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County Okays another $250,000 for EDA legal costs – faces more criticism

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County/EDA Attorney Dan Whitten, left, and County Administrator Doug Stanley absorb some public critique of a perceived lack of municipal oversight of how the EDA was using county taxpayer money. Royal Examiner Photos/Roger Bianchini

If the agenda was light – several agency reports, a Consent Agenda and Closed Session – not so with some of the public and board comments at the Tuesday morning, August 6 Warren County Board of Supervisors meeting. County supervisors and staff continued to take heat from two of their primary public critics over the perceived lack of oversight many feel was a primary contributing factor to the Economic Development Authority financial scandal.

And speaking of that scandal, the one action taken after Tuesday’s closed session was raising the payment cap for the Sands Anderson law firm handling the EDA civil litigation seeking recovery of approximately $20 million in allegedly misdirected assets, from $500,000 to $750,000. Coupled with the $600,000 the County authorized and covered payment of to the Cherry Bekaert public accounting firm that investigated signs of fraud in EDA operations and finances, the County will have spent $1.35 million on identifying and trying to rectify the EDA financial situation.

With these numbers continuing to accumulate it may be little surprise that some of the most vocal critics of the County’s perceived role in allowing the EDA financial scandal to develop for years under its operational funding nose and primary municipal oversight role, continue to appear to reiterate their harsh assessment of county officials.

For some it appears Board Chairman Dan Murray’s now familiar pre-meeting call for personal prayer for community healing in the wake of EDA revelations and accusations will only be accomplished with a purge of county staff and elected officials.

James Harper has been his Rockland neighbor Doug Stanley’s harshest critic.

Two of the most familiar county government critics, Paul Gabbert and James Harper, continued to single out County Administrator Doug Stanley for criticism. Gabbert asked the board not to renew or make changes to Stanley’s contract, but let the board in place after the November election make those choices. Murray and Linda Glavis have both announced their retirement and the third supervisor up for election this year, Shenandoah District’s Tom Sayre is facing opposition from Walter Mabe, who has aligned himself with the county government reform movement.

During the second public comment portion of the meeting Harper spoke against the Crooked Run 2 residential development project “that Mr. Stanley seems to be pushing”. He suggested the County allow planned development “off of Happy Creek Road” close to a number of public schools to proceed before rezoning commercial land in the county to facilitate residential development.

His reference appeared to be to the Front Royal Limited Partnership (FRLP) approximately 750 acres, 602 of which was moved into the town limits by a “friendly annexation” around 2014 and earmarked for residential development of approximately a thousand units. That development, first discussed as early as 2004, has been stalled within the Town permitting and proffer process since the 2014 annexation agreement.

Some are asking why not develop residential in town on FRLP property where it has been planned since the Town-County ‘friendly annexation’ of 2014. No answers have come from the Town side as of yet.

Harper’s suggestion to the County might be more pertinent to the Town side of the Crooked Run 2 equation. For most believe regardless of County rezoning, without the Town central water utility extended beyond the town limits that has been requested, the Crooked Run 2 residential development project would be dead in the water.

And many former and some longer-tenured current town officials believe the Town continues to lose millions of dollars per year in commercial tax revenue as a result of its last agreement to extend its central water utility onto county land without annexation. But as previously observed, that is another story dating to another century; not to mention another vote for another municipal body coming up in the not-too-distant future of this century.

Harper then pointed a request Shenandoah District Supervisor Tom Sayre’s way. He asked Sayre to drop his $25,000 civil defamation lawsuit against former EDA Executive Director Jennifer McDonald because he theorized she might be using “county money, in other words citizen money for her legal team,” adding, “If you win (the lawsuit) it might be county money that you win – stop being a bully and save taxpayer money,” Harper urged the supervisor.

However criticism of board members wasn’t limited to public comment at both the beginning and end of Tuesday’s meeting. Earlier Supervisor Sayre queried County Attorney Dan Whitten on details of County and EDA insurance policies through fellow Supervisor Tony Carter. Sayre complained that he had never “officially been told” of Carter’s involvement in EDA insurance coverage.

“We went into closed session and we were discussing about the policies regarding the actual employees of the EDA; and then I found out that the same board member has those insurance policies – is that accurate?” Sayre asked Whitten.

James Harper urged Tom Sayre to drop his $25,000 civil defamation suit against Jennifer McDonald. Sayre may be wondering if Harper will also urge McDonald to drop her $600,000 civil defamation suit against him.

The insurance policies Sayre referenced include coverage of some County and EDA properties and employee criminal liability insurance for the EDA through the Stoneburner-Carter Insurance Company.

Whitten explained that Stoneburner-Carter acted as insurance broker on some the referenced insurance contracts. Whitten cited EDA properties insured through Stoneburner-Carter as including the Kendrick Lane EDA Office complex, the Stokes Mart property, Afton Inn and the Baugh Drive building. He noted that while EDA’s do not have to follow procurement policies that as of July 1 the EDA adopted the County’s procurement policies setting certain bid guidelines according to total value of policies and requiring board approval over $10,000 value.

Whitten also explained that despite the fact that Happy Creek Supervisor Tony Carter’s name is attached to the company, he is not an owner. Carter later explained to the media that his mother is the owner of the company in wake of the 2006 death of Oliver Stoneburner. At this point in time he remains an employee, if a potential heir to company ownership. Some of the County policies and the EDA office complex policy actually pre-dated his election to the county board, Carter told media after the meeting.

If some caught it from public comment, Tony Carter pictured at work session after meeting, heard it thrown his way from the home team as Sayre questioned his insurance business dealings with the County and EDA.

He also said that he disclosed his company employment and recused himself from any votes involving the hiring of Stoneburner-Carter for coverage of County-owned properties, including county-owned fire stations; but had not in the EDA insurance packages.

Of that latter decision Carter noted, as Whitten did earlier, that while as a county board member he saw potential conflict of interest without disclosure, but with no direct affiliation to the EDA he felt a similar disclosure unnecessary.

Noting the board of supervisors’ authority to appoint EDA board members, Sayre wondered if the separation was as defined as Whitten and Carter concluded.

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Crooked Run West, Tap Fee discussion – few substantive answers

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A Monday, October 21 Front Royal Town Council Work Session was bracketed by a presentation by Crooked Run West principal Tom Mercuro on his argument as to why the Town should agree to extend its central water-sewer utility to his again revamped Crooked Run West primarily residential development, and a revisiting of Interim Mayor Matt Tederick’s’ initiative to slash some Town water-sewer connection Tap Fees.

It was a good bracketing as the two issues are intertwined as to the future of residential development in the county on both sides of the town limits.

However whether anything was cleared up by the two discussions remains to be seen. Mercuro traversed a dizzying power point presentation referencing the need to have his residential development in place to generate the revenue he needs to build a bridge to that development.

“Housing is the income we’re looking for,” Mercuro told council, shortly shifting to the question, “Where’s that money coming from – I don’t know, that’s why I’m here today.”

Mercuro also presented charts indicating his now 600 apartment, 150 assisted living units residential development would not threaten to max out the Town’s available or near future water supply.

Crooked Run West principal Tom Mercuro pleads his case to the interim mayor and council. Photo and video by Mark Williams, Royal Examiner.

However Mercuro’s water usage chart presentation was halted by Councilwoman Letasha Thompson’s observation by remote phone hook up that his gallons per day (GPD) usage information was incorrect. Mercuro’s claim of 100 to 125 GPD usage per residential unit was incorrect, Thompson pointed out, referencing online federal government data bases indicating that GPD usage was estimated at around 100 GPD per person, with 2.7 persons per unit the average estimate on residential housing occupancy.

A quick online check at press row indicated Thompson was correct, essentially tripling Mercuro’s water usage estimate.

As the presentation and discussion of it reached a conclusion, Interim Mayor Tederick polled council on moving a vote on the Crooked Run West request to an upcoming meeting agenda.

“I’m not ready to vote on this,” Councilman, former Mayor and former Town Public Works Director Gene Tewalt told his colleagues.

“I agree,” Thompson said via phone hook up.

“What are the missing pieces?” Councilman Jacob Meza wondered at exactly would require additional time and review.

After noting recent changes to the Crooked Run West plan that he felt required more time to analyze, Tewalt added that a delay might perhaps also be warranted because the request would require a radical change to the Town’s water policy as it applies to extension beyond the town limits.

What water policy?

What change? – Seemed to be the collective council majority reaction to that news.

Even Tederick who has been in the midst of the Town-County Route 522/340 North Corridor Agreement discussion since the mid-1990’s seemed surprised.

“Why haven’t I heard this before?” Tederick asked staff.

You have – “Councilman Tewalt has raised the issue a number of times,” soon-to-be-departed Town Manager Joe Waltz informed the mayor and Tewalt’s colleagues.

From the start Tewalt’s issue has been that the existing Memorandum of Understanding (MOU) between the Town and County regarding continued County requests for Town central water-sewer utilities outside Town without annexation have been only considered for primarily industrial or commercial development seen as an economic benefit to the entire community.

With the County’s anti-annexation 1998-99 North Corridor Agreement being in place for 20 years, some may have forgotten that annexation prior to the extension of central municipal utilities beyond its boundaries is the normal municipal procedure.

“We don’t provide water for residential development. We are jumping the gun too fast – I don’t understand why,” an exasperated Tewalt reiterated to his colleagues.

“So you want to change the water policy first?” Meza asked, leaving the implications of such a change on the Town and County’s relative economic and developmental futures swinging in the wind.

Interim Mayor, soon-to-be Interim Town Manager Tederick took Meza’s side, noting that discussion of the Crooked Run West residential plan had been going on for months – “We’re jerking business people around,” Tederick offered of his perspective.

Tederick has couched both the Crooked Run West residential water-sewer request and his Town water-sewer Tap Fee reduction initiative as pro-growth moves, reversing a perceived past anti-growth Council and staff stance.

What has been absent from the discussion is where residential growth is supposed to occur according to established planning and state guidelines. That was a major topic in 2014 when the County agreed to a friendly annexation of 604 acres of Front Royal Limited Partnership (FRLP) land off Happy Creek Road into the Town limits. That development of as many as 800 or so units now on the Town’s east side, as well as another hundred or more units on another 150-acre FRLP parcel in that area appears to have floundered due to the precise, past anti-growth agenda Tederick has referenced.

And that floundering has come despite the fact FRLP’s location fits perfectly into planning guidelines on Urban Development Areas (UDA’s) in the vicinity of existing residential development and utility lines to serve that development within town and city boundaries, as opposed to more remote farm and Agricultural land.

Tederick and staff have recently met with FRLP representatives about what might be done to jump start FRLP residential development. However nowhere in the Crooked Run West power point on water usage or subsequent council discussion was the impact on Town water capacities from the potential of water use from a thousand or more in-town FRLP residential units broached.

Nor has there been much reference to a major change in the Town’s water policy to accommodate the Crooked Run West residential usage request setting a precedent that any similar future request must legally be accommodated?

See the Crooked Run presentation, discussion and related Tap Fee discussion in this exclusive Royal Examiner video:

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EDA in Focus

I’ll see your $12 million dollars, and raise you another $1.5 million

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Truc ‘Curt’ Tran during Dec. 20, 2018 visit to the ITFederal construction site. At the time he expressed distress at the potential departure of Jennifer McDonald under increased scrutiny by her board and auditors. Royal Examiner File Photos/Roger Bianchini

On October 9, attorneys for ITFederal and its principal Truc “Curt” Tran filed a $13.5 million countersuit in response to the Front Royal-Warren County Economic Development Authority’s $21.3 million dollar civil litigation in which Tran and his company are named as two defendants liable for the return of over half of the EDA assets being sought for recovery.

Tran claims “substantial damages and reputational harm” to him and his company “from wrongful and deceitful acts that the Warren EDA – through its former Executive Director, Jennifer McDonald – committed against them”.

Tran also seeks a declaratory judgment that the $10 million dollar bank loan he and ITFederal received through the EDA “is a validly authorized transaction by the EDA” and “is not in default”. Tran notes in his countersuit that he is current on his monthly loan payments of $42,160 on a 30-year payback term beginning in January 2016.

Tran’s civil litigation counter attack on the EDA came five days after the EDA filed an amended complaint, adding detail of alleged fraudulent representations made by and/or on behalf of Tran/ITFederal in enabling his acquisition of the single largest amount of EDA assets being sought for recovery in its embezzlement and financial fraud scandal.

Those assets include the balance of the $10 million bank loan achieved by the EDA on Tran’s behalf in early 2016 and related vendor (minimum of $392,249) and direct payments (minimum of $1.43 million) to the company adding at least another $1.82 million dollars to the ITFederal portion of the EDA lawsuit.

So in claiming he was the one defrauded by the EDA and its former executive director, Tran has upped the EDA ante of about $12 million dollars filed against him by $1.5 million dollars – talk about high stakes gambling.

In January 2018 Jennifer McDonald attempted to explain her use of large amounts of cash in real estate transactions as a consequence of a three-year lucky streak at the Hollywood Casino slot machines in Charles Town. State Police have since said McDonald lost $750,000 gambling, including what she won. Some have asserted her losses may have been even greater based on playing with and without more easily traceable ‘tickets’.

The amended EDA complaint cites Tran as in default on the $10 million dollar EDA/First Bank & Trust loan despite past admitted renegotiations on its terms.

“To date, ITFederal has not satisfied the Construction Targets for either the $2 Million Deed of Trust or the $10 Million ITFederal Borrower Note,” the Amended EDA complaint states, citing the absence of an occupancy permit at this point.

“On information and belief, little to no proceeds of the ITFederal loan have been applied to the ITFederal Project. On information and belief, Defendant Tran has converted a substantial portion of the proceeds of the ITFederal loan to his personal benefit.”

The EDA’s Amended Complaint notes that on October 4, the day it was filed, “the Warren EDA provided notice of default to ITFederal as required by both the $2 Million Promissory Note and the $10 Million ITFederal Borrower Note,” and adds that it believes ITFederal “cannot cure the default within the time allotted by the $10 Million ITFederal Borrower Note.”

What was originally presented by ITFederal – a three building complex including an approximate 26,000 s.f. office building above; and below a two-building IT tech center, including a cloud center to upper left.

As one can see, the amended EDA litigation and Tran’s countersuit paint distinctly contrasting portraits of what the dueling litigations contend happened in Tran’s acquisition of the estimated $12 million dollars in EDA assets.

The Tran/ITFederal Countersuit contends, “The Warren EDA – through Ms. McDonald, who had apparent, actual and/or implied authority to act on its behalf – materially misled Mr. Tran and ITFederal through both affirmative misrepresentations and concealment.”

However the EDA’s Amended Complaint repeatedly references actions by “Defendant Tran and Defendant McDonald” alleged to have been made in concert, falsely presenting Tran, his company and its potential to the EDA Board of Directors and Town and County officials.

“Defendant Tran and Defendant McDonald represented to the Town, the County and the Warren EDA multiple times that (a) Defendant Tran was a high-net worth individual, (b) he did not need any financial assistance from the Town, County and the Warren EDA to make the ITFederal Project financially viable, (c) ITFederal/VDN Systems had procured a $140 million contract with the Nuclear Regulatory Commission to provide information technology services on a long-term basis and (d) Defendant Tran had the endorsement and support of the U.S. Congressional Representative Robert Goodlatte (Rep. Goodlatte) in connection with the ITFederal Project,” the amended EDA lawsuit asserts.

Contrasting portrait: what is of ITFederal as of dueling legal filings in October 2019 – an unfinished 10,000 s.f. office building accessed by Phase One of the West Main St. connector road.

That is followed by eight more paragraphs alleging coordinated efforts by Tran and McDonald to misrepresent the financial and business potential of ITFederal and its CEO to local officials. Among those allegations was that Tran didn’t need the $10 million dollar loan but would accept it at the behest of Rep. Goodlatte, who it has been represented by EDA officials wanted the loan to help attract further redevelopment clients to the Avtex Brownfield site in his Sixth Congressional District; that Tran would actually pay the $10 million loan back in 60 to 90 days; and that federal EB-5 Visa Program financing was coming to the project.

Tran attorneys are sure to point out that those “Defendant Tran and Defendant McDonald represented” assertions most often continue to elaborate “through Defendant McDonald”.

As Royal Examiner observed as the ITFederal scenario was developing from our launch in October 2016 through 2018, the elusive Tran generally let the EDA executive director take the point in responding to questions from municipal officials or the press about his project at the EDA controlled Brownfield site.

Tran’s Countersuit filing asserts that McDonald forged his signature at least twice to give the impression he was the “secret investor” in the Criminal Justice Training Academy Project; and at least one other time to indicate his involvement “related to real estate deals in which he had no involvement”.

The suit also alleges McDonald “falsely misrepresenting” that the EDA had received a State grant for the ITFederal construction project at the Avtex site; and that McDonald misled Tran about the environmental suitability of the Royal Phoenix Business Park site at the former Avtex Superfund site to the point of telling him the soil was “so clean you could eat off it.”

It’s a nice view toward the mountains but I don’t know that I’d eat off that turned dirt at the former Federal Superfund site. EDA civil case hearing testimony has indicated that Congressman Goodlatte’s endorsement contributed to the EDA board’s lack of due diligence in verifying assertions believed forwarded by ITFederal’s own ‘Three Amigos’ – McDonald, Tran and Goodlatte.

“These fraudulent actions have unnecessarily entangled Mr. Tran and ITFederal in this matter, resulting in the Warren EDA frivolously suing this respectable businessman and his company where they are victims of the Warren EDA’s and its Executive Director’s wrongdoing,” the Tran Countersuit states.

However Tran was singing a different tune to the press during an on-site visit December 20, 2018. During a lengthy EDA board closed session after which it was announced McDonald had resigned by email earlier that day, Tran was asked about the possibility McDonald might be terminated or asked to resign following the closed session.

“I heard about this and it’s blowing my mind. Oh that would be sad. She’s done so much for this area of the county and the town to redevelop, and even me – I was just about to move on and she,” Tran hesitated before adding of the prospect of a turnover at the top of the EDA, “So, so, we have to go do this with the next guy’s ideas or something?”

How things have changed in the wake of several “next guy’s” ideas – one civil suit filing in which Tran and his company have been cited as liable for around $12 million dollars in restitution to the EDA and McDonald somewhere considerably over $3 million; not to mention 28 felony financial criminal indictments against the former EDA executive director Tran once put so much faith into to present his development plans to local officials.

Sheriff, ITFed principal Tran, Donnie Poe named with McDonald in EDA civil suit

UPDATE: McDonald family members, business associates added as defendants in EDA civil suit

Tran credited McDonald with saving ITFederal project – but what was saved?

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EDA in Focus

All County supervisors now have attorneys and motions dates set

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Three Warren County Supervisors who had not yet retained legal counsel during an initial September 27 court appearance of County and EDA officials charged with misdemeanor misfeasance and nonfeasance regarding an absence of due diligent oversight of former EDA Executive Director Jennifer McDonald were back in court Monday morning, October 21.

Those supervisors, Tony Carter, Linda Glavis and Archie Fox appeared either with counsel or with letters to the court from their attorney. The 9 a.m. Warren County Circuit Court docket of Judge William Sharp was adjourned at 10 a.m. to allow Judge Bruce Albertson to record the trio of supervisors’ legal representation and set motions hearings dates. Albertson appeared by video hookup from his Harrisonburg Courtroom. Sharpe has recused himself from hearing all EDA related matters.

Glavis and Fox were slated for the Monday, October 28, 9 a.m. docket when a preponderance of the 14 County and EDA board members motions to quash the three misdemeanor charges against them will be heard, along with Discovery Motions should the effort to have the charges dropped fail.

Any chance you recognize this building? No doubt local media and EDA attorneys, civil and criminal defendants do. Three supervisors were there Monday morning to have hearing dates sent with legal representation now in tow. Royal Examiner File Photo/Roger Bianchini

Due to a scheduling conflict of Carter’s attorney Caleb Kershner, the Happy Creek Supervisors Motions Hearing date was scheduled for November 21, at 4 p.m. It was noted that another attorney scheduling conflict had Supervisor Tom Sayre’s Motions Hearing date set for November 19, though that date did not work for Carter’s Leesburg-based attorney either.

Fox is represented by John Swerling, out of Alexandria, and Glavis by Bruce Blanchard of Reston.

Next Monday will be a busy and crucial day for EDA related hearings. In addition to motions to quash the criminal misdemeanor charges against the bulk of the 14 current or past public officials charged with failing to provide adequate oversight of Jennifer McDonald’s actions as EDA chief executive, the first hearing date on the Removal Petition of all five County supervisors filed on Friday is also slated for that day’s morning docket. That petition is seeking to immediately suspend the supervisors “from performing their duties in office until the Show Cause hearing is held”.

Removal Petition attorney Timothy Johnson said that while technically the Show Cause (as to why the supervisors should not be removed) Hearing could be held on that initial court date, experience says that additional Respondent motions may push the hearing date out.

Should that happen and were the judge predisposed to grant the motion to immediately suspend the supervisors from their duties pending the Show Cause hearing it remains to be seen how the County government would function as to any necessary board votes on appropriations or budgetary matters, etc. Johnson said the court could appoint people to fill the roles of supervisors, though the more likely path would be that the motion for immediate suspension would not be granted to allow the uninterrupted function of County government to continue.

Defense attorneys move to quash grand jury misdemeanor indictments

County Supervisors removal petition filed with 941 signatures

Grand Jury indicts 14 County and EDA officials for lack of EDA oversight

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EDA in Focus

County Supervisors removal petition filed with 941 signatures

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On Friday, October 18, the attorney for the organizers of a citizens group seeking removal of all five Warren County Supervisors filed the Petition for that removal with a total of 941 signatures attached, broken down by County Voting Districts.

The filing required a minimum of 10% of the number of registered county voters who voted in the last election. That number is cited as 6,958, requiring a total of 696 countywide. However self-identified “primary organizer” of the petition drive, Bonnie Gabbert, noted in an affidavit filed with the petition that she had rounded each voting district’s total up, raising that minimum required signature total to 699.

So while the petition total of about one-seventh of the county’s most recent voting population does not indicate majority support for the recall, it does meet the State requirement for such a matter to be brought before a Circuit Court judge. And it appears on information from petition attorney Timothy Johnson that for the same reasons of personal or professional familiarity with defendants leading to recusals in EDA cases, that Warren Circuit Court Judge William Sharp will recuse himself from the recall hearing as well.

Maureen Schofield of Front Royal greeted Warren County BOS members at their Tuesday meeting on October 15. Photo by Kim Riley

Johnson told Royal Examiner he believes Chief 26th Judicial District Judge Bruce D. Albertson, who has been presiding at EDA civil and criminal case hearings will preside at the scheduled October 28 Show Cause removal petition hearing. Albertson was already scheduled to be here that day to hear a number of defense motions to quash the very charges the main thrust of the removal is based on.

The removal petition cites the board members’ September 20th misdemeanor criminal indictments related to an absence of due diligent oversight of the actions of former Warren County Economic Development Executive Director Jennifer McDonald in the final four months of 2018 as a primary legal basis of the removal.

“Pursuant to Va. Code § 24.2-233(1), a Circuit Court may remove from office any elected officer residing within the jurisdiction of the Court for neglect of duty, misuse of office, or incompetence in the performance of duties when that neglect of duty, misuse of office, or incompetence in the performance of duties has a material adverse effect upon the conduct of the office.

“On September 20, 2019, Supervisors Daniel J. Murray of the North River District, Thomas H. Sayre of the Shenandoah District, Tony F. Carter of the Happy Creek District, Archie A. Fox of the Fork District, and Linda Glavis of the South River District were indicted for violating the English Common Law, and specifically, each were charged on three misdemeanor counts …” of misfeasance and nonfeasance in the conduct of their office as previously reported (see below linked story).

The petition acknowledges the coming November 5 election in which two supervisors, Chairman and North River Supervisor Dan Murray and South River Supervisor Linda Glavis are not seeking reelection; and Shenandoah District Supervisor Tom Sayre is in a race with Walter Mabe. It also notes that Fork District Supervisor Archie Fox and Happy Creek Supervisor Tony Carter are not up for reelection until November 2021.

Regardless of those electoral variables, the petition asks the court “to suspend the Respondent-Supervisors from performing their duties in office until the Show Cause hearing is held”. There are no Board of Supervisors meetings scheduled prior to that October 28 Show Cause hearing that will revolve around the defendants’ arguments as to why they should not be removed.

And one might make an educated legal guess that at least part of those defense arguments will revolve around the same Sovereign Immunity issue the EDA has raised in the Town of Front Royal’s civil action against it.

Vexatious litigation?

“Sovereign Immunity is ‘a rule of social policy, which protects the state from burdensome interference with the performance of its governmental functions … Most importantly, the doctrine of Sovereign Immunity provides for ‘smooth operations of government’ and prevents ‘citizens from improperly influencing the conduct of governmental affairs through the threat or use of vexatious litigation,’ ” a motions filing in the Front Royal vs. EDA civil suit reads.

In addition to its primary Show Cause allegations regarding the misdemeanor indictments cited lack of due diligent oversight of the former EDA executive director late in 2018 the recall petition also alleges a number of other board failings since that time.

Those include failing to take corrective action to prevent a recurrence of the past absence of economic development oversight and use of public money; failing to “review critical financial information” related to a recent bond consultant initiative to refinance some existing capital improvement bonds that could save the County several million dollars; and allowing the EDA purchase of what is described as the “Westrock LLC warehouse purchase” (aka 426 Baugh Drive warehouse) at a price of $5.3 million.

While the removal petition allegations surrounding the misdemeanor indictments and other past absences of EDA oversight appear to have a solid footing for legal arguments, some of the peripheral allegations may have a less substantial foundation.

Unlike some other EDA owned properties, the Braugh Drive warehouse has been cited by current EDA officials as “just the type of property” an EDA should purchase for marketing/sale to a job creating company.

The alleged failure to launch corrective measures and lack of bond refinancing scrutiny seem to ignore several board initiatives and consultant processes. Those include the supervisors’ participation in an EDA Reform Committee and joint County-Town-EDA meetings held to discuss just such corrective measures, many already in the process of being implemented by the EDA and County, including the County’s assumption of the role of the EDA’s financial agent with check-writing authority.

The alleged lapse of due diligence regarding bond refinancing seems to ignore the County’s long-time use of bond consultant Davenport & Associates to perform that very bond reissue due diligence in recommending actions to the supervisors.

And the allegation of wrong doing in the tabling a decision on whether the County will fund the legal defense of the supervisors on their misdemeanor charges to December ignores the explanation that a decision be deferred until the motions to quash the indictments have been heard. That could be a factor in a decision as a compromise solution of the County using taxpayer money for the supervisors defense counsel only if the charges are dropped or the supervisors are acquitted at trial was broached during October 1 meeting discussion.

Those defense motions to quash the misdemeanor misfeasance and nonfeasance indictments against County and EDA officials, as well as Discovery motions if necessary, are slated for hearing on October 28, the same day as the Show Cause hearing on the recall is on the court docket.

Photo accompanying Royal Examiner’s early February 2018 story where Jennifer McDonald alleged about $2 million in Hollywood Casino slot machine winnings over a three-year period with no more than $18,000 of her or house money being invested to achieve those winnings. State Police have estimated McDonald lost $750,000 including her winnings; some contend those losses could be even higher.

Among other EDA McDonald-related oversight lapses cited in the recall petition are the “red flag” of McDonald’s public story of “substantial gambling winnings” to account for her use of cash in her real estate businesses; as well as the sale of the 30-acre ITFederal parcel at the Royal Phoenix/Avtex site “for substantially below fair market value”.

One might say “substantially below” in that the publicly discussed $2 million 30-acre parcel was gifted to ITFederal LLC for one dollar in an effort to “jump start” further development at the 147-acre planned Royal Phoenix Business Park site. Four years later that plan is floundering and ITFederal and its CEO Truc “Curt” Tran are defendants in the EDA’s $21.3 million civil suit. In its first month of existence Royal Examiner broke the story of that one dollar sale being the reason for a one-year delay in U.S. Justice Department approval of the sale (see below linked story).

The EDA is seeking recovery of the balance of its $10 million First Bank & Trust loan to ITFederal on the grounds it was obtained “under false pretenses”. Despite that EDA civil suit contention, Tran and his Congressional sponsor Robert Goodlatte, who helped and/or stood silently by as McDonald pushed those alleged “false pretenses” into the municipal and public consciousness, have thus far remained off the EDA Special Grand Jury criminal indictment radar.

Above, the initially-submitted plan for an approximate 26,000 s.f. ITFederal building number one, of three promised; below the reality, a 10,000 s.f. building meeting minimum EDA loan and EB-5 Visa requirements.

Indicted in addition to the five supervisors  on September 20 by the EDA Special Grand Jury were County Administrator Doug Stanley, former EDA/County Attorney Dan Whitten, former EDA Board members Ron Llewellyn, Bruce Drummond, Greg Drescher, William “Billy” Biggs and current EDA Board members Mark Baker, Tom Patteson, Gray Blanton. Each faced three identical charges, two counts of Misfeasance and one count of Nonfeasance in the conduct of their public offices.

October 28 should be a long and interesting day in Warren County Circuit Court.

Interested in reading the petition? See below.

Grand Jury indicts 14 County and EDA officials for lack of EDA oversight

Feds OK ‘Dollar Special’ on first Avtex property sale

Op-Ed: County, EDA officials cited for failed oversight – why not the Town?

CIRCUIT COURT OF THE COMMONWEALTH OF VIRGINIA,

COUNTY OF WARREN

In re Joint Petition for Removal of Daniel J. Murray, Thomas H. Sayre, Tony F. Carter, Archie A. Fox, and Linda Glavis

BONNIE GABBERT, as representative petitioner for North River District, KRISTINA C. NELSON, as representative Petitioner for Shenandoah District, MAUREEN SCHOFIELD, as representative petitioner for Happy Creek District, MARK HAJDUK, as representative petitioner for Fork District, JEAN M. STANLEY as representative petitioner for South River District, and all other signatories to this Joint Petition from their respective magisterial districts,                                                                      Petitioners,

v.

DANIEL J. MURRAY, THOMAS H. SAYRE, TONY F. CARTER, ARCHIE A. FOX, and LINDA GLAVIS,

Respondents.

Case No.:

PETITION FOR REMOVAL OF ELECTED OFFICIALS

          Named Petitioners as representatives for Warren County’s magisterial districts, and the attached signatories to this Petition for Removal of Elected Officials who are registered voters who reside within the jurisdiction of the respective officer being petitioned for removal and who have signed this petition under penalty of perjury seek the removal from elected office of Respondent-Supervisors DANIEL J. MURRAY, THOMAS H. SAYRE, TONY F. CARTER, ARCHIE A. FOX, and LINDA GLAVIS, state as follows:

  1. Pursuant to Va. Code § 24.2-233(1), a Circuit Court may remove from office any elected officer residing within the jurisdiction of the Court for neglect of duty, misuse of office, or incompetence in the performance of duties when that neglect of duty, misuse of office, or incompetence in the performance of duties has a material adverse effect upon the conduct of the office.
  2. On September 20, 2019, Supervisors Daniel J. Murray of the North River District, Thomas H. Sayre of the Shenandoah District, Tony F. Carter of the Happy Creek District, Archie A. Fox of the Fork District, and Linda Glavis of the South River District were indicted for violating the English Common Law, and specifically, each were charged on three misdemeanor counts as stated as follows:

(a) On or about September 1, 2018 through December 31, 2018, in the County of Warren, [respective supervisor’s name], did unlawfully commit nonfeasance by failing to act to limit or restrict the powers, responsibility, and access to the public financial resources of Jennifer Rae McDonald in her position as Executive Director of Front Royal Warren County Virginia Economic Development Authority resulting in financial loss to Warren County, in violation of Section 1-200 and 19.2-8 of the Code of Virginia, 1950, as amended.

(b) On or about September 1, 2018 through September 25, 2018, in the County of Warren, [respective supervisor’s name], did unlawfully and negligently commit misfeasance by not properly exercising his/her powers of appointment, oversight, and removal, of Jennifer Rae McDonald in her position as Executive Director of Front Royal Warren County Virginia Economic Development Authority resulting in the unlawful diversion of more than $300,000 in public funds, in violation of Section 1-200 and 19.2-8 of the Code of Virginia, 1950, as amended.

(c) On or about October 20, 2018 through November 30, 2018, in the County of Warren, [respective supervisor’s name], did unlawfully and negligently commit misfeasance by not properly exercising his/her powers of appointment, oversight, and removal, of Jennifer Rae McDonald in her position as Executive Director of Front Royal Warren County Virginia Economic Development Authority resulting in the unlawful diversion of more than $9,000 in public funds, in violation of Section 1-200 and 19.2-8 of the Code of Virginia, 1950, as amended.

  1. These criminal charges stem from the Respondents’ failures to perform their duly elected duties, and ensure proper use of and safekeeping of Warren County’s taxpayers’ monies. Aside from the criminal charges as stated, the Petitioners further allege that the Respondent-Supervisors neglected their duties or otherwise were incompetent to perform their duties by:

(a)        Failing to establish policies and procedures that would have ensured a proper accounting oversight of the Warren County Economic Development Authority, including its Executive Director, in contravention of its duty to establish appropriate oversight policies pursuant to Va. Code § 15.2-403(A);

(b)        Failing to require and actually review regular, sufficiently descriptive financial and other activity reporting from the Warren County Economic Development Authority, including its Executive Director, and any other financial monitoring department such as the from the Commissioner of Revenues, and/or the Warren County Treasurer, and/or the Finance & Purchasing Department pursuant to Va. Code § 15.2-403(B);

(c)        Failing to inquire into official conduct of the Warren County Economic Development Authority’s Executive Director when ‘red flags’ were presented such as her alleged substantial “gambling winnings,” the ‘data center project’ land being sold for substantially below fair market value, and when the Executive Director acknowledged falsifying invoices pursuant to Va. Code § 15.2-403(C);

(d)       Failing to account for the “Westrock LLC” warehouse purchase for more than $5.3 million, which served no apparent benefit to the citizens of Warren County and no apparent plan for said warehouse;

(e)        Failing to take appropriate corrective actions to ensure that such gross errors in accountability cannot happen again as no proposed solutions have been presented to the public or to the Board of Supervisors to establish proper policies and procedures, or otherwise improve financial oversight; and

(f)        As recently as October 1, 2019 at the most recent Board of Supervisors meeting, admittedly failing to review critical financial information concerning revenues and County bond information that would be used to fund Warren County services, and for refusing to decide an agenda item concerning whether the taxpayers of Warren County were to pay for the criminal defense costs associated with the Supervisors’ criminal indictments stemming from the charges related to their misfeasance and nonfeasance in office and postponed such a decision until December 2019.

  1. The above-stated actions have caused irreparable injury to the interests of the Warren County Government and the citizens whom it is supposed to serve. Millions of dollars of taxpayer monies have been embezzled or otherwise misplaced; trust in local government officials and the departments they work for has been broken; and the reputation of Warren County is forever tarnished. The Respondent-Supervisors have allowed these injuries to occur, and have taken inadequate actions to remedy the errors.
  2. Two Supervisors (Mr. Murray and Ms. Glavis) are not seeking re-election, and one Supervisor (Mr. Sayre) is running for re-election next month. The other two Supervisors (Mr. Carter and Mr. Fox) are not subject to an election until November 2021.
  3. As the criminal charges are pending, the citizens of Warren County believe that the Respondent-Supervisors are not in a position where they can capably perform their duties while also addressing such criminal allegations. Aside from the criminal charges, the Respondent-Supervisors have failed to present any cognizable plan of addressing the lack of accountability and oversight, and have demonstrated that they cannot perform their duties competently.
  4. The Petitioners request that the Court suspend the Respondent-Supervisors from performing their duties in office until the Rule to Show Cause hearing is held pursuant to Va. Code § 24.2-236.
  5. This Petition has been signed by the requisite number of registered voters who seek to remove their respective Supervisor from office. From the last election for that respective Supervisor’s election, the following number of registered voters voted in the respectively stated districts were as follows:
Magisterial District Number of Voters in Last Election Cycle
North River District 1,084
Shenandoah District 1,415
Happy Creek District 1,811
Fork District 1,541
South River District 1,107

Pursuant to Va. Code § 24.2-233, this Petition is accompanied by signatures of registered voters who reside within the jurisdiction of the respective Supervisor totaling at least ten percent (10%) of total number of votes cast at the last election for the office that the officer holds.

WHEREFORE, Petitioners respectfully request that this honorable Court award the following relief:

  1. Issue a Rule to Show Cause to the Respondent-Supervisors requiring that the Respondents appear before this Court and show cause why they should not be removed from office, and that such hearing be held no less than five but not more than ten days from the filing of this Petition;
  2. As part of issuing the Rule to Show Cause, issue an Order suspending the Respondents from their elected official positions on the Warren County Board of Supervisors until such Rule to Show Cause Hearing is heard;
  3. Upon hearing sufficient evidence proven by a preponderance of the evidence, remove the Respondents from their positions in office; and
  4. Grant other and further relief as the Court deems just, proper, and equitable.

Dated: October 3, 2019                                  Respectfully submitted,

Berryville, Virginia

                                                                       

Timothy R. Johnson (VSB No. 87673)

The Law Offices of Timothy R. Johnson, PLC

20-B East Main Street

Berryville, Virginia 22611

P: (540) 352-4672

F: (540) 595-3500

E: trjohnson@trjlegal.com

Counsel for Petitioners

  

VERIFICATION BY REPRESENTATIVE PETITIONERS

  1. I, Bonnie Gabbert, a resident of the North River District within Warren County, have reviewed the allegations in the Petition for Removal of Elected Officials, and affirm under penalty of perjury that such allegations are true and accurate to the best of my knowledge.
  2. I, Kristina C. Nelson, a resident of the Shenandoah District within Warren County, have reviewed the allegations in the Petition for Removal of Elected Officials, and affirm under penalty of perjury that such allegations are true and accurate to the best of my knowledge.
  3. I, Mark Hajduk, a resident of the Fork District within Warren County, have reviewed the allegations in the Petition for Removal of Elected Officials, and affirm under penalty of perjury that such allegations are true and accurate to the best of my knowledge.
  4. I, Maureen Schofield, a resident of the Happy Creek District within Warren County, have reviewed the allegations in the Petition for Removal of Elected Officials, and affirm under penalty of perjury that such allegations are true and accurate to the best of my knowledge.
  5. I, Jean M. Stanley, a resident of the South River District within Warren County, have reviewed the allegations in the Petition for Removal of Elected Officials, and affirm under penalty of perjury that such allegations are true and accurate to the best of my knowledge. 
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Local Government

Supervisor decries public harassment of family; BOS chairman calls for consolidation

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In the wake of the Front Royal-Warren County Economic Development Authority (EDA) financial scandal, the two leaders of the Warren County Board of Supervisors (BOS) this week individually made two very different requests of their constituents.

BOS Chairman Daniel Murray called for consolidation of the Town of Front Royal and Warren County governments, while BOS Vice Chairman Thomas Sayre denounced the public harassment of his family members.

Both supervisors, along with the other three supervisors and several other local individuals, were indicted last month by a special grand jury that’s investigating potential criminality related to the EDA financial fraud investigation and civil litigation.

Supervisor Tom Sayre ask not to post things about his family on Facebook. “Please leave my family alone”, he said. Photo and video by Mike McCool, Royal Examiner.

Subsequently, some enraged area taxpayers have written negative comments online about Sayre’s family, he said during the board members’ report portion of the BOS meeting on October 15.

“I have a statement to make,” began Sayre, shaking his head back and forth. “I have seen on Facebook and other posts attacking my daughter, my son and my wife. I find that conduct outrageous.”

Looking out into the audience Sayre said: “To those doing this, please leave my family alone.”

Without naming names, Sayre said the treatment started roughly two weeks ago, shortly after all five BOS members were indicted on Sept. 20 by the Warren County Special Grand Jury. The supervisors then were among the total of 14 indicted individuals who presented themselves at the Magistrate’s Office at the Rappahannock-Shenandoah-Warren County Regional Jail on September 24 and 25, to be arraigned and then released on their own recognizance.

Sayre told the audience on Tuesday that they probably knew who was posting the disparaging remarks online about his family, but said, “I’m not going to give anybody the notoriety they’re seeking. It’s sick.”

Noting that new posts appeared online this week further slamming his family, Sayre said, “It’s stuff that’s just mind boggling and it’s not even close to being true.

“So, please, leave my family alone will ya?” he said, putting emphasis on the last two words.

“We should be one government for all,” Murray said. “This will stop finger-pointing and put a lot of things at rest.”

Murray then made his statement, saying he’s challenging the new BOS in January to research and implement a plan for consolidation.

“We should be one government for all,” Murray said. “This will stop finger-pointing and put a lot of things at rest.”

The BOS chairman added that too many falsehoods are floating around the community, though he didn’t elaborate on them.

“And remember, Facebook is a publication and what’s put on Facebook could be handled legally,” he said.

The Royal Examiner camera was there. Watch the Board of Supervisors reports and public comments in this exclusive video:

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Local Government

Town Manager announcement steals thunder from tap fee reduction debate

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The lone vote against Tederick’s appointment to be interim town manager came from Gene Tewalt, Photos by Mark Williams, Royal Examiner.

Prior to the end-of-meeting announcement of Interim Mayor Matt Tederick’s pending appointment to fill the position of town manager on an interim basis during the search for a permanent replacement for departing Joe Waltz, public and council attention had been focused on the public hearing and scheduled first vote on some dramatic reductions to water and sewer tap fees.

In fact the lone vote against Tederick’s appointment to be interim town manager came from Gene Tewalt, who had butted heads with Tederick earlier Tuesday night over the tap fee reduction initiative the mayor has propelled forward.

And while Tewalt declined comment on his vote in opposition to the interim town manager appointment, the two long-time local political figures have often butted heads over Town-County issues.

And that was again apparent in the discussion of the proposed water-sewer tap fee reductions that was the central focus of council and public discussion at the Tuesday, October 15, Town Council meeting at the Villa Avenue Community Center.

Tederick had put approval on a fast track to be completed before his interim mayor’s tenure is up in early November in the hope of being positioned to cast a potential tiebreaking vote in favor of the cuts if necessary.

Tewalt led opposition to that fast track and a final council decision pending receipt of more information related to coming water-sewer utility costs that he said could quickly melt a significant portion, if not all, of a $12 million Enterprise Fund reserve.

Criticism from former Front Royal Mayor and Councilman Stan Brooks during public comments Tuesday for referring to Town reserves as a “slush fund”.

In fact as recounted in our related story, Tederick caught some friendly, if pointed criticism from former Front Royal Mayor and Councilman Stan Brooks during public comments Tuesday for referring to Town reserves as a “slush fund”. Brooks noted the term implied hidden money used for illegal purposes.

An impeachment ‘sidebar’
Another citizen urging caution on the tap fee issue, Fern Vasquez, noted that having lived through the Nixon “plumbers” and impeachment era of the early 1970’s she was well versed in the illegal ramifications Brooks referred to regarding “slush funds”.

And while she didn’t elaborate, having those same first-hand memories of another impeachment era, one might add that the “CREEP” (Committee to Re-Elect the President) Nixon “slush fund” at issue was used to finance such 1972 campaign dirty tricks as slipping LSD into the drink of a leading Democratic candidate, Ed Muskie while he was in the midst of a railroad whistle-stop campaign stump; and of course the Watergate break in of the National Democratic Headquarters, the cover up of which proved fatal to the Nixon presidency among Democrats and Republicans alike.

And as also reported in our related story, contacted about Tederick’s pending appointment as interim town manager, Brooks quipped, “I guess now Matt will be managing the Town’s ‘slush fund’.”

Tap fee cuts on hold
Be that political history as it may – ancient and national or local and developing – in the face of a majority of public comment and public hearing criticism regarding the importance of maintaining a healthy reserve fund balance and not making a tap fee rush to judgment, the scheduled first council vote on the tap fee proposal was tabled. That tabling was so that council could seek additional information on costs versus reserves as related to the redundant corridor water line system expansion on the table after eight years of discussion; as well as the perhaps soon to be state or federally mandated Intake and Inflow (I&I) improvements to the sewer system that are under consultant’s study at this time.

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