Defense counsel disputes evidence in EDA-ERE civil, related criminal cases

Donald F. Poe following his July 23 arrest and booking into RSW Jail – Photo RSW Jail website

In the wake of the July 23 arrest of Earth Right Energy (ERE) controlling partner Donald F. Poe, Royal Examiner explored recent defense motions in the EDA civil suit related to Poe and his solar energy LLC. On July 10 Earth Right Energy attorney Ryan Hutter filed one of the most recent in a series of motions between EDA and defendant counsels regarding alleged vagaries or legal failings in the plaintiff’s civil complaint of March 26.

In that response the ERE attorney points to flaws in the Cherry Bekaert report methodology, as well as gaps in its description of ERE’s contractual relationship with the EDA, including the return of $334,851 on the 426 Baugh Drive solar panel installation project. That reimbursement was made after the EDA board declined to proceed with solar panel installation at the massive 76,800 square-foot warehouse.

As Royal Examiner has previously reported, Cherry Bekaert devotes about a page and a half in the introduction of its investigative summary to “Scope Limitations imposed by the EDA BOD (Board of Directors) and County Board of Supervisors”. The company presents 18 bullet points of those limitations that it states prevented it from pursuing all leads, performing interviews with some key involved parties, or having independent access to all involved materials.

Limitations, assertions in EDA investigative report present a mixed bag

It is this admission of a largely County-EDA controlled evidentiary procedure that has unleashed public suspicion and social media accusations that the Cherry Bekaert investigation could have been targeted in certain directions and away from others by public officials who could be, or who know, potentially involved figures.

Huttar takes this admission and runs with it in his July 10 filing on his client’s behalf.

“Plaintiff treats CB (Cherry Bekaert) report as a third-party’s independent conclusion. However, this is a dastardly trick … the EDA hand-selected the information it provided CB and limited CB’s scope by withholding information necessary to make a rational independent (apparent missing word, “conclusion” perhaps). Therefore the CB report is nothing more than a half-truth provided by the EDA through CB. For example, CB, a firm that is qualified and capable of forensic audits, had all of the information provided in paragraph one of this heading and performed no other independent investigation,” Hutter wrote, adding that the CB report “does not even include or account for the $334,851 paid back to the EDA” on the aborted Baugh Drive contract.

They say ‘follow the money’ – but in the case of recent EDA financials that path may be a somewhat convoluted one out from EDA headquarters. Royal Examiner File Photo/Courtesy CassAviation

Follow the money – where?

The material Huttar references in “paragraph one” notes that the total $841,409 the Cherry Bekaert report states “was paid to Earth Right Energy by MCDONALD for solar equipment and installation that were never received” was comprised from “multiple contracts” including some that were performed by the company.

As noted in yesterday’s story on Poe’s two criminal financial indictments of July 23, the Cherry Bekaert fraud investigation report cites seven payments to Earth Right Energy between July 10 and September 19, 2018, totaling slightly over $1.2 million.

Poe, new McDonald indictments are a near perfect wording match

“Although the CB report does not factor in the $334,851 Baugh Drive reimbursement, the EDA clearly knew they received $334,851 for the Baugh Drive Contract per the emails exchanged by EDA and ERE,” Huttar wrote, citing CB Report Exhibit L.

However, the Cherry Bekaert report not only alleges that McDonald engaged in a series of fraudulent acts and misrepresentations to achieve the ERE solar contracts and payments, but also cites a series of four EDA payments to ERE between July 10 and August 14, 2018 for the Baugh Drive project totaling the above-cited $841,904 in allegedly misdirected EDA funds.

So even factoring in the cited $334,851 reimbursement on that project, it would appear that if the Cherry Bekaert EDA-ERE payment record is correct, ERE still owes the EDA $507,053 on the Baugh Drive project that was not reimbursed.

And as noted in the above referenced new indictments story, it remains unclear if the Kendrick Lane EDA office complex solar panel installation work was completed due to ongoing issues with electric meter reading so that billing of different tenant offices can be accomplished. According to the Cherry Bekaert report ERE was paid a total of $437,984.21 for the Kendrick Lane work at the old American Viscose/FMC/Avtex Administration building now occupied and managed by the EDA. As previously reported here a final wire transfer payment of $409,812.48 from the EDA operational account for the Kendrick Lane work was made to ERE on September 19, 2018.

Solar electricity provided or solar electricity not provided – that appears to be the Shakespearean question at issue at the EDA’s Kendrick Lane office complex. Royal Examiner File Photos/Roger Bianchini

In fact, Cherry Bekaert acknowledges problems with enacting the stated EDA plan to bill EDA office complex tenants for the electricity produced by the ERE-installed roof solar panels. Of a December 6, 2018 interview with McDonald, Cherry Bekaert reports, “However, MCDONALD acknowledged that the EDA had not begun selling power to tenants nor did she know if tenant metering had been connected or what was required through the local utility provider (the Town of Front Royal) in order to sell power directly to EDA building tenants. It was brought to our attention by County officials that the local utility provider would not permit individual or net metering which would potentially create a problem if what had been represented by MCDONALD was true.

“Regardless, the solar PV system allegedly installed at Kendrick was not operational. Further, no witness interviewed had firsthand knowledge of the system installation and none had performed a site inspection of the EDA roof to determine evidence of installation,” Cherry Bekaert investigators wrote.

The investigative public accounting firm also asserts fraudulent representations by McDonald concerning the Earth Right Energy solar contracts and payments.

“During our interview on 12-06-2018, MCDONALD represented that the EDA BOD had approved the purchase and installation of solar equipment in the board’s ‘closed session.’ Based on interviews with all of the above EDA BOD members (Drescher, Drummond, Blanton, Llewellyn, Patterson, Baker), they disagreed with MCDONALD’s assertions and denied authorizing the purchases from Earth Right Energy. In addition, WHITTEN, as Counsel to the EDA, confirmed that the EDA BOD cannot approve material transactions in closed session since the EDA is a political subdivision of the County and subject to the laws of the state of Virginia including Freedom of Information Act (FOIA). This is confirmed through EDA BOD minutes as the BOD comes out of closed session to vote on the record.”

Jennifer McDonald and her EDA board on the job in September 2018 – who could have guessed anything might be wrong …

The issue of allegedly forged documents indicating closed session board votes had been taken to support McDonald contentions some of her alleged embezzlement actions had been approved by the EDA board, became an issue during a May 30 EDA civil case hearing. However rather than ERE contracts, that document presented into evidence by McDonald’s counsel related to authorization of a $2-million transfer of EDA funds to McDonald to make a land purchase.

EDA Attorney accuses former executive director of forging document

Cherry Bekaert also claims McDonald and Poe were business partners during the time these contracts were being enacted and payments were being made, apparently for work not yet done.

“We determined POE to be an undisclosed business partner of MCDONALD based on text messages and emails between MCDONALD and POE. In addition, based on text messages between MCDONALD and Gail Addison (believed to be a relative of MCDONALD’s, possibly a sister) MCDONALD claims POE is her business partner on or about 09-21-2018,” the Cherry Bekaert summary of its findings states.

Jennifer McDonald on July 23 when she was transported to RSW Jail from the Fairfax jail she was transferred to on June 11, two-and-a-half weeks after her May 24 arrest. McDonald was in WC Circuit Court that day for a motions hearing. Photo RSW Jail website

Cherry Bekaert lists three interlinked Poe-controlled LLC’s related to the solar panel business: EARTHRIGHT ENERGY, LLC, Susan Poe (Donald Poe’s wife) registered agent; Earth Right Energy Solar Commercial, LLC, Mandy Newman (believed to be Donald Poe’s daughter) registered agent; and Earth Right Energy-South, LLC, EARTHRIGHT ENERGY, LLC listed as registered agent.

Of the operational status of the companies Cherry Bekaert writes, “it was apparent from documents, text messages, and e-mails examined that POE conducted the day-to-day business operations of the entities including, but not limited to, material discussions regarding solar photovoltaic systems and their installation.”

Of Poe’s business partner Justin Appleton the report adds, “Justin Appleton (‘APPLETON’), signed documents on behalf of Earth Right Energy Solar and claimed to be the ‘Managing Partner’ as well as a master electrician.”

If there is little agreement between the sides on contractual dynamics and financial liabilities, what the dueling plaintiff and defense motions do indicate is a convoluted financial and contractual scenario at the root of the EDA civil complaint involving McDonald, Earth Right Energy and its principals Donald Poe and Justin Appleton. All four, among others, were named as defendants in the EDA civil litigation seeking recovery of a total of about $20 million in allegedly misdirected EDA assets from nine defendants.

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It appears the $841,904 Earth Right Energy portion of that civil action will be facing lengthy debate in civil, and now criminal court proceedings as well.