EDA in Focus
EDA $17.6 M lawsuit: Sheriff McEathron, McDonald, Donnie Poe, others named
FRONT ROYAL – Nine defendants were named in a civil case filed Tuesday in the Circuit Court of Warren County by the Front Royal-Warren County Economic Development Authority for their alleged involvement in the misappropriation of $17,640,446.16 of the authority’s money.
Defendants named in the case filed by Richmond attorney Daniel M. Siegel, with the Sands Anderson firm, are former EDA Executive Director Jennifer McDonald, Warren County Sheriff Daniel McEathron, ITFederal principal Truc “Curt” Tran, ITFederal LLC, MoveOn8 LLC, DaBoyz LLC and Donald Poe and Justin Appleton, principals of Earth Right Energy Solar Commercial LLC.
The complaint states that McDonald, who worked at the EDA for nearly 20 years – 10 of them as executive director – “engaged in a variety of schemes to unlawfully take money from the Warren EDA for her personal benefit” from at least 2016 to 2018.
The filing states that “McDonald stole from the Warren EDA, misused its financial assets, deceived its leadership, withheld necessary information from the Warren EDA, misappropriated Warren EDA assets for her personal aggrandizement, and conducted a years-long campaign of deceit and exploitation.”
It further states that “Defendant McDonald enjoyed, and abused, an extraordinary position of trust. There was no part of the Warren EDA’s operations, records, or financial affairs with which she was not familiar.”
Defendants “engaged in a variety of schemes and artifice to unlawfully enrich themselves at the expense of the Warren EDA,” the filing states and involve the following projects:
- a. Work Force Housing – Royal Lane Property Embezzlements;
- b. Afton Inn Project Embezzlements;
- c. Criminal Justice Academy a/k/a Skyline Regional Training Academy;
- d. ITFederal Loan;
- e. Subsequent Payments to ITFederal;
- f. Unlawful Payments Concerning Earth Right Energy, LLC;
- g. Unlawful Payment of Town and Warren County Funds for Defendant McDonald Owned/Controlled Real Estate.
The filing states that McDonald has admitted to taking money from the Town of Front Royal and Warren County bank credits facilities for several purposes other than which they were intended. It notes that Defendant McDonald “often doctored and/or created false documents and then made or directed to be made false entries in the Warren EDA’s books and records to conceal the diverted monies.”
Moreover, the filing indicated that McDonald admitted via email on the day she resigned that she is liable for $2.7 million in EDA losses. According to the filing, she had agreed to pay that money back to the EDA by June 20, 2019 by either getting reimbursed by ITFederal, an unnamed private investor, and Earth Right Energy or pay it back herself. She did not specify if Sheriff McEathron was the unnamed investor, though the pair bought a number of properties together in excess of $2 million.
“The admission grossly undervalues the extent of her theft and unlawful distributions but is one indication of her consciousness of guilt in her conduct,” the filing notes.
The filing states that DaBoyz LLC, which was owned and operated by McDonald and Warren County Sheriff Daniel McEathron, purchased property at 2951 Rileyville Road in Page County for $554,427 through “credit facilities” belonging to the EDA.
According to the filing, on Sept. 14, 2016, the EDA wired $2 million to an account at First Bank and Trust to TLC Settlements LLC. That $2 million was subsequently paid to DaBoyz LLC. The filing says that DaBoyz LLC. then purchased several parcels of land.
The filing states that LLCs owned solely by McDonald or with McEathron “unlawfully diverted money” from the EDA through bank credit lines restricted for Front Royal and Warren County use.
The filing states that McDonald “authorized the wire transfer of money from a Warren EDA credit facility to the sellers of 1321 Happy Creek Road. The wire transfer was for $1,007,672.84.” That property, the filing states, was “conveyed” to Moveon8 LLC, another company owned and operated by McDonald and McEathron.
The filing states that McDonald fraudulently altered invoices for payments on the Afton Inn project, resulting in the embezzlement charge. McDonald doctored invoices for payments by United Bank that were supposedly used for the project. The filing states the invoices totaled over $50,000, though the project’s developer claimed those invoices were not submitted by the company.
The filing states that McDonald used that money to pay on her personal Sears credit card and Chase bank card accounts.
The filing also states that the Criminal Justice Training Academy a/k/a Skyline Regional Training Academy was “an artifice orchestrated to divert Warren EDA funds to personally benefit” McDonald, McEathron and Tran.
The filing further states that of the $10 million loan to ITFederal, “little to no proceeds” were applied to the ITFederal project. Instead, it says that McDonald and Tran “converted all or a portion of the proceeds of the ITFederal loan to their own personal benefit.”
Regarding the Earth Right Energy Solar Commercial LLC project that would have put solar panels on county schools, the filing states that McDonald directed over $1.2 million be given to Poe’s company using lines of credit established for Front Royal and Warren County. $841,904 was for the installation of equipment that was never performed, according to Tuesday’s filing.
The filing further states that defendants caused the EDA to make transactions for equipment or enter into agreements with Earth Right Energy LLC that were not approved by the EDA.
McDonald, McEathron, Tran nor Poe could be reached via telephone for comment; contact information for Appleton could not be found.
An EDA news release issued Tuesday afternoon states that the board, like the community was “shocked by the breadth of these allegations.”
It went on to say that the board was “disappointed that these transactions didn’t come to our attention earlier through regularly scheduled annual audits, we commit to doing everything we can to ensure this does not happen again. We recognize that this board must regain the public’s trust while seeking to recover pubic funds and holding those responsible accountable for their actions.”
Under the leadership of interim executive director John Anzivino, the board stated in the release that it had “put into place new policies ranging from expense approvals to screening of employees. We’ve reinstated a loan committee and appointed a budget committee for additional oversight while expanding the scope of the audit committee. We’re also seeking more engagement of current board members and their understanding of the responsibilities and oversight duties of this unpaid, volunteer role as well as new members with new ideas and different perspectives.”
The EDA board and the Warren County Board of Supervisors have begun discussions to make the County the fiscal agent for the EDA effective July 1, 2019 the release stated, which would bring all financial transactions under the watch of Acting Warren County Treasurer Jamie Spiker, which would, the release stated, “provide additional layers of oversight, protection and accountability so we can focus on what we do best – growing our region’s economy.”
The release further stated, “While we’re taking important steps now to safeguard our future, let us not lose sight of the many accomplishments of the EDA in recent years showing our significant role in our community’s economic development. Such accomplishments include the growth in the expansion of existing industries as well as the ongoing development of two industrial parks, one former Superfund site and a technology park.”
Since the mid-1990s, the EDA says it has helped create over 2,500 jobs and $500 million in investment in Warren County and the Town of Front Royal.
EDA in Focus
Federal Court ruling on McDonald criminal defense motion for change of trial venue may come this week
Update: As of March 14 our information is no decision has yet been rendered by the federal court judge on the McDonald defense motion for a change of venue for criminal trial slated for this mid-May to June.
On Wednesday, March 8th, the first pre-trial motions hearing in the federal 10th Western District of Virginia criminal cases against Jennifer McDonald related to the Front Royal-Warren County Economic Development Authority (FR-WC EDA) financial scandal will be held. One might anticipate a ruling by U.S. District Judge Elizabeth K. Dalton on McDonald’s defense motion to have the jury trial moved from Harrisonburg to Charlottesville. Other pre-trial motions are scheduled for March 28th and May 4th.
What is anticipated to be a five-week or longer trial on her 34 federal criminal indictments is scheduled to begin May 15, running into June. McDonald faces 16 counts of money laundering, 10 counts of bank fraud, seven counts of wire fraud, and one count of aggravated identity theft, the latter related to the Truc “Curt” Tran/ITFederal case.
Federal court-appointed defense counsel for McDonald, Eric Trodden, filed the change of venue for trial last month. He asserts that his client is not likely to get an unbiased jury in Harrisonburg due to Shenandoah Valley regional media reporting about McDonald and other related civil cases in which she was a witness or topic of legal arguments pointing a finger at her alleged role as the central figure in the estimated $26-million financial embezzlement and misappropriation of FR-WC EDA funds scandal.
There have been numerous delays in criminal prosecutions as the EDA criminal cases were moved due to local conflicts of interest or dropped due to speedy trial concerns surrounding the voluminous amount of evidentiary material, now estimated at over a million pages. For the most part, McDonald has been free on bond or out of jail as initial criminal charges were dropped at the state level due to those speedy trial concerns. Those jurisdiction moves were, first, from Warren County’s Commonwealth’s Attorneys Office to Rockingham County’s prosecutors office in Harrisonburg, then to the above-referenced federal district court also in Harrisonburg.
Last year McDonald was indicted on those 34 federal criminal charges related to the FR-WC EDA financial scandal of 2014-18 during her decade tenure as EDA executive director. As previously reported by Royal Examiner and others, EDA attorneys went on a civil case trial winning streak beginning in July of 2022 and ending in October with the initially delayed civil liability trial of McDonald’s husband, Samuel North. EDA counsel won 5 of 5 verdicts of personal liability, 7 of 7, including two related company liability findings in 2 of those cases. Total liability found by those five civil case juries, including compensatory, punitive, and statutory conspiracy findings, amounted to about $14 million. With out-of-court settlements, including a “no-fault” agreement with McDonald for real estate estimated at about a $9-million value, the EDA has, on paper, recovered about $24 million. (See related stories on the Royal Examiner website).
And while the related civil cases were held in Warren County Circuit Court in Front Royal, that local and regional reporting of McDonald’s often given 5th Amendment responses asserting her Constitutional right not to self-incriminate, in addition to EDA attorneys descriptions of her as the orchestrator of an alleged conspiracy to misdirect municipal and EDA assets to her and others personal gain, may have found its way to potential jurors in Harrisonburg is more than likely, her defense counsel asserts. The fact that Charlottesville, while only 11 miles further from Front Royal at 74 miles to Harrisonburg’s 63 miles, is considerably east of Harrisonburg and not part of the Shenandoah Valley-based regional media has largely insulated the Charlottesville community’s potential jury pool from the story, McDonald’s attorney believes. And the slight difference in distance from Front Royal/Warren County will not cause undue hardship on witnesses based in Front Royal and Warren County, McDonald’s attorney argues in his motion for the venue change.
Will the federal judge agree? – Get the popcorn and stay tuned for Wednesday’s pre-trial motions hearing, and we may find out.
EDA in Focus
County’s EDA Board authorizes another confidential settlement agreement at end of monthly meeting review of ongoing projects and opportunities
The Front Royal-Warren County EDA held their monthly meeting on Tuesday, February 28, 2023, at 8 a.m. All five Board members and the County Director of Economic Development were present at the Warren County Government Center Caucus Room. Following a closed session at the meeting’s conclusion, the board approved a resolution accepting another confidential settlement agreement. It is believed the agreement involves multiple civil litigation defendants in the 2014-2018 FR-WC EDA financial scandal cases. The wording of a portion of the motion to accept the confidential agreement states: “WHEREAS, the EDA desires to enter into the confidential settlement agreement with confidential parties providing for a confidential settlement payment to the EDA;”. There was no action on the other closed session topic, “business opportunities”.
As part of the Committee Reports, Board Chair Jeff Browne provided an update on the marketing plan in anticipation of formalizing the path forward at the next meeting. Mr. Browne also gave an overview of the presentation that he and the Director of Economic Development, Joe Petty, provided to the Virginia Economic Development Partnership’s (VEDP’s) Business Investment Team earlier this month.
Treasurer, Jim Wolfe, and Joe Petty provided an update on the proposed FY-2023-24 and FY-2024-25 Budgets, and they will be reviewed by the County Board of Supervisors on Thursday, March 2 at 7:30 PM.
Secretary, Jorie Martin, gave a recap of the recently held Open-Door Business Session hosted at the Virginia Inland Port on February 23, 2023.
Mr. Petty provided an update on the Department’s recent activities that including meeting with prospects, planning for upcoming regional programs, and presentations at meetings both locally and out-of-town.
As a follow up to old business the County and EDA will continue to move forward on IT (Information Technology) and social media programs that include resolving security and administrative rights to access profiles and data to ensure that all information is secure and up-to-date.
Presented as new business, Jorie Martin and Scott Jenkins provided the Board with a draft Request For Information (RFI) for the Avtex Redevelopment Site. The Board agreed to share the working document with the Town, as well as County, in order to provide additional feedback on the final version. There was also a discussion regarding ongoing work on a financial process Memorandum Of Understanding (MOU) between the EDA and the County to consolidate multiple agreements and clarify the process moving forward.
The next regular monthly Board meeting will be held on Friday, March 24, 2023, at 8:00 AM at the Warren County Government Center Caucus Room.
(From a release by the FR-WC EDA)
EDA officials, attorneys mum on circumstance of Rappawan/Vaught Jr. civil case dismissal – But a good guess might be…
The Front Royal-Warren County Economic Development Authority has made another out-of-court resolution of part of the civil litigation surrounding the financial scandal alleged to have been orchestrated by former FR-WC EDA Executive Director Jennifer McDonald between 2014 and 2018. In the wake of a jointly filed motion of December 21, 2022, filed with the court six days later, the EDA’s civil claim against Rappawan Inc. and company official William T. Vaught Jr. was dismissed “with prejudice” – meaning it cannot be refiled.
Vaught Jr. and Rappawan were involved in a 2016 transfer of real estate assets with Jennifer McDonald over a 37 day period in which McDonald, utilizing her DaBoyz real estate company and EDA assets according to the civil action claim, bought a piece of property from Rappawan/Vaught Jr. for $1.9-million dollars, then sold it back to Rappawan/Vaught Jr. 37 days later for $1.3 million, absorbing a $600,000 loss. The EDA alleges McDonald made the transactions with EDA assets and without the knowledge or approval of the EDA Board of Directors.
Royal Examiner contacted what is now the unilaterally Warren County-overseen FR-WC EDA Board of Directors Chairman Jeff Browne about the December resolution of the Rappawan/Vaught Jr. civil action. Browne explained that as part of that resolution he could not comment on the case dismissal. EDA counsel Cullen Seltzer and Executive Director Joe Petty both confirmed the gag order on details of the EDA/Rappawan/Vaught Jr. joint filing for dismissal of the civil case.
But with the EDA and its contracted Sands-Anderson legal counsels’ 5-for-5 track record in five civil jury findings of liability against 7 other civil case defendants last year, one might hazard a guess the EDA did not agree to the binding dismissal without realizing at least a significant compensatory claim in either real estate or cash as part of that dismissal agreement – let’s take a wild guess, somewhere in the $600,000 range.
In four trials last July and one more in October, five people and two companies were found liable for over $14 million in compensatory, punitive, and statutory conspiracy damages by Warren County civil trial juries. Judge Bruce D. Albertson later dismissed all defendant motions to have the jury verdicts overturned.
Judge notifies involved parties of denial of all defense motions to overturn jury verdicts in EDA civil liability cases
As previously reported, the EDA reached an out-of-court, “no-fault” settlement with McDonald for an estimated $9-million in real estate assets held in her or one of her real estate companies names. It would appear that such out-of-court settlements shield defendants against punitive or statutory conspiracy claims that tacked significant additional financial liability to several defendants in civil case verdicts handed down in July and October 2022.
Delayed civil cases
In other EDA civil court news, attorneys for seven more defendants – three companies and four people associated with those companies – filed a joint motion on January 3rd to have civil trials slated for March 13 continued to a date following Jennifer McDonald’s trial on criminal charges related to the EDA financial scandal. McDonald’s trial on over 30 criminal indictments is now scheduled for as many as five weeks in May-June in the Western District of Virginia federal court in Harrisonburg. Those defendants filing for a continuation were: TLC Settlements LLC and Tracy L. Bowers; Campbell Realty Inc., Jeanette M. Campbell and Walter L. Campbell; Service Title of Front Royal LLC and Victoria L. Williams.
The plaintiff EDA claims those companies involvement in some of McDonald’s real estate transactions utilizing EDA assets it says never received the necessary EDA board authorization led to the unjust enrichment of defendants as part of the conspiracy it alleges McDonald orchestrated to move EDA assets to her own benefit, as well as the benefit of other involved parties. EDA counsel filed a Memorandum in Opposition to those filings for delay in the civil trials of those defendants.
Several defense counsel pointed to McDonald’s past testimony in other related civil trial where the predominance of her testimony was to plead her 5th Amendment right against self-incrimination with the criminal cases hanging over her. Should she be acquitted, more forthcoming testimony exonerating their clients might be expected, defense counsels reasoned.
In arguing against the continuance, EDA attorneys noted that the case against these defendants collectively seeking over $4.4-million in damages was filed on April 15, 2020, and all the defendants were served two days later, with the court setting the trial to open March 13, 2023, on June 18, 2020. Plaintiff EDA counsel viewed the motion to continue as a reaction to the EDA’s string of successful civil prosecutions referenced above.
As Royal Examiner as previously reported, including the no-fault out of court settlement with McDonald and the five civil trial verdicts against seven other defendants last July and October, on paper the EDA has been awarded approximately $23 million in liability or settlement findings. And as noted above, with the closing of information on the jointly agreed upon Rappawan/Vaught Jr. civil case dismissal, it remains unknown if that settlement may have raised the compensation which the EDA has achieved in or out of the courtroom into or past the $24-million range.
On February 2nd Judge Albertson removed these civil cases from the March Warren County Circuit Court docket and told attorneys to seek mutually available dates in June for those defendants cases to be heard. Of course, that assumes the oft-delayed and batted from one jurisdiction to another criminal cases against McDonald aren’t once again continued on a motion by her federal court-appointed attorney.
EDA in Focus
FR-WC EDA moves to guarantee records protection during transition to County IT oversight, goes to Closed Session on litigation, business matters
The Front Royal-Warren County EDA held a special meeting on Wednesday, February 1, 2023, at 3:00 PM at the EDA Office on Kendrick Lane. All five Board members, legal counsel, and the County Director of Economic Development were present.
The meeting began with the discussion of moving the February Regular Meeting from Friday, February 24, to Tuesday, February 28 at 8:00 AM. The schedule change was unanimously approved.
Following the schedule discussion, the Board requested legal counsel to draft an agreement to protect EDA records in order to move forward with the information technology transition with the County.
The Board concluded the meeting with a closed session to discuss potential disposition of real property to business prospects, the small business loan committee applications, and legal consultation regarding active litigation. There was no new business following the closed session.
As noted above, the next regular monthly Board meeting will be held on Tuesday, February 28, 2023, at 8:00 AM at the Warren County Government Center.
EDA in Focus
County overseen FR-WC EDA reviews Conservancy Park status, Small Business Loan Committee applications, future property marketing options
The Front Royal Warren County EDA held its monthly meeting on Friday, January 27, 2023, at 8:00 AM at the Warren County Government Center. Four Board members, legal counsel, and the County Director of Economic Development were present. Chairman Jeff Browne participated remotely.
The regular meeting began with a discussion regarding a potential utility easement through the EDA’s Happy Creek Technology Park property to a neighboring parcel. The proposed development is in its early stages although the utilities could create a loop through the business park while also accommodating any potential future development on adjacent properties. The Board of Directors has concerns with any easements that may encumber any EDA owned property, however, they are open to future discussions if it can create an overall cohesive development area.
As part of the Committee Reports, Jorie Martin and Joe Petty provided an update regarding the Avtex Conservancy Property and recent presentations to the Board of Supervisors and Town Council. Mrs. Martin mentioned the interest in issuing an RFI (Request For Information) for the remaining property, and a work session may be scheduled to review the document.
Treasurer, Jim Wolfe, and the Director of Economic Development Joe Petty provided an update on the financial statements and the Board of Supervisors will soon begin having meetings regarding the Fiscal Year 2023-24 budget.
Staff from the Virginia Economic Development Partnership (VEDP) provided a presentation regarding the Virginia Business Ready Site Program (VBRSP) and ways the EDA can position its available properties. The discussion gave the Board better insight into the types of businesses interested in locating in Virginia and types of assets they look for in property.
The FR-WC EDA is still looking for applicants to take part in the Small Business Loan Committee. The EDA approved four (4) certificates of satisfactions for previous loans that have been successfully paid off. The Board also approved two amendments to existing leases for C-CAP and the Happy Creek Technology Park Grazing Lease.
The Board concluded the meeting with a closed session to discuss potential disposition of real property to business prospects, the small business loan committee applications, and legal consultation. No new business followed the closed session.
The next regular monthly Board meeting will be held on Friday, February 24, 2023, at 8:00 AM at the Warren County Government Center.
EDA in Focus
WC EDA release describes history, intent, and timing of Avtex Conservancy Park initiative
Front Royal-Warren County EDA representatives presented to the Warren County Board of Supervisors on Tuesday, January 10, 2023. The Avtex Ad Hoc Committee members, Jorie Martin and Scott Jenkins, along with the County Director of Economic Development, were in attendance to discuss the Former Avtex Fibers Conservancy Parcel. The FR-WC EDA recommends conveying the Conservancy Parcel, consisting of 240 acres, from the EDA to the County.
Shortly after the final work shift concluded at the Avtex Fibers Plant in 1989, the community began to wonder about the future of the Avtex Property. In 1993, the Parks and Recreation Department released the document Front Royal’s Plan for Parks, Trails, Bike-paths, and Greenways. While the plan addressed the entire community, it was one of the first local plans that stated, “The Avtex property on the West side of Front Royal may be amenable to eventual Park use, following the resolution of issues concerning the EPA project to modify the land and ponds … retention of the area as an open-space/wildlife preserve is the most desirable use of this land following the completion of its cleanup in the following 10-20 years.”
Another document published in 2000, The Avtex Fibers Conservancy Park Master Plan Report, was the culmination of work by stakeholders and the community that focused specifically on the Avtex Property and stated, “The Master Plan recommends restoration of the basin area into a conservancy park that combines ecological restoration and conservation of native habitats with passive recreation opportunities for local residents and visitors.”
Remediation of the Superfund site began in 2000 and continues today, as the EPA and FMC consistently monitor the property to ensure it is currently safe and in the future. The FR-WC EDA recognizes that now is the time to fulfill the community’s vision by implementing the 2000 Master Plan. Nationally there is an increase in the public’s interest in accessible green space and passive recreation. Additionally, the Avtex Trail would provide more opportunities to experience Front Royal’s location along the Shenandoah River.
“Moving forward with implementing the Conservancy Master Plan is just the beginning of a process to revitalize the site,” said Ad Hoc Committee Member Jorie Martin. “Avtex Fibers was once an economic engine of Front Royal, and the new trail will begin to change the perception of the property and create a fresh outlook for redevelopment on the remaining parcels.”
The FR-WC EDA will continue to work with Warren County, the Town of Front Royal, EPA, and FMC to ensure that the development of conservancy property and, ultimately, the redevelopment of the entire Avtex Property is a top priority for our community.
For more information regarding the FR-WC EDA’s vision for the Former Avtex Fibers Conservancy Parcel, contact the Avtex Ad Hoc Committee Members Jorie Martin at firstname.lastname@example.org and Scott Jenkins at email@example.com, and the presentation can be found at wceda.com. Information regarding the EPA’s cleanup efforts and reports can be found at www.epa.gov.
About the Front Royal-Warren County Economic Development Authority:
The mission of the Front Royal-Warren County Economic Development Authority (FR-WC EDA) is to strengthen the economic growth of our community by fostering a friendly business environment and providing services to create and retain quality jobs in Warren County. The Authority also supports community tourism, recreation, and arts & cultural initiatives to provide a better quality of life for the County’s residents, workers, and visitors. Coordination with the Board of Supervisors, County staff, the Town of Front Royal, and State agencies are integral to promoting economic development and tourism throughout Warren County.
For more information, contact Jeffrey Browne, FR-WC EDA Board of Directors Chair, at 540-635-2182, firstname.lastname@example.org
WC EDA proposes County takeover of Avtex Conservancy Park’s 240 in-town acres; Supervisors approve six of seven Airport Lease Agreements
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