EDA Allowed to Keep Sands-Anderson Legal Representation Despite Aknowledged Flaws in Recent Authorization Process

After a day in and out of the Warren County General District Courtroom beginning on the 9 a.m. docket and ending Judge Anne M. Williams day shortly after 5 p.m., Wednesday, July 23, there was somewhat of a “split decision” in the latest Truc “Curt” Tran versus the Front Royal/Warren County Economic Development Authority (EDA, WCEDA, FR-WC EDA or IDA) litigation.

In favor of the EDA in that “split decision” was a denial of Tran’s request for an “Injunction” against the EDA on the continued use of its existing legal counsel, primarily Sands-Anderson on “financial scandal” civil cases, due to FOIA (Freedom Of Information Act) violations in authorization of that continued representation.

On Tran’s side was the Court’s order of payment of court costs in the case by defendant EDA, rather than unsuccessful plaintiff Tran, who represented himself in court on Wednesday. Court officials estimated those court costs in a case like this as usually in the $70 to $80-dollar range.

It was in and out of the Warren County Courthouse during recesses called to allow for other cases to be addressed while EDA counsel William Miller of the ‘mbbtk’ law firm out of Fairfax and self-representing ‘Curt’ Tran pondered their final arguments before Judge Anne M. Williams. – Royal Examiner File Photos

In looking up “Injunction” as a legal filing, we got this definition: “An injunction is a court order that legally compels or restrains a party from taking specific actions. It’s an equitable remedy, meaning it’s used when monetary compensation wouldn’t be sufficient to address the harm or potential harm. In essence, an injunction either orders someone to do something (a mandatory injunction) or to stop doing something (a prohibitory injunction).”

From the discussion with Tran about the litigation, it appears he was seeking to have the court rule against the EDA’s use of public funds to pay for a continuation of its legal representation by Sands-Anderson. In his Final Arguments, Tran told the court, “If you don’t tell them they can’t do this today, they’ll go do it again.”

His contention appeared to be that the EDA Board of Directors, particularly its Chairman Rob MacDougall, was trying to hide the additional legal costs Sands-Anderson would generate to be covered by county taxpayers. He pointed to reports the EDA had already spent as much as $9-million in legal costs related to the 2014-18 “financial scandal” Tran has found himself embroiled in.

Background

However, it may be noted that the EDA has received judgments in civil litigations in which Sands-Anderson represented the EDA’s interests in the neighborhood of $28-million. If we recall correctly, Sands-Anderson went undefeated in EDA civil liability court cases.

However, Tran noted that his liability of nearly $14-million based on a $10-million base economic developmental loan and an additional $2-million in developmental expense coverage is under appeal. In addition to such appeals, there is the specter of some civil case defendants’ inability to pay. That has led to the transfer of some defendant properties to the EDA.

Royal Examiner photo of access road and abandoned ITFederal building initially proposed for two stories to house personnel to begin its $10-million economic development project at the EDA-overseen former Avtex Superfund site.

In fact, Tran and the EDA were in Circuit Court on July 9th on Tran’s appeal of a Court ruling awarding the 73-acre economic development parcel purchased by his Lewisburg Way LLC. That property has an assessed value of $1,414,300. Judge Daryl Funk, who made the initial Lewisburg Way property-transfer ruling, denied Tran’s appeal to overturn that ruling. And as previously reported, Tran has not yet publicly indicated whether he will appeal that ruling.

It was a ruling based in the property being paid for with money transferred from ITFederal to Lewisburg Way with Tran as principal of both companies. In earlier civil litigation Tran and ITFederal were found liable for nearly $14-million, including penalites and interest. The basis of that $14-million total was an initial $10-million economic development loan to which $2-million in developmental expenses was later added by the EDA during the tenure of EDA Executive Director Jennifer McDonald. As readers will recall, McDonald is now imprisoned on 30 criminal convictions related to the unauthorized movement of EDA assets during the 2014 to 2018 time frame.

So, with all variables involved, how much the EDA has or will actually realize in that string of civil court wins may be less than the $28-milion awarded in court. In a story by this reporter dated February 14, 2024, Royal Examiner reported:

“To date, the EDA has been awarded judgments totaling $27,984,694.10, but has only recovered $7,728,888.40 (cash, real estate, and other assets) through litigation and mediation. The EDA will never recover the full amount lost, but it is committed to continuing efforts to recover as much as possible. To date, the EDA has incurred legal costs in excess of $7.6 million.”

Those numbers indicate a relative break-even “push” in legal costs versus civil court awards collected as of early 2024. Tran’s largest single EDA civil court liability ruling of approximately $14-million has yet to be collected due to his appeal. As we recall, while Tran initially continued to make payments on his bank-enabled $10-million EDA economic development loan, he stopped those payments once the EDA’s civil litigation was filed against him.

No finding of intent to defraud

In prefacing her decision, Judge Anne Williams said that she found no evidence of intended malice or deception in the actions of the EDA board in April, May, and June of this year. Rather, board member confusion, as well as conflicting advice by other governmental representatives, appeared to be at play in the three-month series of EDA meetings during which Sands-Anderson legal representation remained on the table.

Photo of 3 of 5 EDA Board members physically present, with one remotely connected and one absent, at meeting in which future Sands-Anderson legal representation would be discussed during Closed Session. Technically, it was ruled an insufficient number to authorize legal representation out of closed session.

As cited above, Tran’s Injunction filing revolved around the EDA Board’s authorization to continue to retain Sand-Anderson as EDA legal counsel in upcoming “financial scandal” related litigations without open meeting discussion or a legal vote. The matter had only been discussed by the EDA board in closed session early in the process, plaintiff Tran told the court.

It may be noted that, as reported in our recently published story “EDA responds to Tran FOIA on movement of $858k+ of Court Ordered Reimbursements,“ the day prior to this hearing, the EDA and its board Chairman Rob MacDougall had responded to a July 15th FOIA request by Tran. But our understanding is that FOIA requests and responses were only indirectly related to Tran’s Injunction filing.