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EDA in Focus

County updating equipment, rewriting IT software in wake of system ‘intrusion’

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During his update on County business at the virtual meeting of the Warren County-Front Royal Economic Development Authority Board of Directors Friday morning, March 26, Interim County Administrator Ed Daley addressed the status of the County’s software situation in the wake of the early March discovery of what has been termed an “intrusion” of that system. Daley has fallen short of calling the incident a “hack” due to an absence of discovered consequences such as stolen files or manipulation of existing files or systems.

However, the consequences which began with a nearly three-week halt in use of all county officials and staff emails due to the County server being taken down as a security precautionary measure, continues to be felt. As previously reported, the local IT system intrusion was part of a larger “intrusion” of software at various unspecified locations across the country. It’s source and purpose continues to be a matter of investigation from the federal level down.

A day prior to Daley’s report at the EDA’s monthly meeting, Warren County Emergency Services Coordinator Rick Farrall’s March 25 County “Situation Report” also began with an update on the post software “intrusion” consequences:

COMMUNITY INFORMATION


  1. Warren County Email Update
    1. Warren County, the Warren County Sheriff’s Office, and the Warren County Department of Fire and Rescue Services are still experiencing significant computer/email issues.  The County is working diligently to restore full computer and email service to all personnel.
    2. Please note that any emails sent to County personnel at warrencountva.net, warrencountysheriff.org, or warrencountyfire.com may not be received until all email services are fully restored.

File photo of County Emergency Services vehicle in front of WCGC in March 2020. A year later the on-site emergency services have revolved around software protection and clean up. Royal Examiner Photos by Roger Bianchini

A clue to that restored service came Friday during the interim county administrator’s report to the EDA. Daley told the EDA board that 150 new laptop computers were slated to arrive Tuesday (March 30). Contacted late Friday afternoon, Daley told Royal Examiner by phone that it was anticipated all County emails would be back online at the beginning of the coming week, possibly coinciding with the arrival of the new computers and a rewrite of the County IT network. The system overhaul is to assure whoever was behind the intrusion no longer has access to the system, Daley explained. In a late update Monday morning, Daley said it now appeared the computers would not arrive until Thursday, delaying the restored email use until later in the week.

“We’re just busy buying computers and throwing computers out and wondering why we still have 2007 computers… – It’s a new experience every day,” Daley began his report to the EDA board Friday morning.

“Well, we wish the County well – it’s a horrible problem,” EDA Board of Directors Chairman Jeff Browne told his former fellow EDA Board member and chairman. EDA officials later told Royal Examiner the separate EDA server had not been impacted by the County intrusion, though a downed 10-year-old router had temporarily taken the EDA system offline for about a day this past week.

As noted in our original story on the hack – “A new municipal ‘normal’ – large scale software ‘intrusions’ and targeting an international human organ harvesting business?!?” – Daley said that while the beginning date of the intrusion hadn’t been established, it was verified it did not involve or impact election data from last November.

Interim County Administrator Ed Daley at early March county supervisors meeting. A portion of his recent reports, regardless of to whom, has traced the impact of and reaction to the county software intrusion discovered earlier this month.

Daley told us that discussion of acquiring upgraded technology for the County was already underway when the intrusion was discovered March 7 to 12. In fact, the old County Information Technology was only capable of support of Windows 7, which will soon be non-serviceable as Window 10 and beyond continue development.

“So this gave us a reason to upgrade now,” Daley told Royal Examiner of the County IT software intrusion. One sign of the upgrade will be an eventual switch from .net to .gov in the County network, including staff and other official emails.

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EDA in Focus

EDA moves on line of credit extension, continued County financial support and Baugh Drive HVAC repairs

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Following a 4-hour Closed Session at its monthly meeting on May 21st, the Front Royal-Warren County Board of Directors passed two resolutions and one motion:

On a motion by Jorie Martin, seconded by Jim Wolfe, the EDA Board unanimously approved the following resolution:

RESOLUTION OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE TOWN OF FRONT ROYAL AND THE COUNTY OF WARREN, VIRGINIA, APPROVING AN EXTENSION OF THE EXISTING LINE OF CREDIT

WHEREAS, the Industrial Development Authority of the Town of Front Royal and the County of Warren, Virginia (the “Authority”) has requested the extension of its existing line of credit (the “Line of Credit”) with First Bank and Trust (the “Lender”) and such extension has been agreed to by the Lender in a commitment letter dated May 11, 2021 (the “FB&T Commitment”) a copy of which is on file with the Authority.


NOW, THEREFORE, BE IT RESOLVED BY THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE TOWN OF FRONT ROYAL AND THE COUNTY OF WARREN, VIRGINIA:

1. The Chairman or Vice-Chairman of the Authority, either of whom may act, is hereby authorized and directed to execute and deliver the FB&T Commitment which extends the maturity date of the Line of Credit from June 30, 2021, to September 30, 2021.

2. This resolution shall take effect immediately.

And also on a motion by Jorie Martin, seconded by Jim Wolfe, the EDA Board unanimously approved the following resolution:

RESOLUTION OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE TOWN OF FRONT ROYAL AND THE COUNTY OF WARREN, VIRGINIA, APPROVING AN UPDATED SUPPORT AGREEMENT WITH THE COUNTY OF WARREN, VIRGINIA RELATING TO A FORBEARANCE AGREEMENT AND APPROVING AN EXTENSION OF SUCH FORBEARANCE AGREEMENT

WHEREAS, the Industrial Development Authority of the Town of Front Royal and the County of Warren, Virginia (the “Authority”) has requested the continuation of assistance from the Board of Supervisors (the “Board”) of the County of Warren, Virginia (the “County”) by entering into an updated Support Agreement, to undertake a non-binding obligation to appropriate moneys to the Authority in connection with the Forbearance Agreement, dated March 10, 2020 (the “Forbearance Agreement”) between the Authority and First Bank (the “Lender”) relating to monthly debt service payments of the Authority due to the Lender under the EDA Loans (as defined in the Forbearance Agreement) during the 2022 Fiscal Year and the extension of such Forbearance Agreement from June 30, 2021, to June 30, 2022.

NOW, THEREFORE, BE IT RESOLVED BY THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE TOWN OF FRONT ROYAL AND THE COUNTY OF WARREN, VIRGINIA:

1. In consideration of the Authority’s undertakings with respect to the Forbearance Agreement, the Chairman or Vice-Chairman of the Authority, either of whom may act, is hereby authorized and directed to execute and deliver the Support Agreement and to extend the Forbearance Agreement from June 30, 2021, to June 30, 2022. The Support Agreement shall be in substantially the form presented to this meeting, which is hereby approved, with such completions, omissions, insertions, or changes not inconsistent with this resolution as may be approved by the Chairman or Vice-Chairman of the Authority, in their sole discretion, the execution thereof by the Chairman or Vice-Chairman of the Authority to constitute conclusive evidence of his or her approval of such completions, omissions, insertions or changes.

2. The Chairman or Vice-Chairman of the Authority, either of whom may act, is authorized to extend the Forbearance Period (as defined in the Forbearance Agreement) from June 30, 2021, to June 30, 2022, and to approved documentation of such extension.

3. This resolution shall take effect immediately.

Finally, on a motion by Tom Patteson, seconded by Jim Wolfe, the EDA Board unanimously approved a motion to authorize the Chair to sign an agreement with AirServe to replace Rooftop Unit #1 and repair Rooftop Units #4 and 5 at 426 Baugh Dr. for $18,796.

The EDA Board of Directors will have their next regular monthly board meeting via Zoom on Friday, June 25, 2021, at 8 a.m.

(From a release by the WC EDA)

 

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EDA in Focus

EDA vacancies filled; supervisors forward resolution urging action on EDA criminal prosecutions

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The final items on the Warren County Board of Supervisors Tuesday evening agenda were two Economic Development Authority matters. The second of those was appointments to fill the two vacant seats on the EDA Board of Directors. Those vacancies were created by the supervisors’ majority decision to make Ed Daley’s interim county administrator’s appointment more lengthy than originally anticipated when the retired Frederick County-Winchester area municipal manager was tapped from the EDA Board following the forced resignation of long-time Administrator Doug Stanley, and by the amount of out-of-state work, Melissa Gordon has been engaged in recently.

Appointed to fill those seats were Scott Jenkins and Robert Hencken.

Jenkins and his wife Lisa are proprietors of Mountain Home Bed & Breakfast on the county’s south side and are active in tourism promotion endeavors locally. Hencken has been a member of the county’s Broadband Committee. Further information on the appointees will be provided when available from the County.

The pace of criminal justice


Preceding those appointments was the approval of a Resolution expressing a collective discontent at the pace at which the criminal side of the EDA financial scandal case is proceeding. Following John Bell’s 2019 election, in early 2020 his office recused itself collectively from those cases due to personal or professional connections leading to potential conflicts of interest. Criminal indictments dating to Brian Madden’s tenure as Warren County Commonwealth’s Attorney were eventually dropped by the Special Prosecutor’s Office in Rockingham County to avoid case dismissals due to the volume of material – over a million pages of documentation – leading to a permanent dismissal of cases on defense motions related to a prosecutorial failure to meet speedy trial standards.

Some citizens are wondering if the sun has set on criminal prosecutions in the EDA financial scandal. Royal Examiner File Photos by Roger Bianchini

As it stands, new old indictments can be re-filed or new ones filed when prosecutors are ready to move toward trial. However, another delay occurred when the Special Prosecutor’s Office turned the case over to federal authorities in the Western District of Virginia. The consequent lag time in a renewal of criminal prosecutions related to the $26-million dollar-plus EDA financial scandal and civil litigation has frustrated some citizens, and now it seems, those citizens’ elected officials.

The “Resolution Seeking Justice For The Citizens Of Warren County” was passed on a unanimous voice vote on a motion by Delores Oates, seconded by Walt Mabe.

Following an introductory paragraph, a six-paragraph series of sentences beginning with “WHEREAS” traces the EDA’s mission of promoting local economic development; former Executive Director Jennifer McDonald’s role in a position “of public trust” in that endeavor; the allegations that “from at least 2016 until 2018, McDonald, along with various others, engaged in a variety of schemes to unlawfully take millions of dollars in money and property from the EDA for her own personal benefit”; the criminal charging and dismissals described above; concluding with the fact that “currently, no criminal charges are pending against McDonald.”

Citizen frustration has been expressed on social media that former EDA Executive Director Jennifer McDonald, here on the job with her board of directors in September 2018, is not currently facing criminal indictment.

The Resolution then concludes: “Now, Therefore, Be It Resolved By The Board As Follows:

1. The Board requests that a criminal prosecution be instituted as soon as possible against McDonald and any other parties who aided or conspired with McDonald to steal EDA funds or property.

2. The Board authorizes and directs the County Administrator to transmit a copy of this resolution to Acting U.S. Attorney for the Western District of Virginia Daniel P. Bubar, Commonwealth’s Attorney John Bell, Congressman Ben Cline, Senator Mark Warner, Senator Tim Kaine, State Senator Mark D. Obenshain, Delegate C Todd Gilbert, Delegate William D Wiley, Delegate Michael J. Webert, and all local media.”

Followed by acknowledgment the Resolution is considered immediately in effect upon its adoption on May 18, 2021.

Intent of Resolution

Royal Examiner contacted Board Chairperson Cheryl Cullers several days after the resolution’s passage to explore the process of mixing politics and law enforcement, as the resolution seems to do in ordering distribution of it to elected officials at the state and federal level with its “as soon as possible” assertion. Cullers said rather than politicization of a law enforcement endeavor, the resolution’s intent was largely informational.

The Warren County Board of Supervisors made it official on May 18, 2021 – it wants action ‘ASAP’ on the criminal side of the EDA financial scandal investigation. That investigation is now in the hands of federal authorities in the Western District of Virginia.

“I think with this the intent was to let people know that we do want to see justice for them in this case with the small amount of encouragement we can give, rather than to tell law enforcement how to do its job,” the Warren County board chair asserted. She pointed to the lengthy delay in re-establishing criminal prosecutions, as noted above the criminal cases have passed through the hands of three different prosecutorial agencies, finally being passed from the state to federal level from late 2019 to early 2020.

Cullers said that while she has not experienced much direct feedback from constituents, she is aware of social media expressions of frustration at the lack of action on the criminal side of the EDA financial scandal litigation since the original indictments were dropped by the Special Prosecutor’s Office in Harrisonburg to assure they could be re-filed when prosecutors were ready to proceed to trials against multiple defendants.

But when might that be after over a year of no visible action at the federal level?

Interim County Administrator Ed Daley left, and County Attorney Jason Ham was tasked with preparation and distribution of the board of supervisors ‘Resolution Seeking Justice for the Citizens of Warren County’ regarding criminal prosecutions related to the EDA financial scandal.

With the May 18th passing of the “Seeking Justice” resolution that is now, not only a matter of citizen but official county concern as well. Tasked by the county supervisors with distribution of the resolution to state and federal elected officials and the media, Interim County Administrator Ed Daley agreed with Cullers’ assessment, adding a subtle political push to the equation.

“I think the intent is to assure that the case is proceeding, and is not put in the inactive case file at the federal level,” Daley told Royal Examiner on Thursday afternoon, as the staff was preparing the resolution’s distribution documentation.

The full text of the resolution is available here.

Those two EDA-related matters begin at the 2-hour-and-13-minute mark of the County meeting video.

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EDA in Focus

Following Joint Closed Session with County, EDA authorizes $9-million civil settlement negotiation with former executive director

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The Board of Directors met with the Warren County Board of Supervisors in a joint meeting at their Work Session on Tuesday, May 11. Following an approximately 90-minute Closed Meeting, on a motion by Greg Harold, seconded by Jim Wolfe, the EDA Board unanimously approved the following resolution:

RESOLVED, that the Sands Anderson, P.C. law firm is authorized to enter into such agreements and make such court pleadings on behalf of the Industrial Development Authority of the Town of Front Royal and the County of Warren, Virginia (“EDA”) as may be necessary to effectuate in favor of the EDA a resolution of the EDA’s claims against Jennifer McDonald, MoveOn8, LLC, and DaBoyz, LLC, which resolution shall include provisions (i) that any judgment against Jennifer McDonald, MoveOn8, LLC, and DaBoyz LLC shall be the joint and several liability of all three entities, (ii) that any judgment against Jennifer McDonald, MoveOn8, LLC, and DaBoyz, LLC shall not be dischargeable in bankruptcy, and (iii) that any such judgment be for no less than $9,000,000.

The EDA has successfully proved in civil court that Ms. McDonald and the two corporations associated with her owe money to the EDA, and by extension, to the citizens of our community. This resolution, resulting in a significant judgment in favor of the EDA, once properly approved and entered by the courts, will represent an important milestone in the EDA’s effort to recover losses it has incurred in this matter. The judgment, if approved by the courts, will not be dischargeable in bankruptcy and these defendants will be liable for it until it is paid.

The Board understands that the citizens of Front Royal and Warren County expect accountability and restitution by any and all parties who were involved in misconduct or other unlawful takings from the EDA. This resolution, with support from the Warren County Board of Supervisors, is a step forward in that direction.


The EDA Board of Directors will persist in seeking redress for losses incurred by the EDA. Just as importantly, the EDA will continue moving forward, working diligently to bring jobs and investment to Front Royal and Warren County.

The EDA Board of Directors will have their next regular monthly board meeting via Zoom on Friday, May 21, 2021, at 8 a.m.

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EDA announces 1-year lease with SYSCO on Baugh Drive warehouse

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In a special meeting, the Warren County/Front Royal Economic Development Authority on April 30, 2021, has leased the 426 Baugh property to Sysco until May 2022. The monthly lease is $28,800 per month.

Earlier the EDA had made arrangements to sell the former Atlantic Skyline Building at 426 Baugh Drive for the full asking price of $5,750,000 to Parallel Virginia, LLC, a pharmaceutical processor of medical cannabis. The sale was contingent upon the conditional approval of the company’s application for a pharmaceutical processor permit in Health Service Area 1 by the Virginia Board of Pharmacy – that decision that was expected in March 2021 apparently had been postponed.

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EDA ups ante in civil litigation versus McDonald – without defense objection

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Could the Warren County Economic Development Authority (EDA) and its former executive director, Jennifer McDonald, be headed toward a settlement of the EDA’s multi-million dollar civil litigation against her and her two real estate LLCs, MoveOn8 and DaBoyz? That would appear to be a possibility in the wake of a “Stipulations” agreement hearing Friday morning, April 9, in Warren County Circuit Courtroom A.

Then EDA Executive Director Jennifer McDonald speaking at a 2017 town council work session – might she and her attorney soon be talking to EDA attorneys about a mutually agreeable settlement of the civil litigation against her? Royal Examiner File Photos by Roger Bianchini

After the adjournment of the 9 a.m. docket hearing to deal with remote phone connection issues for other defendants’ attorneys not present for the two-pronged April 9 hearing, Judge Bruce D. Albertson reentered the courtroom at 9:25 a.m. with the remote connection issues resolved. EDA lead civil attorney Cullen Seltzer of the Richmond law firm of Sands Anderson then read the five-point “Stipulations” submission to the court as McDonald and her attorney Peter Greenspun listened at the defense table.

The first of those stipulations set an amount of $62,315,315.51 as the EDA’s claimed damages in the civil case against McDonald and her two real estate companies alleged to have been used to move EDA assets to her or co-defendants’ personal benefit. It is worth noting that the original EDA civil litigation filing was in the $21-million range, later being amended with added defendants to near $28 million.


The second and third stipulations note that the McDonald-LLC defendants “take no position on the basis for” that plaintiff-claimed amount; nor do they admit to “any wrongdoing” regarding the EDA’s claim of damages.

It is the wording of the final two stipulations approved by the court that may hint at negotiation between the plaintiff and defendant:

“The Defaulted Defendants (McDonald, MoveOn8, and DaBoyz) have endorsed an order providing money damages judgment in the amount of $62,315,315.51 in favor of the plaintiff (the ‘Money Judgment Order’),” Stipulation 4 reads, followed by this:

“No sooner than 60 days from April 9, 2021, Plaintiff’s counsel may tender to the Court the Money Judgment Order if the Defaulted Defendants and the Plaintiff do not sooner enter into an agreement satisfactory to the parties. The Defaulted Defendants do not oppose the Court’s entry of the Money Judgment Order once tendered pursuant to this paragraph.”

Did Friday’s EDA civil litigation hearing indicate signs of progress toward an out-of-court resolution of, at least a portion of that litigation?

Defense attorney Greenspun and his client left the courtroom after the five minutes it took for the “Stipulations” submission to be read to the court by EDA counsel and for Judge Albertson to accept them, as indicated above, without objection from the defendant or her counsel, as the second part of the morning’s hearing began. That hearing was on a “Protective Order” request by defendant April Petty’s attorney Bill Shmidheiser to prevent volumes of his client’s bank records not relevant to the EDA case against Petty being posted on a secured database accessible by all the associated defendants, 15 in the first amended complaint and nine more added later.

Shmidheiser cited 3 pages related to a $41,000 check deposit regarding one real estate transaction as relevant to the case out of an estimated one thousand pages of Petty’s bank records from at least six accounts reviewed by the plaintiff attorneys and posted to the database.

EDA co-counsel Sean Hutson argued that the defendant should not be the one to determine the relevance of her own documents, that other defendants’ counsel should. After he polled four defense attorneys connected to the hearing remotely and getting four “no objections” to Petty’s counsel’s request, Judge Albertson granted Petty’s requested exclusion of apparently unrelated bank records from the case database.

Following adjournment after that 20-minute hearing, we asked EDA lead counsel Seltzer about the implications of the Money Judgment Order “Stipulations” agreement approved by the court earlier. However, he declined to discuss details of the status of an active case on the record.

Pictured virtually hosting recent EDA Board meeting, Chairman Jeff Browne is hopeful discussion can lead to out-of-court agreements on at least parts of EDA efforts to recoup alleged miss-directed assets.

So, we soon tried EDA Board of Directors Chairman Jeff Browne with whom we’d briefly discussed the morning’s hearing following adjournment of an 8 a.m. Emergency Meeting of the EDA Board earlier that morning. No action followed a 50-minute closed session. During the brief open session, Browne explained the “emergency” designation simply meant the meeting had been called within 24 hours of its convening.

While also reluctant to discuss the still-active EDA civil litigation, Browne did observe that the entering of a signed agreement by the involved parties citing a 60-day window to reach a mutually satisfactory conclusion was a positive sign that discussion would take place. Of the potential of such discussion, Browne observed, “If we can avoid trial and save tons of money by coming to an agreement it would be a positive development. I hope it works out.”

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EDA authorizes escrow fund use to help cover FY-21 debt service

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Following a multi-faceted hour-and-a-half closed session Friday morning the 26th at its regular board meeting of March, the Warren County-Front Royal Economic Development Authority Board of Directors authorized use of a portion of the $158,598.31 balance of an escrow account related to the Leach Run Parkway loan to make regularly scheduled loan payments for the Avtex loan and the Leach Run Parkway loan for April, May and June 2021. It was pointed out this will provide some relief to the County’s financial burden in covering the EDA’s debts for the remainder of Fiscal Year-2021 in the wake of the EDA financial scandal predating the current board and staff.

EDA attorney Sharon Pandak prefaced the motion by reviewing circumstances surrounding the Leach Run Parkway Loan escrow account, which also predates the current board and executive director’s tenure, and its recent reimbursement in part by United Bank following the bank’s finally closing with the Town of Front Royal on the assumption of responsibility for a loan to pay off the balance of the $8,440,797 FRPD headquarters construction project.|

The clouds have begun to clear from the FPRD headquarters financing situation – but about that $640k in previously paid interest … – Royal Examiner Photos by Roger Bianchini

Contacted later, EDA Executive Director Doug Parsons explained the original balance of the Leach Run Parkway Loan escrow account was $250,000 that had never been accessed. However, United Bank elected to draw on that Leach Run Parkway Loan escrow account for the interest and principal payments on the FRPD construction loan during the four months – November 2020 to February 2021 – it was awaiting finalization of the Town’s FRPD loan. The delay, as explained by both Town and EDA officials, was due to the discovery of a needed partial release of the deed of trust of the former Avtex Superfund site, for the 5.24-acre parcel upon which the FRPD headquarters is situated at 900 Monroe Avenue, had never been realized.


The Warren County Board of Supervisors chose to stop covering the EDA’s original FRPD loan payments that the Front Royal Town Council refused to accept moral responsibility for in the wake of the EDA financial scandal during the tenure of former EDA Executive Director Jennifer McDonald, after the October 2020 payment. That was when the EDA FRPD loan payments went from 3% interest-only in the $21,000 monthly range to over $50,000 in principal and interest monthly payments.

Parsons cited the United Bank Leach Run Parkway Loan reimbursed escrow account amount based on fluctuating monthly principal payments at $116,246.84, as noted above bringing the escrow account balance to $158,598.31. With a virtual ZOOM meeting torrent of numbers dancing through our heads, we asked Parsons for a rundown of exactly what was approved regarding the use of the escrow funds.

File photo of Doug Parsons, speaking center, dating to Feb. 2020, pre-pandemic and virtual ZOOM meeting world days.

“In an effort to help the County service our debt, the Board of Directors voted this morning to apply $53,953.29 toward the loan payments of the Leach Run Parkway loan and the Avtex loan for the remaining three months of FY-21 – April, May, June 2021,” he began, breaking that number down further: Avtex loan monthly payments of $14,021.80 and Leach Run monthly of $3,962.63 totals $17,984.43 x 3 = $53,953.29.

With the FRPD loan future principal and interest payments finally assumed by the Town, as had always been anticipated by the EDA upon completion of the project it financed for the Town, the lone remaining sticking point on the FRPD financing situation between the Town and EDA appears to be reimbursement of the approximately $640,000 of construction loan interest previously covered by the EDA and the County. And it is likely that number was part of a closed session discussion of the EDA’s countersuit against the Town, the second of three closed session topics adjourned from open session to at 8:06 a.m. Friday.

 

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We are bringing back two of our most popular classes for the month of June, Messy Makers and Art Adventures! Messy Makers returns for the month of June on Wednesdays from 4-5 pm. With the warm weather[...]
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