by an impartial panel to meet the high standards of the program, which includes demonstrating a constructive “spirit of full disclosure” to clearly communicate its financial story and motivate potential users and user groups to read the CAFR.
Tran defense motions echo earlier filings, cite vague summary of allegations
On May 2, the attorney for ITFederal and its CEO Truc “Curt” Tran followed attorneys for the other seven defendants in the EDA civil suit of March 26 in filing defense motions attacking the style and substance of the case against their clients.
In the demurrer seeking dismissal of five of the six counts (1-4 and 6) in the EDA Civil Complaint it is asserted that the filing by attorney Cullen Seltzer of the Richmond law firm of Sand-Anderson lacks the legally-required specificity and factual basis to support its oft-stated conclusion that the defendants have acted to improperly divert EDA assets based “on information and belief”.
“And many of the Plaintiff’s allegations being made solely ‘on information and belief’ is fatal under the heightened pleading requirement for fraud,” Tran/ITFederal attorney Brandon H. Elledge writes citing case history, adding of such wording, “and thus to avoid dismissal, a fraud plaintiff must supplement such allegations with ‘a statement of facts on which the belief is founded’ and also ‘must delineate at least the nature and scope of plaintiff’s efforts to obtain, before filing the complaint, the information needed to plead with particularity’.”
As to the sixth count omitted from the Tran/ITFederal request for dismissal, Count 5 – “Breach of Fiduciary Duty of Loyalty” – the demurrer notes that it “does not purport to state a claim against Mr. Tran and ITFederal” but rather asserts actual claims “only against Defendant McDonald” – which does appear to be the case as it would impact all defendants other than McDonald. See Related Story:
“As an employee of the Warren EDA, Defendant McDonald owed the Warren EDA a fiduciary loyalty,” Count 5 begins in recounting the obligations of McDonald’s role as the executive director of the EDA.
And it is in the absence of the detail of the preceding 160 paragraphs leading to the $17.6 million-plus civil suit’s call for compensation in six counts against all nine defendants upon which defense attorneys have focused their arguments for dismissal.
The six counts seeking a judgment of “not less than $17,640,446.16” against “the Defendants jointly and severally” are: 1/ Fraud and Fraud in the Inducement; 2/ Conversion; 3/ Conspiracy; 4/ Unjust Enrichment; 5/ Breach of Fiduciary Duty of Loyalty; and 6/ Ultra Vires (improper) Transactions and Agreements.
And other than that one mention of the minimum of $17.6-million-and-change of allegedly misdirected or embezzled EDA assets there is no other reference to specific amounts of money tied to any defendant in the plaintiff presentation of the resultant civil “Counts” against those defendants. In fact, only “Defendant McDonald” and “Defendant Earthright Energy LLC” are cited in the six counts – McDonald in the aforementioned Count 5 “Breach of Fiduciary Loyalty” that does appear focused on her alone; and Earthright Energy LLC in Count 6 “Ultra Vires Transactions and Agreements” related to work arrangements or contracts engaged in with Earthright Energy through McDonald without approval of the EDA Board of Directors “in the manner required by law.”
However as alluded to above and noted in previous stories on the EDA complaint and defense motions against it, there is detail concerning specific amounts of money involved in specific transactions involving specific defendants throughout the first 160 paragraphs of the complaint. Those 160 graphs appear to present the basis of fact and finance leading to the final 39 paragraphs stating of the more generalized summary of offenses described in Counts 1 through 6 of the EDA civil suit. See Related Story:
However for Tran/ITFederal attorney Elledge that detail too, is lacking.
“While the Complaint is long on allegations as to McDonald’s misconduct, it offers very little as to Defendants … Tran … and ITFederal except for conclusory recitations or vague statements made only ‘on information and belief’,” Elledge asserts, adding, “Mr. Tran and ITFederal expressly deny the meritless claims asserted against them and any alleged wrongdoing in this matter.”
Of the summary nature of the stating of the Counts against the defendants, the Tran/ITFederal defense memorandum of support of the demurrer for dismissal states, “… the group pleading method employed by the Warren EDA in its Complaint is improper and fails to fairly inform Mr. Tran and ITFederal of the nature of the claims levied against them …”
However, is that true of the first 160 paragraphs of the 199-graph complaint – well 209-graphs if you include the 10 paragraph “Prayer for Relief” seeking return of EDA assets, attorneys fees and “punitive damages (of at least one million dollars) jointly and severally against the Defendants”?
The complaint devotes many paragraphs to the securing of a $10-million bank loan for Tran/ITFederal through the EDA, citing the involvement of McDonald and then-U.S. Congressman Robert Goodlatte, R-6th, along with Tran. It is noted that loan was made at Goodlatte’s request despite repeated assertions by “Tran and Defendant McDonald …that Tran did not need the financial support of the Town and Warren EDA”.
However that “unnecessary” $10 million dollars of financial support was acquired, along with the gift of a 30-acre parcel at the Royal Phoenix site publicly valued by the EDA at $2 million for a one dollar price. Conditions were attached to that gift, including completion of the project by an eventually extended completion date of mid-2020; and a reduction of the scope of the project from an approximate 40,000 s.f. in a three-building complex alleged by Goodlatte to produce over 600 high-paying tech jobs through ITFederal to the community, to a 10,000 square-foot building producing at least 10 jobs of indeterminate wage.
And while the complaint notes that far less than $10 million appears to have been spent to date on the ITFederal Project here, the Tran/ITFederal motion for dismissal asserts Tran did nothing wrong and has worked within the parameters of his agreement with the EDA, both on the loan and a Memorandum of Understanding (MOU) regarding nearly $1.5 million in what is described as “Subsequent Payments to ITFederal” alleged to have been unauthorized by the EDA.
Regarding the Count of “Conversion” of EDA assets to Tran’s personal benefit, Elledge writes on behalf of his clients, “The only Warren EDA funds allegedly retained by ITFederal are a $10 million loan pursuant to a promissory note and a deed of trust and some $1.5 million pursuant to a Memorandum of Understanding. Thus, ITFederal received those funds in accordance with such agreements. Plaintiff does not – and cannot – allege a breach of such agreements, and it, therefore, alleges no right to immediate possession of the funds. Rather, it lawfully controls them subject to the terms of the loan documents and the MOU …
“The only payments due to Plaintiff is the repayment terms of the promissory note, and it has not – and cannot – allege that ITFederal has breached or defaulted on any of its contractual obligations,” the Tran/ITFederal filing in support of its motion for dismissal states.
But at issue for the EDA as plaintiff is an alleged fraud perpetrated by Tran in conjunction with McDonald in her role as EDA executive director and possibly others, to acquire the loan, gift of property and “Subsequent Payments to ITFederal”. That fraud is alleged to involve a $140 million in purported ITFederal government contract the plaintiff found no evidence exists – though Elledge asserts it does – as well as websites said to create a false impression of financial viability of Tran companies the plaintiff asserts there is no discovered substantive support of, and false representations of Tran’s personal worth and intentions of investment in this community.
“Plaintiff does not allege any cohesive fraudulent scheme here, but rather a series of independent transactions connected only by the involvement of Defendant McDonald … In the portions of the Complaint referencing Mr. Tran and ITFederal, Plaintiff obscures who actually made what representations at issue by repeating the phrase ‘Tran and Defendant McDonald represented, through McDonald (emphasis in context) … Such vague construction fails to establish Mr. Tran’s connection to the alleged misrepresentations by omitting how Mr. Tran managed to represent anything ‘through McDonald’,” the Tran/ITF filing states, adding, “By lumping Mr. Tran together with Defendant McDonald and referencing ‘multiple occasions,’ Plaintiff unsuccessfully tries to create an impression of wrongdoing without articulating who made what statement to whom on which occasion.”
From a different angle, Tran/ITFederal attorney Elledge echoes Jennifer McDonald attorney Lee Berlik’s argument that his client is being villainized for the alleged actions of other defendants and/or bad decisions by past EDA boards.
“Plaintiff suggests every statement by every counterparty it now regrets crediting was a false statement by Ms. McDonald … instead of a false statement to Ms. McDonald (emphasis in context),” Berlik wrote in his April 16 filing on his client’s behalf, adding, “The Warren EDA is looking for someone to blame for every decision it now regrets since new leadership has taken over – and Ms. McDonald is it.”
From Tran’s legal perspective he has simply taken advantage of a series of sweetheart deals offered by the EDA Board of Directors at the urging of friends in high places, including Congressman Goodlatte and the EDA’s then executive director.
What could possibly be wrong with that?
At issue in the wake of the filing of the series of defense demurrers for dismissal of the cases against their clients is will that question in regard to all defendants ever be argued in front of a jury in a Warren County or any other courtroom?
Budget funding, UPS lot permitting, tax deadline and street closure concerns
The Front Royal Town Council meeting of Monday, May 13, saw:
- first-reading approval of appropriations to support its $47,538,060 Fiscal Year 2019/2020 budget;
- approval of UPS’s request for a special use permit to expand its commercial parking area at its 470 South Commerce shipping facility contingent upon nine conditions recommended by the planning commission to protect the habitability of a nearby residential neighborhood;
- extension of the deadline for payment of Town real estate and personal property taxes from June 5 to June 21 this year;
- and the reading of several proclamations into the record.
See these actions and Downtown Bakery proprietor Keith Menefee’s “Public Comments concern about the event-long extent of East Main Street’s road closure during the Family Fun Day event of the previous Saturday on the Royal Examiner video:
Council addresses legal options in replacing Mayor Tharpe
After a closed session at the end of Monday’s meeting, Vice-Mayor Bill Sealock explained that council will meet its legal obligation to appoint a new mayor within 45 days of the resignation of Hollis Tharpe on May 2. The announcement of the intended appointment will be made by May 28, Sealock indicated.
The vice mayor, who has been serving as acting mayor since Tharpe’s resignation following a solicitation of prostitution indictment, indicated he does not want the appointment – “I don’t want to lose my vote,” he said of the mayor’s role of only breaking council vote ties.
Council could appoint one of its own or any town citizen legally qualified to serve as mayor to fill the position.
Council has authorized Town Attorney Doug Napier to petition the court not to have to call a required special election to fill the mayor’s term out before the county’s upcoming municipal elections this November. State code allows such requests to be made when the next municipal election is less than a year away.
See Vice Mayor Sealock address council’s plan moving forward in this Royal Examiner video:
Town Council to consider how to fill the seat of former Mayor Hollis Tharpe
The Front Royal Town Council at it’s May 13th meeting has scheduled a Closed Meeting for filling the seat of former Mayor Hollis Tharpe.
There appears to be three scenarios:
a) the possible appointment of a specific public appointee of Town Council, namely, a citizen of Front Royal or a sitting Town Council Member, to fill the seat vacated by the resignation of former Mayor Hollis L. Tharpe, pursuant to Section 2.2 3711. A. 1. of the Code of Virginia;
b) the possible appointment of a specific public appointee of Town Council, namely, a citizen of Front Royal, to fill a seat vacated by the possible appointment of a Town Council Member, should a sitting Member of Town Council be appointed to fill the seat of Interim Mayor, due to the resignation of former Mayor Hollis L. Tharpe, pursuant to Section 2.2 3711. A. 1. of the Code of Virginia; and,
c) for the purpose of consultation with legal counsel employed or retained by a public body regarding specific legal matters requiring the provision of legal advice by such counsel, specifically, the law regarding filling vacancies on positions of the governing body of the Town, pursuant to Section 2.2-3711. A. 8. of the Code of Virginia.
After the closed meeting, hopefully the Council will have a decision on how this seat will be filled.
See related story: