Egger wonders why those questions would kill a promised $40-million investment
By Roger Bianchini
(Norma Jean Shaw contributed to this story)
“Sticks and stones may break my bones, but words will never hurt me.”
While that is a familiar childhood refrain illustrating a traditional folk wisdom, it may not apply to a promised $40-million investment on a 30-acre “gift” promised to bring as many as 600 jobs to the former Avtex Superfund site – THAT was a warning conveyed by Bret Hrbek at Monday night’s (Nov. 28) Front Royal Town Council meeting.
“It has come to my attention, as well as several members of Council’s attention over the past week, it seems that ITFederal, specifically the owner, Mr. Curt Tran, has become highly offended by the hostility that he feels is directed toward him, and the accusations that have been made in his direction, to the point where, Ms. McDonald (EDA Executive Director) if she wasn’t dealing with an emergency right now, would be here telling us this; and the fact she has been scrambling all week trying to appease him and keep him within the Town, if not at least the County. And they’re ready to pull up roots and walk away.”
Hrbek cited no names in issuing his warning. However, it was just over a month ago (Oct. 24) that Councilwoman Bébhinn Egger began seeking assurances that ITFederal was in a position to achieve the promised $40-million economic investment at the former federal environmental disaster site. That first private commercial investment at the 147-acre Royal Phoenix Business Park portion of the 467-acre former Avtex Superfund site has been projected to create 400 to 600 jobs.
“I’m not sure if I should be complimented or offended that Mr. Hrbek is suggesting that I could bring down a $40-million company singlehandedly,” Egger replied to Hrbek’s warning that questioning the business dynamics of ITFederal and its CEO could be the reason an ITFederal-led Avtex redevelopment project is aborted.
“I agree with both Mr. Hrbek and Mr. Connolly,” Egger continued, “I AM anxious to see this project come to fruition. I AM anxious to see 600 new jobs come to Front Royal.”
However, she added that she perceived her job to include conveying legitimate concerns brought to her by constituents – “things in black and white that don’t appear to add up.”
While she didn’t specify in her reply, concerns she has raised about ITFederal over the past month include:
- CEO Tran’s peripheral land purchases in the area;
- Non-IT-related side business projects for that land described on websites;
- Tran’s involvement in a federal program that grants educational visas to family members of foreign nationals in exchange for financial investments in U.S.-based business;
- still unanswered questions about the contract base that would support the announced $40-million ITFederal investment in the Royal Phoenix Business Park (writer’s note: the one ITFederal website Tran’s primary liaison in this community, EDA Director McDonald, has agreed IS the company’s, states ITFederal LLC was created in 2016; has one employee; and estimates an annual revenue of $33,499. An online search found no contract history for ITFederal LLC or ITFederal Inc. However, it turned up a contract history for one of Tran’s oldest businesses, VDN Systems. That contract history on the “InsideGov” website dates back to the year 2000. It shows 3 years of DoD (Department of Defense) contracts just over $1.1-million between 2000 and 2002. However, after what appears to be a negative-$933,000 balance in 2003, <insidegov> indicates VDN never had another DoD contract; and over the past 11 years averaged about $38,000 in annual income and just $9,100 annually since 2011. The site indicates six contracts with the Executive Office of the President between 2006 and 2011, the last for $50,000 in 2011). The last listed contract for VDN Systems is $5,000 under the heading “Other” in 2014.)
“I don’t think it is insulting or out of line for an elected official to ask questions or get answers,” Egger replied to the suggestion that her inquiries could be seen as an excuse to bail out on a $40-million, 500-job promise to this community. “I think it’s important for all of us to keep in mind that we shouldn’t get anxious about getting an awesome deal or being nationally known for our great (Superfund site) comeback or any of that. We need to proceed cautiously and keep Front Royal in mind first.”
Egger concluded by reasserting her enthusiasm for the promise of ITFederal – “I want there to be an awesome IT firm out there.” However, she added a note of caution – “Again, people have brought questions to me they are concerned about. And I think we do deserve an answer … and IF the Congressman’s answer is, ‘Oh, I was at the groundbreaking,’ I think the people of Front Royal deserve a little bit more than that.”
Political dynamics (local)
Hrbek wondered if history wasn’t repeating itself in the way of lost economic development opportunity for the Town. He recited a series of business opportunities the Town has let slip away over the past decade. He attributed the loss of three major businesses, at least two of which (SolAVerde and KRATOS) were primarily the result of Council infighting, obstructionism and even unfounded accusations of criminal behavior; and one (Energy Answers) he attributed to “jealousy and infighting between the Town and County.”
Of the one-dollar giveaway of 30 acres valued at $2,010,000 to ITFederal, Hrbek noted that were the company not to live up to its contractual promises, the land must either be purchased at full value or reverts back to the EDA.
Hrbek also worried at the potential loss of $150,000 in government grant money for the West Main Street Extension, were the ITFederal project to fall thru.
Political dynamics (State & Federal)
Hrbek then addressed the base query of ITFederal’s economic ability to achieve what has been promised at the Avtex site. Egger has suggested Council seek an official assurance about the company’s economic viability from Congressman Bob Goodlatte. EDA Director McDonald has credited Goodlatte with bringing ITFederal here as “an economic development opportunity.” Hrbek said that Goodlatte’s staff had relayed the Congressman’s statement that his “stamp of approval was my coming to the groundbreaking.” That groundbreaking occurred on October 26, 2015, and ceremonially shoveled the only dirt thus far moved at the site.
Hrbek referenced what he termed “a bidding war” between Goodlatte (R-6th) and Democratic Governor Terry McAuliffe’s offices for credit for bringing ITFederal to Front Royal and the Avtex site. He suggested the alleged competition for credit in bringing economic redeveloping to the Avtex site, led both politicians to adequately vet the company.
Hrbek then pointed a partisan finger at governmental bureaucracies from DEQ to VDOT, for delaying, perhaps even intentionally sabotaging the start of the ITFederal project. – “I wouldn’t put it past the Department of Environmental Quality under this (McAuliffe’s) administration to have delayed it on purpose because of being upset that even though the governor offered them more money, the congressman got the credit (for bringing ITFederal to the former Superfund site).”
Later asked about the “bidding war” Hrbek replied, “I shouldn’t have used the term ‘bidding war’ – That wasn’t a very accurate description,” elaborating, “There were money/benefits that Goodlatte secured. McAuliffe offered more and IT Federal turned down McAuliffe due to loyalty to Goodlatte.”
Baby, please don’t go …
Hrbek wrapped up by addressing Tran directly, stating it “is not the Town’s desire to see you leave” and asserting that the Town has done all it could to facilitate his business interests developing at the Avtex site. He then suggested Council approve a Resolution of Support of Tran and ITFederal to further express its collective desire he not “pull up roots and walk away.”
John Connolly then endorsed Hrbek’s remarks, further vilified big government and “unelected bureaucrats in a position to delay things.” Connolly said that the lone player involved, other than Council itself; that had not played a part in delaying the project 15 months was the company itself.
Following Egger’s reply to Hrbek and Connolly’s remarks, Jacob Meza, Gene Tewalt and Mayor-Elect Hollis Tharpe added their support of ITFederal and Hrbek’s initial concerns that the Town not be perceived as a barrier to the company and its CEO coming here.
Tharpe noted any qualms Tran might have about Town support should have been eased by its initial bridge loan of October 2015 – “I think if you loan somebody $10-million that speaks for itself,” Tharpe said. He also observed that ITFederal’s January 2016 payback of that loan should “speak for itself.” (writer’s note: When the First Bank & Trust $10-million construction loan went through in January 2016, only after a bank-requested Resolution of Support of the ITFederal project was unanimously approved by Council on November 23, 2015, the Town loan, ostensibly given so ITFederal could begin construction-related work in the fall of 2015, was paid back.)
Mayor Tim Darr agreed with everybody that encouraged ITFederal to stick to its announced plan to come here and accomplish what has been described by the EDA – a $40-million investment resulting in as many as 600 jobs. However, the Mayor issued a note of caution in criticism of any elected official doing what they perceive as due diligence based either on their own research or the input of citizens.
Council’s job description
“I also want to make sure that everybody understands that as an elected official and a Council member, that it is the Council member’s position that if they feel that something isn’t right or the citizens think isn’t right, that they do have that right to speak up. That doesn’t mean it reflects Council’s [position],” Darr pointed out of individual versus majority opinions.
The Mayor added that he respected any Council member who raised legitimate issues, but said he did not share the particular concerns Egger had raised regarding ITFederal.
“I do think she has that right as a Council member, and the people of this Town elected her to do that and it’s her job to do that,” the mayor said, concluding the conversation.
EDA Board Chairman Jeff Browne reacts to July civil litigation results ordering total of over $13.35 million paid to the County Economic Development Authority
As noted in our lead story on the “Warren Economic Development Authority” (EDA) versus Truc “Curt” Tran and his ITFederal LLC company civil liability case result (See: Jury awards WC EDA $11.9 million-plus in civil compensatory claims against ITFederal and Truc ‘Curt’ Tran), involved players on the plaintiff’s side deferred to current EDA Board Chairman Jeff Browne for a reaction, not only to the Tran/ITFederal result, but a month in which four civil liability cases went the EDA’s way. After a day of reflection on this month’s civil liability trials, much of which he watched in the courtroom, often with other EDA board members, this is what Browne told Royal Examiner:
“As part of the Jennifer McDonald lawsuits, the EDA successfully sued six defendants this month in four civil jury trials and was awarded about $13 million in compensatory damages, $400,000 in punitive damages, and $75,000 in damages for statutory conspiracy. There will be additional civil trials in March 2023.
“The EDA’s main responsibility in these lawsuits is to recover assets that rightfully belong to the EDA and ultimately to the residents of Warren County. It’s a work in progress, but I’m pleased with the outcomes. Every defendant was found liable on multiple charges. Every defendant has to pay. A jury found that the EDA Board of Directors with oversight responsibility of Jennifer McDonald wasn’t negligent in retaining her as it took immediate steps after finding solid evidence of her misbehavior.
“But that isn’t the whole story. Members of the EDA Board were present on every day of every trial. We were impressed with the juries and Judge Albertson. Jury members listened attentively, took notes, and showed in their verdicts that they had a command of the facts in each case. Judge Albertson was fair to both sides of each case and did a good job of managing each trial. Prior members of the EDA Board, prior staff EDA members, a former county administrator, and former members of the Warren County Board of Supervisors all stepped up to testify and do their civic duty. We can be proud that our judicial system still works.
“The criminal process moves forward in other venues. In the meantime, some measure of justice is present in the jury verdicts in Warren County this month. For that, we are grateful.”
Coupled with the out-of-court “no-fault” settlement agreement with McDonald for an estimated $9 million in real estate assets, the courts have now ordered the return of $22 million to $23 million in assets to the EDA. At various points in the investigation into alleged embezzlement and misdirection of EDA assets between 2014 and 2018, the total involved amount has been cited from $21 million to $26 million. There have been significant legal fees involved, perhaps $6 million or more. But in the wake of this month’s results, it appears the EDA’s contracted civil counsel from the Sands Anderson law firm of Richmond are earning that money.
Asked for a reaction to the verdict, Tran and his attorney Gregory Melus declined comment. As noted in the above linked story on the verdict, Melus notified the court of his intention to file a motion to overturn the verdict as not supported by the evidence presented at trial, as have the other three involved civil case defense attorneys.
Jury awards WC EDA $11.9 million-plus in civil compensatory claims against ITFederal and Truc ‘Curt’ Tran
After five hours of deliberation beginning shortly after 9 a.m., at 3:30 p.m. Thursday afternoon, July 28, a Warren County Circuit Court civil case jury awarded the “Warren Economic Development Authority” (aka EDA, WC EDA, FR-WC EDA) a total of $11,919,313.38, plus some interest payments from defendants Truc “Curt” Tran and his ITFederal LLC company. The finding of liability against the defendants related to exchanges of money for Tran and ITFederals’ plan to develop a 30-acre parcel at the 148-acre Royal Phoenix Business Park portion of the former Avtex Superfund site in Front Royal. That seven-person civil case jury also dismissed all counterclaims by co-defendants Tran and ITFederal related to breach of contract and surrounding claims against the EDA.
However, the jury did not find the defendants liable on claims of Conspiracy and Fraud that could have led to significant punitive damages up to $350,000, or as high as triple the compensatory claim of $11.9 million if found guilty of statutory conspiracy indicating malice against the plaintiff. Tran was found liable on claims of Conversion, Unjust Enrichment, and Ultra Vires, the latter actions outside the authority of involved officials. ITFederal was found liable on claims Conversion, Unjust Enrichment, Ultra Vires, and Breach of Contract.
The breakdown of liability of the defendants was $1,499,986 against Tran, plus 3-1/4 years of interest on that amount accumulated since the March 2019 filing of the EDA civil actions against defendants alleged to have worked with former EDA Executive Director Jennifer McDonald between 2014 and 2018 to defraud the EDA out of an estimated $21-million. The $11.9-million claim of compensatory damages against Tran and ITFederal was the largest single portion of the EDA civil liability actions for recovery of lost assets. With approval of a bankruptcy court judge, McDonald settled EDA claims against her in an out-of-court “no-fault” settlement for what was cited as $9 million in real estate assets.
From testimony over four days of trial in the Tran/ITFederal liability case that $1.499-million finding against Tran related to EDA payments made to Tran under the pretense it was front money that would be reimbursed to the EDA by a $1.5 million Virginia Economic Development Partnership (VEDP) grant that was never acquired, or even applied for.
The finding of liability for $10,419,327.38 against ITFederal revolved around the $8,419,327.38 balance of a $10-million loan/promissory note the EDA gave the company to begin development of the ITFederal parcel behind the EDA offices in the old Avtex Administration building off Kendrick Lane. As noted in previous stories (see LINKS at end of story) on testimony and evidence presented during the trial, ITFederal was presented to the EDA Board of Directors in 2015-16 by then Sixth District Congressman Robert Goodlatte as not really needing the loan. Past EDA board members Greg Drescher and Ron Llewellyn testified that Goodlatte suggested the loan as a public relations move to illustrate Virginia’s positive work with the private sector to redevelop a former federal Superfund “brownfield” site.
Consequently, despite the written-in 30-year payback loan term, EDA officials believed it was actually being done as a short-term public relations effort, and would be paid back in a matter of months when what they believed was an existing $140-million ITFederal contract with the Nuclear Regulatory Commission (NRC) kicked in. A McDonald representation to her board that Tran would become an “anonymous donor” of $8-million to a proposed Criminal Justice Academy project then being worked on by the EDA, was seen as the start of that early repayment, the former EDA board members testified.
It appears this civil case jury, as three before it this month, have rejected a defense theory of the case asserting that the defendants were unwitting victims of McDonald’s alleged lies concerning the movement of EDA assets, just as the EDA was victimized. Plaintiff attorneys from the Sands Anderson law firm of Richmond, Va., countered those arguments by asking the jury to “follow the money” to see who benefited from the misinformation they allege McDonald was giving the EDA board, as well as EDA auditors.
During the previous morning session on Wednesday, the two sides presented their final witnesses: for the defense Mark Viola, proprietor of Viola Engineering, who did geo-technical work for Tran on the ITFederal site regarding construction delays related to underground discoveries of old utility piping and substances; and in plaintiff rebuttal to some of the previous day’s defense assertions, former County and EDA attorney Dan Whitten.
Late Wednesday, the court heard motions from both sides to strike the opposition claims against their clients. After listening to extensive arguments from both sides, Judge Albertson denied all motions to strike claims by either side, preferring as he has reviewing similar motions in earlier EDA civil liability cases this month, to allow the jury to make the decision on the substance of each sides’ claims against the other. After adjourning to dinner of pizza ordered to the courthouse for them around 7 p.m., the jury returned at 7:25 p.m. to say they preferred to go home and begin deliberations Thursday morning, which Judge Albertson agreed to.
As the three previous defense attorneys have following findings in the EDA’s favor this month, Tran/ITFederal counsel Gregory Melus notified the court he would file a motion to overturn the jury verdict. Those motions appear based on a defense contention evidence produced at trial was inadequate to justify conviction. A 30/30/10 day filing and response time schedule was set, though plaintiff counsel indicated if Melus needed additional time due to scheduling conflicts, that would not be a problem.
With motions to overturn on the table, counsel for both sides declined comment following Thursday’s verdict. Current EDA Board Chairman Jeff Browne, who observed much of the trial along with board members Jim Wolfe, Scott Jenkins, and Greg Harold, indicated that after speaking with counsel and some consideration he might have a response for the media shortly. See that EDA response in related story posted when available.
EDA civil liability defendant ‘Curt’ Tran on witness stand for over 4-1/2 hours as trial heads into final day
Tuesday, July 26, the third day of the “Warren Economic Development Authority” versus Truc “Curt” Tran and ITFederal LLC civil liability and counter-suit case was highlighted by the defendant’s 4-hours-and-37-minutes on the witness stand. That time started with a 2-hour-25-minute near monologue on direct examination, followed by 1-hour-58-minutes of sometimes contentious cross-examination by EDA co-counsel Lee Byrd and a fortuitously briefer 14 minutes of redirect examination by defense attorney Gregory Melus. On direct examination, Tran recounted his life story, beginning as an 11-to-12-year-old refugee to America in the wake of the Vietnam War and the fall of Saigon, leading into his work in data storage with the federal government and private sector, culminating with his efforts to develop a federally funded data center and import/export business in Front Royal and Warren County.
During that direct examination, Tran managed to recount a series of circumstances involving not only former EDA Executive Director Jennifer McDonald and a lack of supervisory EDA Board of Directors oversight of McDonald, but also shifting federal program guidelines, former President Barack Obama, and failed 2016 presidential candidate Hillary Clinton among reasons his projects here failed. The latter two involved a failure of the federal government during Obama’s presidential tenure to sign into law the Trans-Pacific Partnership (TPP), an international trade agreement that might have helped facilitate the import-export business Tran had hoped to create with his ITFederal company involving the cattle farm production of beef on acreage purchased off Happy Creek Road.
During a sometimes explosive cross-examination, Tran conditionally insinuated that several previous witnesses may have perjured themselves during testimony regarding circumstances of his agreements on the ITFederal project. Those witnesses in the defendant’s crosshairs of scrutiny included former EDA and County Attorney Dan Whitten, former EDA board member Ron Llewellyn, and Virginia Economic Development Partnership (VEDP) official Debbie Melvin.
In fact, Tran appeared to flirt with accusing former U.S. 6th District of Virginia Congressman Robert Goodlatte of, if not perjury, since he was not called as a witness for either side, but potential past lying were testimony from other witnesses, including Whitten, Llewellyn, and Greg Drescher, to be proven true regarding Goodlatte’s lobbying for Tran/ITFederal to receive the $10-million EDA loan for the Avtex site ITFederal project on a short-term basis as a positive public relations initiative for Virginia.
“I never say short-term, I didn’t say that – did he say that?” Tran wondered of multiple witnesses saying Goodlatte presented the $10-million dollar loan for the ITFederal project as a public relations effort to attract more business interest in Virginia rather than a loan Tran and his company actually needed to achieve their planned Avtex site federal data center development. With one defense witness remaining to be called Wednesday, one might wish Goodlatte was that witness to address that question, though he has not appeared on a prospective witness list.
Prior to sending the jury home at 7:02 p.m. Tuesday, Judge Bruce D. Albertson told that jury he anticipated deliberations to be handed over to them no later than early-to-mid-afternoon on Wednesday. Those deliberations involve an EDA base compensatory damage claim of over $ 11 million against Tran/ITFederal, as well as potential punitive damages up to $300,000 or more were the jury to find Tran and his company guilty of statutory conspiracy to defraud the EDA out of assets obtained under alleged fraudulent circumstances. Testimony indicated the defendants’ counterclaim at a base of approximately $4 million, with more at stake punitively as well.
EDA vs. Tran/ITFederal civil liability and counterclaim trial heads into third day with defense poised to call final series of witnesses
On Monday, July 25, the plaintiff “Warren Economic Development Authority” (aka EDA, WC EDA, FR-WC EDA) completed presentation of its case for liability for both compensatory and punitive damages during the morning session of its case against Truc “Curt” Tran and his ITFederal LLC company. Plaintiff counsel from the Sands Anderson law firm of Richmond, Virginia, called one witness after opening the day’s evidence with edited video of portions of two depositions they took from Tran, the first on October 8, 2021, the second three weeks later on November 1, 2021.
Both Tran’s responses to questions by plaintiff counsel at deposition and the testimony of the fourth and final plaintiff witness, former EDA Board of Directors member, Chairman, and Warren County Public Schools Superintendent Greg Drescher were presented to further the EDA contention Tran was an active participant and co-conspirator with former EDA Executive Director Jennifer McDonald in an effort to defraud the EDA into believing he had the means for follow through on promised development of 30 acres at the 147-acre Royal Phoenix portion of the former Avtex Superfund site. Primary among that fraudulent behavior according to the EDA theory of the case was the assertion ITFederal had secured a $140-million contract with the federal Nuclear Regulatory Commission (NRC), as well as accessing a Virginia Economic Development Partnership (VEDP) grant related to job creation. Evidence indicated neither was true.
Drescher reiterated testimony from former EDA attorney Dan Whitten on the trial’s first day last Friday concerning former U.S. Virginia Sixth District Representative Robert “Bob” Goodlatte’s efforts to justify a $10-million loan to Tran and ITFederal as a positive public relations move, despite his assertion that Tran and his company didn’t really need the loan. Drescher added that due to the nature of how the loan was presented as a show of cooperation between Virginia EDA’s and the private sector, he had believed the money would be returned to the EDA in a number of months, rather than years. That belief led to acceptance of the idea brought to the EDA board by its executive director that Tran would be an “anonymous donor” in development of a police training academy to the tune of $8 million dollars that then-Sheriff Daniel McEathron was interested in developing here.
However, defense counsel Gregory Melus pointed out to Drescher on cross examination that the terms of the EDA-financed $10-million loan to Tran clearly states that the loan had a 30-year payback term written into it. During a 55-minute cross examination, Melus repeatedly pressed Drescher on the lack of oversight provided by the EDA Board of Directors that he claims made his client a victim, rather than a player in any conspiracy alleged by the EDA regarding the failed promises of development creating as many as 600 quality jobs related to a government contracted data center on the 30-acre ITFederal parcel at Avtex.
That fact, among other shortcomings he cited in direct evidence against his client, led Melus to move to strike the plaintiff’s case on the majority of claims against Tran and his company following the resting of the EDA case. However, after hearing both sides arguments in that regard, Judge Bruce D. Albertson overruled the defense motion to strike the plaintiff claims against Tran and his company. As it has in this month’s previous EDA civil liability trials, the court expressed the opinion that the plaintiff evidence presented was sufficient to let the jury decide on its weight, rather than the court midway thru the trial.
With the case thrown to it, the defense opened its witness testimony with a financial investor in ITFederal’s parent company American Commonwealth Regional Center (ACRC). Quincy Zhao testified that he invested $100,000 in ACRC due to its economic development plans related to the EB-5 Visa Program. The program, as previously noted, encourages foreign nationals investment in economic development in the U.S. in exchange for green cards for investor’s families. Zhao explained that wealthy investors from the four primary nations invested in the program, China, Vietnam, India, and Korea (he did not note a north or south), among others, often used the program to educate their children in America’s school system, particularly at the higher educational levels. Zhao noted that eventually Front Royal-Warren County were ruled ineligible to qualify for the EB-5 Visa Program, creating issues with ACRC and ITFederal being able to fund the project. The EB-5 Visa funding was believed still on the table when Goodlatte made his initial assertions to the EDA board about the viability of ITFederal to be a major job creator for this community.
Former County and EDA attorney Blair Mitchell was the defense’s second witness, first of two successive by remote hook up. Mitchell, Dan Whittens predecessor, was queried on his knowledge of difficulties in marketing redevelopment of the Avtex property as a developmentally limited, federal Superfund environmental reclamation project, compared to other EDA industrial and commercial properties. Having retired in April 2016, he was also questioned on his knowledge of McDonald’s work as EDA executive director and the EDA’s recruiting of ITFederal as the first commercial development project at the Avtex site.
In response to a question about whether McDonald or anyone with ITFederal had qualified the NRC $140-million contract as an IDIQ (Indefinite Delivery Indefinite Quantity) federal contract, Mitchell replied, “No”. As plaintiff counsel has pointed out the IDIQ contract simply qualifies a company to bid on future federal contracts, guaranteeing nothing. In Tran’s second deposition video, asked about ACRC’s actual financial benefit from the $140 million NRC IDIQ contract, Tran replied $5,000. However, defense counsel has pointed to notations of “IDIQ” in some documents related to the ITFederal proposal to the EDA on Avtex Lot 6.
The defense’s second remote hook-up witness was James I. Marasco. After reviewing records of the EDA between 2014-17/18, from his home base in Rochester, New York, Marasco supported the defense contention that during that time period the EDA had very poor financial oversight and safeguards in place to prevent the type of financial misdeeds McDonald has been accused of. Marasco’s particular field of expertise is forensic auditing, he noted during direct examination.
Before dismissing the jury shortly after 5 p.m., Judge Albertson told them to expect to be in court later on Tuesday, to 6 p.m. or longer, despite the fact the case is still proceeding ahead of schedule. Due to a trip out of state for a real estate closing, final plaintiff witness and former EDA board member Ron Llewellyn is likely to open testimony at the trial on Tuesday prior to the defense calling its last series of witnesses, including defendant Truc “Curt” Tran. Defense counsel Melus has pointed out to the jury his client is not running away from questions about his role in the aborted ITFederal project at Avtex, as McDonald did in invoking her 5th Amendment right not to respond to questions at risk of self-incrimination during earlier testimony as a plaintiff witness.
First day of $11-million EDA vs. ‘Curt’ Tran civil liability trial concludes
Following opening arguments and the start of the plaintiff’s case, including presentation of its paper trail of nearly 50 Exhibits, we counted 48, it contends will illustrate Truc “Curt” Tran was not an unwitting but active accomplice of former “Warren Economic Development Authority” Executive Director Jennifer McDonald in acquiring a total of $11,913,308 in EDA loans and payments under false pretenses, a Warren County Circuit Court civil case jury was released for the weekend at 4:23 p.m. Friday afternoon, July 22. Attorneys, the media, and a few observers followed the jury out of the courtroom and courthouse two minutes later.
The evidentiary portion of the plaintiff’s case, which included its first three witnesses, hit a snag when lead EDA attorney Cullen Seltzer announced the plaintiff’s next evidence, a video of portions of a deposition interview of defendant “Curt” Tran. Defense counsel Gregory Melus objected to the introduction of that evidence. After the jury was sent out of the courtroom, Melus told the court he had not had time to review the video, having only seen a transcript of those sections of the deposition of Tran by plaintiff counsel. He also objected to the video being introduced, as opposed to the text of the deposition which the plaintiff had originally sent him.
After hearing from both sides, Judge Bruce D. Albertson overruled the defense objection to introduction of the video, but offered to recess the trial to Monday to allow Tran’s attorney to review the estimated hour-long video. Subsequent discussion with counsel indicated the plaintiff may complete presentation of its case Monday. Asked by the court if he was able to open his case at some point Monday, could he complete it by Wednesday, Melus replied in the affirmative. With that positive time-frame looming, if possibly with some longer days to achieve it early in the week, Judge Albertson allowed the perhaps unexpectedly early adjournment on the trials opening day. With the jury dismissed with instructions to avoid discussion, media or social media accounts of the case, and no further matters for consideration by the attorneys, court was recessed at 4:25 p.m. until 9 a.m. Monday.
Prior to that adjournment, in addition to introduction of its paper trail, EDA attorneys called three witnesses. They were in order of appearance, former Warren County and EDA attorney Dan Whitten, Virginia Economic Development Partnership (VEDP) Assistant Director of Accounts Solutions Debbie Melvin, and Jennifer McDonald. Whitten was on the stand for over three hours, 1-hour-38-minutes on direct, and 1-hour-43-minutes on cross examination as counsel for both sides attempted to paint their contrasting evidentiary “roadmaps” of the case.
And as in the three earlier EDA civil liability trials this month, those contrasting “roadmaps”, or theories of the case, revolve around whether defendants were, pick one:
1 – Like the EDA itself, lied to and taken in by McDonald misrepresentations, and victimized themselves due to the EDA’s inability to provide adequate oversight of the alleged criminal actions of its executive director, or:
2 – Were willing participants in individual portions of the series of schemes McDonald is alleged to have hatched between 2014 and 2018 to defraud the EDA out of as much as $21 million dollars in assets to her own, and the benefit of others willing to provide needed “outside” the EDA co-conspirators.
The base compensatory claim of $11.9-plus million against Tran and his ITFederal LLC company is the largest in the EDA’s series of civil liability cases; and Tran has also filed a counterclaim for damages from a lack of EDA oversight of their former executive director. That former director McDonald made an out-of-court “no-fault” settlement for about $9 million in largely real estate assets in the EDA civil claim case against her in the wake of her bankruptcy filing. The only other million-dollar-plus jury award came last week when Donald Poe and his Earthright Energy Solar (ERE) were found liable for a base compensatory claim of $945,000, coupled with combined punitive damages against the two defendants totaling about another $300,000. All attorneys in the earlier civil trial cases have indicated they will file motions to overturn the verdicts based on a contention of inefficient evidence to convict.
Testimony by former EDA and County counsel Dan Whitten in the plaintiff’s case Friday noted former U.S. Sixth District of Virginia Congressman Robert Goodlatte’s championing of Tran and ITFederal as an economic development opportunity here at the former Avtex Superfund environmental remediation site. Whitten testified that both McDonald and Goodlatte presented Tran as a successful Northern Virginia businessman, with a $140-million federal government contract with the Nuclear Regulatory Commission as the basis for his planned Data Center development based out of a 28,000 square foot building on a 30-acre parcel at the Avtex/Royal Phoenix Business Park. However, it turned out that federal contract was an “IDIQ” (Indefinite Demand Indefinite Quantity) that essentially puts one in a position to bid on coming government contracts, rather than any guarantee of a contract.
The Goodlatte-championed ITFederal project also suffered financially when it didn’t qualify as an EB-5 Visa project. Whitten noted the EB-5 program was utilized nationally to encourage foreign investment in the millions in local economic development projects in the U.S. in return for “green cards” and family access to U.S. citizenship. Not testified to was the fact that the program has a rather notorious reputation for not usually realizing exactly what was promised in the way of financial support at the outset.
Whitten testified that Goodlatte had suggested the $10-million loan to ITFederal and Tran to illustrate to the media and public a working cooperative relationship between a local municipal EDA and the private sector. Whitten said that Goodlatte even said that Tran didn’t really “need” the loan, but that it would be a good public relations effort. Whitten testified that the EDA had anticipated that the loan would be short-term as more of a public relations effort, than an actual business loan. That helped explain the EDA board’s acceptance of McDonald’s representation that Tran was going to be an “anonymous investor” to the tune of $8 million in a planned Criminal Justice Academy project.
Responding to a question, Whitten also said Tran had never come to an EDA Board of Directors meeting during the ITFederal recruitment, proposal, loan acquisition, and planning process. In fact, he said he, as EDA counsel, had never previously met Tran.
McDonald was on the stand a rather brief time compared to her previous EDA case appearances, three minutes for direct, and two minutes for cross examination. Asked about her interactions with Tran, and a false claim of VEDP grants for the ITFederal project at Avtex by EDA counsel, McDonald invoked her 5th Amendment right not respond at risk of self-incrimination a total of eight times. She added two 5th Amendment replies to cross examination questions, before defense attorney Melus cut his questioning off.
Plaintiff second witness Debbie Melvin testified that after one meeting with Tran in 2016, the Virginia Economic Development Partnership never received follow-up information sought from Tran about his company to verify its eligibility for a Virginia Jobs Investment Program grant, and that VEDP never authorized any grant funding for the ITFederal Avtex project or any Tran project in Warren County. Earlier Whitten testified that the EDA didn’t find out that paperwork indicating that grant was achieved had been forged, apparently by McDonald, until the EDA financial scandal investigation was underway in 2018-19.
EDA counsel accuses Tran/ITFederal defense of withholding requested documents – But motion for immediate production of missing material denied
A motions hearing in the civil liability case of the “Warren Economic Development Authority” versus Truc “Curt” Tran and his ITFederal company began Monday afternoon, July 18, with plaintiff accusations of a willful withholding of defense evidence regarding ITFederal bank records. EDA attorney Karrisa Kaseorg told Judge Bruce D. Albertson that an ongoing effort to acquire missing records indicated by exhibit numbers of materials provided by the defense peaked over the last month to two months.
Consequently, she asked that defense counsel Gregory Melus provide what the plaintiff believes are those withheld materials “by midnight tonight”. Melus told the court that he personally had responded to all inquiries he directly had seen. However, he noted five to six attorneys and paralegals working on the case, adding that having been, like the court, “ambushed” by the short-term request for the allegedly withheld material, he did not know if the by-the-end-of-the-day plaintiff request could be met.
Judge Albertson worried that with jury selection slated for Thursday, and opening arguments and evidence anticipated to start Friday, that the plaintiff request would require a continuation of the start of the trial.
“We’re not asking for a continuance,” Kaseorg replied, “we want to see the documents.” Plaintiff counsel said they had no indication from the defense that the requested documents were subject to withholding as “privileged” information.
“Mr. Tran and the defense have known this was big problem for over a month … and we have been looking for a good faith settlement,” Kaseorg told the court observing she did not put the problem entirely on Melus’s shoulders. “I agree with Mr. Melus – we are looking down the barrel of 19,000 documents,” she said noting that if it was going to be such a problem the defense team could have communicated that on June 1 when the recent round of plaintiff requests began.
After hearing both sides’ explanation of the pre-trial predicament over about 35 minutes, Judge Albertson read some material while considering a decision. Citing the lateness of the plaintiff motion related to the scheduled start of the trial, he denied the motion for an immediate production of the missing material, with the plaintiff’s exception to the ruling noted. Asked if he also was denying the related motion to “compel” production of certain evidence, the judge responded, “Yes, it’s too close to trial … This should have been done earlier.”
Judge Albertson then denied a defense motion asking that material related to “other business enterprises” of Mr. Tran be withheld as not relevant to his EDA dealings. As previously reported by Royal Examiner, during a July 8 motions hearing on this case Judge Albertson noted he had previously expressed some “skepticism” about the defense objection to EDA evidence about Tran and his company’s use of portions of the $12 million it received in two loans related to proposed development here, primarily at the Avtex/Royal Phoenix Business Park site in Front Royal, for other business ventures in Alexandria or elsewhere. The EDA’s compensatory claim is for approximately $9 million, as Tran has kept current on his $40,000-plus a month loan payments over several years.
The EDA contends Tran acquired the EDA loans fraudulently and conspired with then-EDA Executive Director Jennifer McDonald in doing so. Disputed evidence cited also related to EDA involvement in development of a Criminal Justice Academy and Tran’s Front Royal Farms plan, neither of which came to fruition along with the failed Avtex site business proposal.
Also as previously reported, Tran’s counterclaim appears to revolve around the contention he was taken advantage of by McDonald, and that the EDA Board of Directors at the time should have identified the alleged financial improprieties McDonald is now accused of by the EDA prior to Tran’s involvement. Pointing to a primary disputed aspect of the EDA-Tran/ITFed counterclaims of liability, Judge Albertson observed, “If he’s part of a conspiracy with McDonald, he’s not a victim of the negligent contention.”
And following what is slated to be a two-day trial in the EDA versus William Lambert civil liability case, and one day of jury selection for the EDA vs. Tran and any further motions, we will see the two sides begin their presentations on their respective “roadmaps” of what transpired between McDonald, Tran, ITFederal, and the EDA in the single largest compensatory damages civil case related to the FR-WC EDA financial scandal.