A motions hearing in the civil liability case of the “Warren Economic Development Authority” versus Truc “Curt” Tran and his ITFederal company began Monday afternoon, July 18, with plaintiff accusations of a willful withholding of defense evidence regarding ITFederal bank records. EDA attorney Karrisa Kaseorg told Judge Bruce D. Albertson that an ongoing effort to acquire missing records indicated by exhibit numbers of materials provided by the defense peaked over the last month to two months.
Consequently, she asked that defense counsel Gregory Melus provide what the plaintiff believes are those withheld materials “by midnight tonight”. Melus told the court that he personally had responded to all inquiries he directly had seen. However, he noted five to six attorneys and paralegals working on the case, adding that having been, like the court, “ambushed” by the short-term request for the allegedly withheld material, he did not know if the by-the-end-of-the-day plaintiff request could be met.
Judge Albertson worried that with jury selection slated for Thursday, and opening arguments and evidence anticipated to start Friday, that the plaintiff request would require a continuation of the start of the trial.
“We’re not asking for a continuance,” Kaseorg replied, “we want to see the documents.” Plaintiff counsel said they had no indication from the defense that the requested documents were subject to withholding as “privileged” information.
“Mr. Tran and the defense have known this was big problem for over a month … and we have been looking for a good faith settlement,” Kaseorg told the court observing she did not put the problem entirely on Melus’s shoulders. “I agree with Mr. Melus – we are looking down the barrel of 19,000 documents,” she said noting that if it was going to be such a problem the defense team could have communicated that on June 1 when the recent round of plaintiff requests began.
After hearing both sides’ explanation of the pre-trial predicament over about 35 minutes, Judge Albertson read some material while considering a decision. Citing the lateness of the plaintiff motion related to the scheduled start of the trial, he denied the motion for an immediate production of the missing material, with the plaintiff’s exception to the ruling noted. Asked if he also was denying the related motion to “compel” production of certain evidence, the judge responded, “Yes, it’s too close to trial … This should have been done earlier.”
Judge Albertson then denied a defense motion asking that material related to “other business enterprises” of Mr. Tran be withheld as not relevant to his EDA dealings. As previously reported by Royal Examiner, during a July 8 motions hearing on this case Judge Albertson noted he had previously expressed some “skepticism” about the defense objection to EDA evidence about Tran and his company’s use of portions of the $12 million it received in two loans related to proposed development here, primarily at the Avtex/Royal Phoenix Business Park site in Front Royal, for other business ventures in Alexandria or elsewhere. The EDA’s compensatory claim is for approximately $9 million, as Tran has kept current on his $40,000-plus a month loan payments over several years.
The EDA contends Tran acquired the EDA loans fraudulently and conspired with then-EDA Executive Director Jennifer McDonald in doing so. Disputed evidence cited also related to EDA involvement in development of a Criminal Justice Academy and Tran’s Front Royal Farms plan, neither of which came to fruition along with the failed Avtex site business proposal.
Also as previously reported, Tran’s counterclaim appears to revolve around the contention he was taken advantage of by McDonald, and that the EDA Board of Directors at the time should have identified the alleged financial improprieties McDonald is now accused of by the EDA prior to Tran’s involvement. Pointing to a primary disputed aspect of the EDA-Tran/ITFed counterclaims of liability, Judge Albertson observed, “If he’s part of a conspiracy with McDonald, he’s not a victim of the negligent contention.”
And following what is slated to be a two-day trial in the EDA versus William Lambert civil liability case, and one day of jury selection for the EDA vs. Tran and any further motions, we will see the two sides begin their presentations on their respective “roadmaps” of what transpired between McDonald, Tran, ITFederal, and the EDA in the single largest compensatory damages civil case related to the FR-WC EDA financial scandal.
As County-directed EDA develops detailed Strategic Plan for the future, it moves toward joint meeting with Town counterpart
The still legally named Front Royal-Warren County Economic Development Authority (FR-WC EDA, more commonly now referenced as the WC EDA in the wake of the Front Royal Town Council’s circa 2019/20 withdrawal from participation*) held its regular monthly meeting for September, Monday afternoon the 26th, at the Warren County Government Center. With no action items on the agenda, the focus of County EDA Director Joe Petty and the five EDA Board of Director members were committee reports concerning discussion of a cooperative path forward and procedural adjustments surrounding a reworked Strategic Plan.
Asked about the EDA’s direction in the wake of the meeting, now full-time County EDA Director Petty said, “The meeting was productive in getting the Board of Directors thinking about assigned tasks for the upcoming Strategic Planning Session. There has been a lot of positive movement in the past few months and the Board is looking forward to continuing that momentum into the session by planning for the future. This includes having a cooperative relationship with the Town, FREDA, and County for economic development initiatives.”
Board Chairman Jeff Browne launched the cooperative tone during his opening Executive Committee Report. He sought input on a preferred date for, and legal advice regarding, a largely social “get-to-know” each other meeting with the newly created Front Royal Economic Development Authority (FREDA) Board of Directors. With the meeting planned chiefly as a “getting to know each other” session with no business or action items scheduled, Browne inquired of EDA attorney Sharon Pandak, present remotely, if it would require the same legal notification as regular board meetings. Pandak said that with the intent that the two full boards be present, yes, published public notice of the date and time of the meeting would be required as usual.
Later Browne noted a recent meeting with Vice-Mayor Lori Cockrell to discuss cooperative efforts between the now divided Town and County EDAs. And with Mayor Chris Holloway’s announced retirement from politics Cockrell is also essentially the Mayor-in-Waiting as the only person on the ballot for the mayor’s seat in the coming November Election.
Cooperative movement to a mutually agreeable end was also evident in discussion of a utility easement across WC EDA property at the Avtex site to allow Town crews to perform storm-water management work on existing infrastructure as needed in the future. A consensus was reached to put approval of at least a short-term agreement outlining what work and access is anticipated to eventually be on the table, on the EDA’s next regular monthly meeting agenda in October.
Also, during his Executive Committee Report, Browne noted an upcoming meeting with a senior member of the Council for Competitiveness regarding American companies, particularly supply chain businesses, planning to relocate from overseas seeking favorable locations in the U.S. “It seems like we’d be a really great location for them,” Browne said of the county with its Interstate Highway system crossroads location, as well as the Inland Port connection to the Norfolk Port Authority system.
After a brief discussion of some EDA properties insurance coverage issues forwarded by Jorie Martin, Jim Wolfe summarized work towards establishing goals for an upcoming Strategic Planning meeting slated for 8 a.m., potentially thru lunch time, on Friday, October 14. Chairman Browne pointed to a preparatory meeting envisioned for the previous Friday, October 7, where individually assigned tasks for board members related to the Strategic Plan update, budgetary and marketing matters would be reviewed to give the following week’s meeting a stronger jumping off point. Of the two-pronged October assault on the evolving Strategic Plan, Browne described a strategical perspective: “Focusing ultimately on the big picture – how do we assess competing priorities and reconnoiter them in terms of importance and their immediacy.”
That discussion segued into the Asset Committee Report of Greg Harold, who led off with the good news that with the Baugh Drive warehouse sale being finalized, that property was no longer on the EDA’s asset list. As to its remaining land assets, Harold pointed to the EDA’s recruitment of ULI (the Urban Land Institute) for assistance, particularly as to developmental and marketing issues with the redevelop-able 150 acres of the old 467-acre Avtex “Brownfield” site looming behind the EDA office complex on Kendrick Lane.
Queried later about ULI, County EDA Director Petty explained that “ULI is the oldest and largest network of cross-disciplinary real estate and land use experts in the world.” Of ULI and its membership, Petty pointed to a goal of “delivering the mission, shaping the future of the (real estate/land use) industry, and creating thriving communities around the globe.”
During his presentation Harold noted that ULI’s team of professional land developers could help the EDA determine, not only a highest or best-use of a given property like the aforementioned “Brownfield” Avtex site, but also “the most realistic” and achievable uses.
“It’s not free – it costs money,” Harold pointed out to his colleagues. But with a worldwide track record of success for its members, it could be money well-spent in jump-starting the long floundering Avtex/Royal Phoenix site redevelopment, Harold noted. “I’ve come to the realization that for me Avtex is too big for me to try to figure out what to do with,” the Asset Committee chairman observed of the gorilla in the room of EDA property assets.
“What you’re talking about, is where needed bringing a level of additional professionalism into it, to help make us make good decisions and avoid things that we may not, just from a lack of experience, know about,” Browne observed of the benefit of ULI input.
The Future, if not NOW – flashing back to coach George Allen’s “The Future is Now” slogan for his Washington NFL team – certainly appears to be on the horizon for the WC EDA.
*FOOTNOTE – Against the advice of then-Mayor Eugene Tewalt, during the term of Interim Town Manager Matt Tederick, circa 2019/20, the Town Council elected to ignore offered “good-faith negotiations” to determine who was owed exactly what in the wake of the estimated $26-million joint-Town-County EDA financial scandal, in favor of hostile civil litigation over the Town’s unilaterally claimed losses.
Poe joins EDA civil defendants in motions to nullify civil liability verdicts; Tran counsel granted additional time to file their motion to overturn jury verdict
After expressing some initial reluctance to invest more in legal fees attempting to overturn a Warren County Civil Court jury’s ruling of approximately $1.3 million in base ($945,000) and punitive ($409,800) damages against him and his Earth Right Energy (ERE) company, Donald Poe joined the line of EDA civil case defendants seeking to have Judge Bruce D. Albertson overturn jury liability verdicts rendered in July. The Poe/ERE “Motion To Set Aside Jury Verdict Or In The Alternative To Award A New Trial” was received and filed in Warren County Circuit Court Clerk’s Office on Tuesday, September 6.
The rationale for that motion was along the lines of previous filings by counsel for April Petty, William Lambert, and a still pending one for Truc “Curt” Tran. The defendants’ contention is that the jury verdicts were based on evidence that did not meet a civil code standard to justify the finding of liability in each defendants’ case. Similar motions to strike plaintiff EDA evidence and their cases against the defendants were made by defense counsel and denied at the outset of several of those July trials. To those arguments forwarded by defense counsel on several occasions, Judge Albertson responded that it was “for the jury to decide” the relative weight of evidence to be presented.
In a related development, on August 25 over the objection of plaintiff EDA counsel, Judge Albertson granted Tran/ITFederal counsel’s request for additional time to complete its filing for overturning of the jury’s finding of compensatory liability of about $12 million-plus some interest against Tran and ITFederal. The judge set a new filing schedule of September 15 for defense filings, plaintiff responses by October 17, and defendant replies to plaintiff’s response by October 27. An initial defense motion to overturn filing date was set for 31 days from the July 28 jury verdict in that case. Running towards an August 28 deadline on that schedule, Tran counsel sought the additional time, as noted above, granted over the plaintiff’s objection.
As part of his order granting the filing extension for Tran/ITFederal, Judge Albertson ordered the defendants not to move substantial company or personal assets during the moves toward a final court ruling on the verdict: “Tran and IT Federal (on behalf of itself and on behalf of its wholly-owned subsidiary Lewisburg Way, LLC) shall not sell 943 Happy Creek Road before the court enters its final order, consistent with Code 55.1-400, which precludes fraudulent conveyances,” the judge began, adding, “Mr. Tran and IT Federal shall not dispose of, encumber, or waste any assets of IT Federal. In the same vein, IT Federal and Tran shall not gift, convey, assign, transfer or otherwise dispose of, encumber, or waste any personal assets to delay, hinder, or defraud the Warren EDA as a creditor.”
Motions to set aside the jury verdict of $125,000 of compensatory liability in April Petty’s case was filed with the court on July 28; and in William Lambert’s jury finding of $350,000 of compensatory liability, the motion to overturn was filed on August 18.
And the jury trial of Samuel North, cancelled in July following North’s filing of bankruptcy, has been rescheduled for October 25, beginning at 8:30 a.m. North is former EDA Executive Director Jennifer McDonald’s husband. The central figure in the EDA “financial scandal”, McDonald reached a no-fault settlement agreement in her civil liability case with the FR-WC EDA. She agreed to turn over $9 million in assets, largely real estate, to the EDA to settle their claims against her; while admitting no fault in her acquisition of those assets.
She still is facing criminal trial in federal court in the Western District of Virginia on multiple charges related to the investigation into EDA finances during her executive director’s tenure. Due to its complexity and the amount of involved evidence – cited at over a million pages of documentation – that trial originally scheduled for as many as five weeks this fall, has been pushed into May 2023.
See trial and verdict stories on the Royal Examiner website front page under the NEWS banner at sub-section “EDA IN FOCUS“.
FR-WC EDA finalizes $5.7-million sale of Baugh Drive warehouse to Shahi Foods
The Front Royal-Warren County Economic Development Authority (FR-WC EDA) is pleased to announce that Shahi Food, LLC is the new owner of 426 Baugh Drive in Stephens Industrial Park. The new property owners will relocate and expand their successful family-owned business to Warren County.
The FR-WC EDA originally purchased the property in 2018 and has since been exercising thorough due diligence and recruitment, which led to today’s announcement the contracted $5.7M sale of the property has been finalized. Shahi Food, LLC projects a $7M capital investment and a 5-year employment projection of 100 individuals and begins manufacturing operations at the Baugh Drive site in late 2022/early 2023.
Shahi is currently based in a nearby county and has been in business for over 30 years. They produce an ethnic ice cream bar called Shahi Kulfi in 6 flavors – chocolate, strawberry, cream, pistachio, mango, and coconut. They currently distribute to over 2000 retail outlets in 20 states and have a large market presence in New York, New Jersey, Texas, Ohio, and Virginia. Shahi is approved for retail sales in large grocery and warehouse stores in the US and has received approvals for European distribution of their products. Shahi Food, LLC’s parent company is Shadchem—an international food and consumer products group with a presence in over 16 countries.
“This announcement is the culmination of an intentional and active effort by the FR-WC EDA Board of Directors to bring companies to Warren County that provide quality jobs and values to our
community,” said EDA Chair Jeff Browne. “The sale not only brings jobs and investment to the area, but the proceeds allow the FR-WC EDA to pay down other debt obligations.”
“The County of Warren has had a long-standing partnership with the FR-WC EDA,” said County Administrator Dr. Edwin Daley. “We are incredibly excited about the recent announcement and look forward to having Shahi Food, LLC in the Warren County community for many years.”
About the Front Royal-Warren County Economic Development Authority
The Front Royal-Warren County Economic Development Authority (FR-WC EDA) aims to strengthen our community’s economic growth 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 offer 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 or firstname.lastname@example.org.
Warren County EDA tackles multi-faceted August meeting Action Agenda
The Front Royal Warren County EDA held its monthly meeting on Friday, August 26, 2022, at 8 a.m. All five Board members, legal counsel, and the County Director of Economic Development were present.
The monthly meeting began with the election of officers, which was approved unanimously. The new officers are Chair Jeff Browne, Vice Chair Scott Jenkins, Treasurer James Wolfe, and Secretary Marjorie Martin.
As part of the Executive update, member Jim Wolfe suggested a future board retreat to discuss updating the Authority’s strategic plan. Jorie Martin provided an overview of an existing insurance policy for the FR-WC EDA office building at 400 Kendrick Lane. The Board approved restructuring the policy to provide appropriate coverage and cost savings on the space.
The Chair provided an update on the lease of Suite C at 400 Kendrick Lane. C-CAP will be occupying the suite for their operations starting September 1st.
Jeff Browne summarized a meeting he had with Chair of the Front Royal Economic Development Authority (FREDA), Rick Novak, who was in attendance for the meeting. One of the issues discussed that both Chairs agreed on is a joint EDA retreat to have an opportunity to meet each other in a less formal setting. Novak also provided information on the upcoming Festival of Leaves taking place in Downtown Front Royal on Saturday, October 15th.
Treasurer, Jim Wolfe, provided an update on monthly financial statements and the small business loan committee re-establishment.
The Warren County Director of Economic Development, Joe Petty, provided an update on current activities related to prospects, small business loans, annual audits, and marketing.
EDA’s legal counsel presented a by-law revision that would allow electronic meetings as permitted by the Virginia Code; and additional recommendations by the ad hoc committee consisting of Jorie Martin and Greg Harold. Upon review of the revisions, the Board unanimously adopted the revisions.
As part of new business, the Board approved rescheduling the September meeting, which will be held on Monday, September 26, 2022, at 8 a.m. at the Warren County Government Center Caucus Room.
The Board concluded the meeting with a closed session to discuss business opportunities, with no new business following the closed session.
EDA Board Chairman Jeff Browne reacts to July civil litigation results ordering total of over $13.35 million paid to the County Economic Development Authority
As noted in our lead story on the “Warren Economic Development Authority” (EDA) versus Truc “Curt” Tran and his ITFederal LLC company civil liability case result (See: Jury awards WC EDA $11.9 million-plus in civil compensatory claims against ITFederal and Truc ‘Curt’ Tran), involved players on the plaintiff’s side deferred to current EDA Board Chairman Jeff Browne for a reaction, not only to the Tran/ITFederal result, but a month in which four civil liability cases went the EDA’s way. After a day of reflection on this month’s civil liability trials, much of which he watched in the courtroom, often with other EDA board members, this is what Browne told Royal Examiner:
“As part of the Jennifer McDonald lawsuits, the EDA successfully sued six defendants this month in four civil jury trials and was awarded about $13 million in compensatory damages, $400,000 in punitive damages, and $75,000 in damages for statutory conspiracy. There will be additional civil trials in March 2023.
“The EDA’s main responsibility in these lawsuits is to recover assets that rightfully belong to the EDA and ultimately to the residents of Warren County. It’s a work in progress, but I’m pleased with the outcomes. Every defendant was found liable on multiple charges. Every defendant has to pay. A jury found that the EDA Board of Directors with oversight responsibility of Jennifer McDonald wasn’t negligent in retaining her as it took immediate steps after finding solid evidence of her misbehavior.
“But that isn’t the whole story. Members of the EDA Board were present on every day of every trial. We were impressed with the juries and Judge Albertson. Jury members listened attentively, took notes, and showed in their verdicts that they had a command of the facts in each case. Judge Albertson was fair to both sides of each case and did a good job of managing each trial. Prior members of the EDA Board, prior staff EDA members, a former county administrator, and former members of the Warren County Board of Supervisors all stepped up to testify and do their civic duty. We can be proud that our judicial system still works.
“The criminal process moves forward in other venues. In the meantime, some measure of justice is present in the jury verdicts in Warren County this month. For that, we are grateful.”
Coupled with the out-of-court “no-fault” settlement agreement with McDonald for an estimated $9 million in real estate assets, the courts have now ordered the return of $22 million to $23 million in assets to the EDA. At various points in the investigation into alleged embezzlement and misdirection of EDA assets between 2014 and 2018, the total involved amount has been cited from $21 million to $26 million. There have been significant legal fees involved, perhaps $6 million or more. But in the wake of this month’s results, it appears the EDA’s contracted civil counsel from the Sands Anderson law firm of Richmond are earning that money.
Asked for a reaction to the verdict, Tran and his attorney Gregory Melus declined comment. As noted in the above linked story on the verdict, Melus notified the court of his intention to file a motion to overturn the verdict as not supported by the evidence presented at trial, as have the other three involved civil case defense attorneys.
Jury awards WC EDA $11.9 million-plus in civil compensatory claims against ITFederal and Truc ‘Curt’ Tran
After five hours of deliberation beginning shortly after 9 a.m., at 3:30 p.m. Thursday afternoon, July 28, a Warren County Circuit Court civil case jury awarded the “Warren Economic Development Authority” (aka EDA, WC EDA, FR-WC EDA) a total of $11,919,313.38, plus some interest payments from defendants Truc “Curt” Tran and his ITFederal LLC company. The finding of liability against the defendants related to exchanges of money for Tran and ITFederals’ plan to develop a 30-acre parcel at the 148-acre Royal Phoenix Business Park portion of the former Avtex Superfund site in Front Royal. That seven-person civil case jury also dismissed all counterclaims by co-defendants Tran and ITFederal related to breach of contract and surrounding claims against the EDA.
However, the jury did not find the defendants liable on claims of Conspiracy and Fraud that could have led to significant punitive damages up to $350,000, or as high as triple the compensatory claim of $11.9 million if found guilty of statutory conspiracy indicating malice against the plaintiff. Tran was found liable on claims of Conversion, Unjust Enrichment, and Ultra Vires, the latter actions outside the authority of involved officials. ITFederal was found liable on claims Conversion, Unjust Enrichment, Ultra Vires, and Breach of Contract.
The breakdown of liability of the defendants was $1,499,986 against Tran, plus 3-1/4 years of interest on that amount accumulated since the March 2019 filing of the EDA civil actions against defendants alleged to have worked with former EDA Executive Director Jennifer McDonald between 2014 and 2018 to defraud the EDA out of an estimated $21-million. The $11.9-million claim of compensatory damages against Tran and ITFederal was the largest single portion of the EDA civil liability actions for recovery of lost assets. With approval of a bankruptcy court judge, McDonald settled EDA claims against her in an out-of-court “no-fault” settlement for what was cited as $9 million in real estate assets.
From testimony over four days of trial in the Tran/ITFederal liability case that $1.499-million finding against Tran related to EDA payments made to Tran under the pretense it was front money that would be reimbursed to the EDA by a $1.5 million Virginia Economic Development Partnership (VEDP) grant that was never acquired, or even applied for.
The finding of liability for $10,419,327.38 against ITFederal revolved around the $8,419,327.38 balance of a $10-million loan/promissory note the EDA gave the company to begin development of the ITFederal parcel behind the EDA offices in the old Avtex Administration building off Kendrick Lane. As noted in previous stories (see LINKS at end of story) on testimony and evidence presented during the trial, ITFederal was presented to the EDA Board of Directors in 2015-16 by then Sixth District Congressman Robert Goodlatte as not really needing the loan. Past EDA board members Greg Drescher and Ron Llewellyn testified that Goodlatte suggested the loan as a public relations move to illustrate Virginia’s positive work with the private sector to redevelop a former federal Superfund “brownfield” site.
Consequently, despite the written-in 30-year payback loan term, EDA officials believed it was actually being done as a short-term public relations effort, and would be paid back in a matter of months when what they believed was an existing $140-million ITFederal contract with the Nuclear Regulatory Commission (NRC) kicked in. A McDonald representation to her board that Tran would become an “anonymous donor” of $8-million to a proposed Criminal Justice Academy project then being worked on by the EDA, was seen as the start of that early repayment, the former EDA board members testified.
It appears this civil case jury, as three before it this month, have rejected a defense theory of the case asserting that the defendants were unwitting victims of McDonald’s alleged lies concerning the movement of EDA assets, just as the EDA was victimized. Plaintiff attorneys from the Sands Anderson law firm of Richmond, Va., countered those arguments by asking the jury to “follow the money” to see who benefited from the misinformation they allege McDonald was giving the EDA board, as well as EDA auditors.
During the previous morning session on Wednesday, the two sides presented their final witnesses: for the defense Mark Viola, proprietor of Viola Engineering, who did geo-technical work for Tran on the ITFederal site regarding construction delays related to underground discoveries of old utility piping and substances; and in plaintiff rebuttal to some of the previous day’s defense assertions, former County and EDA attorney Dan Whitten.
Late Wednesday, the court heard motions from both sides to strike the opposition claims against their clients. After listening to extensive arguments from both sides, Judge Albertson denied all motions to strike claims by either side, preferring as he has reviewing similar motions in earlier EDA civil liability cases this month, to allow the jury to make the decision on the substance of each sides’ claims against the other. After adjourning to dinner of pizza ordered to the courthouse for them around 7 p.m., the jury returned at 7:25 p.m. to say they preferred to go home and begin deliberations Thursday morning, which Judge Albertson agreed to.
As the three previous defense attorneys have following findings in the EDA’s favor this month, Tran/ITFederal counsel Gregory Melus notified the court he would file a motion to overturn the jury verdict. Those motions appear based on a defense contention evidence produced at trial was inadequate to justify conviction. A 30/30/10 day filing and response time schedule was set, though plaintiff counsel indicated if Melus needed additional time due to scheduling conflicts, that would not be a problem.
With motions to overturn on the table, counsel for both sides declined comment following Thursday’s verdict. Current EDA Board Chairman Jeff Browne, who observed much of the trial along with board members Jim Wolfe, Scott Jenkins, and Greg Harold, indicated that after speaking with counsel and some consideration he might have a response for the media shortly. See that EDA response in related story posted when available.