Board of Supervisors reacts to EDA allegations

Today, March 27, 2019, the Warren County Board of Supervisors posted this on the County’s website:

County Board Chairman Dan Murray: “On behalf of the Board of Supervisors and County staff, I wanted to express our thoughts on the allegations that have been made public regarding the operations of the Front Royal-Warren County Economic Development Authority and its former Executive Director…”

First let me say that we are all shocked at the breadth of the allegations. Every year the EDA has a professional audit performed by a CPA to provide a level of comfort to the EDA Board of Directors, the Board of Supervisors, the Town Council, and the citizens of Warren County that the financial operations of the Authority are handled appropriately. We have relied on those audits to ensure that the EDA was, in fact, using taxpayer dollars for the purposes intended.

The EDA, through its Board and staff, provides a vital mission to our community by working to expand investment and creating jobs. Since the mid-1990s, the EDA has worked to create over 2,500 jobs and $500 million in investments in the Route 340/522 corridor. This activity allowed Front Royal-Warren County to recover from the loss of its largest taxpayer and employer, Avtex, which was shuttered in 1989. This effort took the hard work of many individuals and the financial support of the community.

We know over the past few years that citizens have raised issues to the Board of Supervisors and staff. Please know that while citizens may not have seen any visible or public response to those concerns, the issues were certainly noted and looked into. When additional information was brought forward, including the concerns raised by the Town relative to the debt service payments, this ultimately led to the Board’s encouragement and financial support for the County Attorney’s hiring of a forensic auditor to perform a thorough and complete review of the EDA finances for the past 13 years.

At the time, the Board of Supervisors was not sure if the issues were simply accounting errors or something far more concerning. The audit left open the potential to continue to dive deeper if and when any such issues were identified, and as we now know, the issues do indeed run much deeper and appear to show a long period of misuse of funds that hurt the reputation of the EDA, the Town of Front Royal, and Warren County. As problems were identified by the forensic auditors, the County also assisted the EDA Board of Directors by retaining the law firm of Sands Anderson to help identify legal issues and pursue appropriate methods for the recovery of identified funds.

We know that expending funds to hire these two firms has drawn the ire of citizens; however, the Board of Supervisors found it necessary to bring in outside help to ensure that any and every issue has been identified and investigated thoroughly. The expenditure of these funds has caused great anxiety for the Board, but it was necessary to perform a thorough analysis and identify appropriate actions to ensure that we begin restoring the public’s trust.

The Board of Supervisors has faith that the current EDA Board of Directors, the forensic auditor, and Sands Anderson (legal counsel) will get to the bottom of these issues, make sure that all of those responsible are held accountable, and make every effort to recover the money that has been embezzled. The issues appear to be systemic in the manner in which the EDA has operated. The reality is that the scope of the EDA’s operations have changed considerably in the past two decades, however, the processes and procedures for financial management did not. This ultimately led to the ability for the misuse of funds to occur. The Board is committed to working with the consultants and the EDA Board to put safeguards and policies in place to ensure that something like this will never have a chance to occur again in the future in our community.

Restoration of the public’s trust and confidence is as important to the Board of Supervisors as recovering the public funds that have been taken from our community and holding those responsible accountable for their actions. To that end, at its regular meeting on March 22, 2019, the EDA Board of Directors adopted a resolution to request the County to serve as the fiscal agent for the EDA; this will require that all financial transactions be handled by the County and its Treasurer and will provide additional layers of oversight and protection. This is just the first step in a long recovery process.

The EDA Board, like many others, were apparently misled by the former Executive Director. They did ask questions and were given plausible explanations at the time, but unfortunately, they were unaware of the extent and magnitude of the scheme.

Due to the ongoing nature of the continuing investigation, the Board will have no further comment on the matter until it is concluded.

Commonwealth’s Attorney Madden requests Special Grand Jury