FRONT ROYAL – “Do you want my Charles Town winning story or is that too light – should I give it to a competitor?” Front Royal-Warren County Economic Development Director Jennifer McDonald asked in a late January text.
“Give nothing to ‘no one’ other than your old pals at Royal Examiner,” came this reporter’s stern reply. How light of a story, was the follow up question as the competitive juices settled a bit.
“Somebody saw me win big at Charles Town on Sunday (Jan. 14) and is now telling everyone,” McDonald replied, expressing a desire to see the story told accurately. “What, you don’t trust social media and word of mouth to accomplish that?” I wondered. “What did you do, hit a Trifecta on the ponies,” I asked. No, rather it was an $18,000 slots jackpot at Charles Town’s Hollywood Casino.
“WOW, how many days and dollars were you up there pulling those one-armed bandits before THAT happened,” I asked by phone a short time later. The answer, delivered the following day at her office with some support documentation, was not what was expected.
With questions having arisen in the past year about real estate investments she made in recent years under the banner of her personal real estate company “Da Boyz” (named for her favorite NFL team, which she said I could note WITHOUT my descriptive team adjective), McDonald thought this series of events offered an opportunity to clear the air, not only about her Sunday, January 14 winning trip to Charles Town and Hollywood Casino, but what she explained were about three or four years worth of comparable visits.
Do what – comparable how?!?
McDonald explained that she used to spend a little money playing the penny slots, taking home an occasional payout of $300 or so now and then – enough to keep you interested. She credits her sister with development of a strategy that when a penny slot win would come in, to take $100 or $200 of that up to the next level slot, the dollar machines.
“I did that and started to win $1200 to $1500 and then she said, ‘Take $100 or $200 of that to the next level; and on her advice I kept doing that and it just has worked for me,” McDonald said. We asked if the “system” worked for her sister as well as it has for her – “No,” McDonald replied with a sympathetic laugh.
She said winning hits on a dollar machine can come in around $1,200 to $2,500, and the $5 machine payoffs can come in anywhere between $3,000 to $15,000 – and of course there is the potential for one of the specialty jackpots hovering around $18,000 to $75,000.
Okay I reasoned, that is the theory that keeps people returning to casinos the world over – that BIG payday just over the horizon – but you know what they say about “a sucker born every minute” and “the house always wins in the end”.
McDonald explained that she will utilize “free slot play” or house money that regular customers may receive as an incentive, and “no more than $200 of my own money, and if I don’t hit anything with my free-slot play or my $200, I leave. About the last four years I have been extremely lucky with this system I have right now,” McDonald said.
How lucky, we asked.
McDonald slipped a sheet of paper across her desk with a series of typed dates and numbers. Scanning the sheet, I realized that the 22 lines taking up about half a page reflected only four days, November 22 and 26, and December 3 and 10; the payout amounts ranged from $1,500 to one of those apparent jackpots of $36,000. The most hits in one day were 12 on December 10 – the first five on that date ranged from $1,270 to $3,000, followed by $8,000 and that $36,000 jackpot, followed by five more payouts between $2,000 and $6,000, totaling around $71,000. Some late calculating indicated the total on the page for the four days shown was just over $102,000.
There was also a total at the bottom – “These numbers obviously don’t total THAT number,” I observed. “Look under that page,” she suggested. Six more full pages of dates and payouts were listed.
“THOSE add up to THAT number,” I guessed of the final page total of over $800,000, a number she explained reflected her winnings from her visits to Hollywood Casino in 2017. And if not as good, her totals from the previous two years were also significant, both totaling over $500,000, she said.
“I have taken the money that I’ve won and I have paid for the educations of my stepdaughter, two of my nieces and my stepson. I bought myself a truck; and the remaining I decided last year that I was going to start investing the money, rather than just letting it sit. So, I started to acquire investment properties … and I’ve been able to make significant deposits on them,” she said of her real estate investments under Da Boyz banner – at least somebody using that nickname is good at something, I suggested, drawing a scowl.
As she has explained before to Royal Examiner, in her position as the EDA executive director, McDonald is forbidden from investing in commercial real estate. However, with her background in real estate, she may invest in residential property.
“My goal for this year is to win enough money to invest in some additional properties,” she added. In addition to that January 14, jackpot hit for $18,000, she produced photos on her phone of hits of $6,000 and $24,000 on January 2, pointing out there were others she had not photographed.
Happy New Year, indeed!!!
Okay, while not a gambler by nature even your humble reporter can see that something beyond luck is at play here – I pressed her for a hint at the “system” she must not be sharing – “There’s got to be more to it; can you whisper it in my ear? Just between us. – You can trust me, I’m a reporter,” I reminded her.
But other than a favorite “quick hit” dollar machine, McDonald said there wasn’t a system other, apparently, than Lady Luck. Speaking of luck, she said she did hit one $75,000 jackpot on that favorite “Quick Hit” dollar machine – I guess it is her favorite!!!
Looking at these winning-date visits averaging three to maybe six a month at Charles Town, we suggested some teetotalers might suggest she has a silly, little gambling problem. Of course, I think a wise man once said “it is only a problem if you are losing,” not if you’re threatening to break the casino bank. McDonald estimated that she may leave empty handed about a third of her visits, usually being able to net at least several hundred dollars in winnings. She said her visits are dictated by work and personal schedules. As for leisure time, when you’re hot, why not? – And if you’re not, go home early.
With such a disciplined approach, we asked how much she had to spend to reach the level of winnings she was describing for the past several years. She produced another tax reference with a worried look – no wonder, it read $666.
“Well, THAT explains a LOT!!!” I offered.
“You have assistance from the dark side – at least you’re not averaging $666 in annual expenditures, are you,” I asked edging my chair closer to the door. She explained that amount was an adjustment to her taxes to cover her own money spent above what the casino had deducted when it took taxes out upon payment of winnings.
After a little research she estimated averaging about $1,000 of her own money per year to achieve her winnings. Recalling her system of moving up the slot ladder with lower-tier winnings, we asked if she thought she might actually be spending more house money than her own to realize her winnings.
“I most definitely have. They sometimes have drawings over there and I have won additional free slot play through those – anywhere from $250 to $1000 free slot play in addition to my weekly free slot play. I love winning on their money,” she concluded with a smile.
Other than developing a “system” where she may be utilizing more house money than what she brought with her, what draws her to Charles Town’s Hollywood Casino, we asked.
“I have tried other casinos and I have not found a place that has a staff that is as polite, and helpful as Charles Town. I feel safe when I go over there; they know you by first name – I just love going there because of the atmosphere,” she said.
HEY, what’s not to love about an atmosphere of personal dominance, where in the end only the house is supposed to dominate? Our guess is she may love going there more than they love seeing her coming these days – or not.
Chances are the unlucky on any given night at Hollywood Casino outnumber the lucky – and hearing this story, that number is likely to go up – THAT ought to be worth a few more “free slot” plays, think …
EDA authorizes litigation to recover Workforce Housing parcel or its value
Following an hour-and-a-half Closed Session Friday morning, November 15, the Front Royal-Warren County Economic Development Authority Board of Directors unanimously approved a motion to authorize litigation to sue Cornerstone, LP, LLC, its principals and affiliates to recover “EDA land improperly conveyed to Cornerstone without EDA authority or collect the full value of the conveyance and such other damages to the EDA”.
The land in question is the 3.5-acre Workforce Housing parcel sold to the Cornerstone group on November 28, 2018, at a price of $10 dollars.
After initially receiving the parcel as a $10 gift from the aunt and uncle of former EDA Executive Director Jennifer McDonald, local realtors Mr. and Mrs. Walter Campbell, the EDA Board agreed to purchase the property for $445,000 in April 2017 after missing a previously undisclosed developmental deadline that would have enabled the Campbells to pursue tax credit compensation for the gift of the land to a public purpose.
It is believed that Cornerstone, LP, LLC, is a branch of regional developer the Aikens Group. Aikens was cited by former EDA Executive Director McDonald as a behind-the-scenes, private sector player in the Workforce Housing financial riddle from its inception in late 2014.
When contacted in April about the transaction Gray Blanton, who signed the Deed of Sale to Cornerstone for the EDA as board chairman in November 2018, told Royal Examiner he had only seen the final signature page of the four page document. Blanton seconded the motion made by Greg Harold to authorize the litigation.
Local real estate attorney Joe Silek Jr., who represented the EDA due to the recusal of then EDA Attorney Dan Whitten for a potential conflict of interest as EDA and County Attorneys, told us in April there was no price on the deed of sale when it was forwarded from the EDA to the Winchester law firm of McCarthy-Akers for completion.
Asked why the EDA would agree to take a $444,990 loss or even a $651,690 if disputed EDA developmental and peripheral purchase costs are included, Silek said, “I don’t think they did,” and referred us to attorney Doug McCarthy of the McCarthy-Akers law firm for further information.
As we first wrote in April, as of publication there has been no response to a phone-message inquiry about the transaction from the attorneys who represented the buyer in the now legally-disputed sale.
Of the transaction, the initial March 26 filing of the EDA civil suit says, “When interviewed on December 6, 2018, Defendant McDonald continued to maintain that the Aikens Group would refund the Warren EDA the full cost of the Royal Lane Property and any improvements, when she knew said property had been conveyed by the Warren EDA on November 28, 2018 to Cornerstone for consideration of $10.”
That transaction came as scrutiny of McDonald’s executive leadership of the EDA was intensifying as the Cherry Bekaert financial fraud investigation progressed. Following several hours of closed session discussion of the Cherry Bekaert findings and her job performance on December 14, 2018, McDonald had her contract, check-writing and administrative authority over EDA bank accounts stripped by the EDA board.
Facing a second closed session on the same topics a week later, McDonald submitted her resignation by email, and according to the EDA lawsuit attempted to cap her financial liability to the EDA at $2.7 million dollars.
As previously reported, in initial defense motion filings McDonald’s now former civil case attorney Lee Berlik claimed his client was being vilified and scapegoated for past bad decisions of the EDA Board of Directors.
However, the EDA civil action alleges a lengthy pattern of gaps, conflicting or misinformation from McDonald to the EDA board regarding what is termed the “Royal Lane Property Embezzlements” among other allegations of financial fraud that have led, not only to civil liability claims against the former EDA chief executive, but also 32 felony financial fraud indictments from a Special Grand Jury empanelled to investigate potential illegalities tied to the EDA civil suit.
And now it seems the Aikens Group finds itself on the perimeter of that EDA civil litigation regarding what has been a twisting and often inexplicable, five-year saga surrounding the attempted transfer of the Campbells’ 3.5-acre Royal Lane parcel to a public use.
Also unanimously approved after the Closed Session, on a motion by Jorie Martin, seconded by Blanton, was authorization for Executive Director Doug Parsons to forward Adjusted Journal Entries developed by retired County Finance Director Carolyn Stimmel and Hottel & Willis’s Heather Tweedy to the Yount-Hyde-Barbour accounting firm for use in development of the EDA’s 2018 Audit Report; and on a motion by Harold, seconded by Tom Patteson, acceptance of the Commission Agreement for the sale of the EDA-owned McKay Springs property, subject to receiving the Agency Agreement within 14 days.
Open Session Business
The pending McKay Springs property transfer and a County Planning Commission Public Hearing two days earlier on Wednesday, November 13, were topics discussed During County Administrator Doug Stanley’s Report during the open portion of Friday’s meeting.
That open portion of the meeting was eventful as the full EDA Board received monthly reports and six-month Strategic Priorities Lists from the EDA’s Asset Management, Finance, Communications and Executive Committees; as well as the monthly report on County business; and Executive Director Parsons’ Strategic Priorities List.
Major topics included the status of the Afton Inn as far as the developer resuming work on site; the status of removal of the Earth Right Energy-installed solar panels on the EDA’s Kendrick Lane Office Complex to allow roof repairs to facilitate empty space rental marketing; and the status of resolving payment issues with the Town of Front Royal on the new Police Station across Kendrick Lane.
As part of the Asset Committee Report Jorie Martin told the board that there had been three replies on the solar panel RFP, with one of particular interest. That one was from a non-profit with the expertise to remove the panels, and then market them for resale at no cost to the EDA. Martin added that it was possible the EDA could even see some revenue from the arrangement.
The EDA is abandoning the idea pushed by McDonald to provide sustainable solar power to the EDA Office Complex, ostensibly as an incentive to help attract a high-end commercial client to the county, supposedly Amazon according to one former board member. Issues include a lack of individual unit metering equipment and the fact the Town has sole authority to charge for the provision of power inside the town limits.
During discussion of the Kendrick Lane roof-solar panel situation it was noted that one positive was that the solar panels were not bolted to the roof in any way, and rather are just sitting on the roof on the panel row bases. Executive Director Parsons pointed out that it had been established that the roof damage did not come from the solar panel installation, but was a consequence of “faulty roof work ages back”.
Also during the Asset Committee Report Harold said the committee “was sad to report that the majority of current bad debt and aging receivables is owed by the Town of Front Royal for their municipal projects”. Primary among those projects is the $8 million to $11 million Town Police Station project financed through the EDA.
Interim Town Manager Matt Tederick was present and in response to a question told the EDA that “the Town is in receipt of the invoice that was most recently sent” regarding the police station and that it would be discussed at a coming council work session.
Tederick also said the Town had received an EDA FOIA request and that the Town Finance Director had scanned relevant material which should be forthcoming shortly. The Interim Town Manager said he had discussed with the Town Attorney setting up a conference call for 3 p.m. Monday to discuss Town-EDA issues.
The Town has filed civil litigation against the EDA to collect “as much as $15 million” in assets it believes were misdirected or lost by the Town during McDonald’s executive leadership of the EDA.
Talking to the press after the EDA went into Closed Session Tederick said he believed the referenced FRPD project invoice was for $8.7 million dollars, with assessed interest calculated at 3.5%, which he added, “differs from the agreed-upon terms the Town was originally offered by the EDA.”
Tederick confirmed the Town’s perceived agreed-upon interest rate on the FRPD project involved New Market Tax Credit Program (NMTC) financing, which is believed to calculate at about 1% over the life of the bond payback.
“So it’s all coming to a head and we’re trying to figure out how to best move forward,” Tederick said. Asked if the Town and EDA were trying to make the financing dispute less adversarial, the Interim Mayor replied, “Make it less adversarial, of course. But we have to agree upon what we can agree upon. And what we can’t agree upon we have a judge to determine what the right numbers are.”
As Royal Examiner has previously reported, a council majority decided to gamble on a best case New Market Tax Credit scenario brought forward by McDonald during consideration of a bond issue on a number of Town or County Capital Improvement Projects. That NMTC Program would have offered a seven to nine-year interest free payback term over an estimated 20 or 30 year payback.
However, that gamble was made over the advice of then-Town Manager Joe Waltz, Town Finance Director B. J. Wilson and NMTC Regional Administrator People Inc. representative Brian Phipps.
Due to uncertainties with the NMTC Program’s future, as well as municipal competition for limited regional funds controlled by People Inc, Waltz, Wilson and Phipps all recommended to Council that a bank-offered, locked-in 2.65% interest rate over a 30-year payback term was the best bet because its favorable interest rate was locked in and the money was not subject to being lost in a municipal competition for funding.
It was also later established that the FRPD headquarters project didn’t qualify for the NMTC program because it was a capital improvement project that did not create jobs, a primary goal of that federal and state overseen program.
“Here comes the judge,” as comedian Flip Wilson used to say.
Watch the entire open session EDA Special Meeting, with the above-referenced discussions and reports, among others of high interest in the exclusive Royal Examiner video:
Earth Right Energy countersues EDA for $20 million in damages
According to a November 7 filing with the Warren County Circuit Court Clerk’s Office Earth Right Energy (ERE) has joined in countersuing the Front Royal-Warren County Economic Development Authority for damages it claims the company incurred as a result of cancellation of a contract it asserts was validly put in place during the tenure of former EDA Executive Director Jennifer McDonald.
As previously reported attorneys for EDA civil defendant ITFederal and its principal Truc “Curt” Tran filed $13.5 million countersuit against the EDA on October 9. The EDA is seeking recovery of as much as $12 million in EDA assets from Tran and ITFederal.
Along with Tran and his company, Earth Right Energy and its principal Donald Poe and Managing Partner Justin Appleton were among defendants named in both the original EDA civil litigation of March 26 and the Amended EDA civil complaint of October 4.
The EDA is seeking recovery of a total of $21.3 million from what has climbed to a total of 15 defendants alleged to have been involved in, or beneficiaries of fraudulent financial schemes surrounding the former EDA executive director. McDonald is now facing 32 criminal felony financial fraud indictments related to the EDA civil litigation and the County and EDA-contracted Cherry Bekaert public accounting investigation of EDA finances at the base of that litigation. Poe is scheduled for a three-day trial January 22 to 24 on three criminal felony charges – two “obtaining money by false pretenses” and one “perjury” – related to the EDA litigation.
The Amended EDA complaint states that ERE, Poe, Appleton “and others, entered into multiple agreements with Defendant McDonald purporting to oblige the Warren EDA to pay for solar installation at Warren County Public Schools, even though Defendant Poe knew, that the Warren County Public Schools did not approve of any agreement to purchase and install solar power equipment from Defendant Earth Right Energy for any Warren County Public School properties.”
While that $27.3 million dollar solar contract for the schools was never acted upon the EDA civil suit cites payments authorized by McDonald to ERE “without permission or authorization by the Warren EDA” totaling $1,279,888. The EDA litigation notes an August 27, 2018 reimbursement payment made by ERE at McDonald’s request to the EDA of $334,851, reducing the total sought for recovery from ERE to “at least $945,037”.
However in its countersuit, ERE attorneys allege that the public schools solar contract was legitimately negotiated and confirmed at some levels in a mid-August 2018 phone conversation witnessed by “Earth Right’s representatives and Mrs. Michelle Henry”. Henry is also facing criminal charges and civil liability in the EDA case.
“Earth Right extended a formal offer in August in the form of an unexecuted written agreement memorializing the terms of the offer.
“In mid-August (2018), representatives from Earth Right, met in person with Jennifer McDonald, then the Executive Director of the EDA, to inquire as to (1) whether the EDA had approved and agreed to the terms in the Offer, and (2) whether the Warren County School Board was amenable to being a third-party beneficiary of the agreement and would endeavor to aid Earth Right and EDA in fulfilling the terms of therein.
“Jennifer McDonald, as Executive Director and in the presence of Earth Right’s representatives and Ms. Michelle Henry, telephoned Mr. Greg Drescher, then Chairman of both the EDA and the Warren County Public School Board (writer’s note: actually Drescher was superintendent of schools, not a member of the School Board).
“Mr. Drescher confirmed to Jennifer McDonald during the above-mentioned telephone conversation that the EDA had approved the agreement and that the Warren County School Board would endeavor to take whatever reasonable steps the EDA and Earth Right needed to have solar installed on the Roofs of the schools subject to the agreement,” four consecutive paragraphs of the ERE counterclaim contend, adding that “on September 4, 2018, Jennifer McDonald … on behalf of the EDA, formally executed the agreement with Earth Right …”
Of the agreement the ERE Counterclaim states, “The intent of EDA and Earth Right though not written was to secure third-party grants and other sources of funding such that the EDA either did not have to make any capital outlays required by the School Solar Agreements or such that the EDA would be recoop all monies paid (grammar in context).”
As a consequence of what it claims was a legitimately enacted contract, Earth Right Energy asks the court for a judgment of $20 million in damages; court costs; “and any other relief deemed just and appropriate.”
And so the legal wheels continue to spin around EDA civil and criminal litigation now estimated to have generated between 700,000 and a million pages of related materials being accumulated by the Warren County Circuit Court Clerk’s Office.
Evidentiary issues delay Michelle Henry hearing to January 23
Commonwealth’s Attorney Bryan Layton and Michelle Henry co-counsel David Hensley and Ryan Nuzzo were granted a joint motion to continue a scheduled preliminary hearing to January 23, at 8:45 a.m.
Judge Bruce D. Albertson granted the continuance after Layton agreed with Hensley’s observation that complications in digitizing the voluminous amount of materials related to the EDA financial fraud investigation and Special Grand Jury documentation leading to criminal indictments related to that investigation had prevented Discovery Motion materials from yet being made available to the defense.
“We have nothing to review, none whatsoever,” Hensley told the court.
Layton told the court that progress had been made in the digitization process the Virginia Supreme Court has suggested to deal with an unusual amount of evidence and documentation related to the EDA criminal and civil cases. However, he observed that, “Unfortunately we are in an unusual situation with a great deal of Discovery material.”
Estimates of the involved material in previous hearing discussions has ranged from 700,000 to one million pages; an amount that has drawn the attention of the Virginia Supreme Court according to Warren County Circuit Court Clerk Janice Shanks.
“We are in rare waters,” Judge Albertson observed of the evidentiary situation.
He ruled that both sides, including legal staffs and the defendant, could have access to available Special Grand Jury transcripts related to the two felony embezzlement charges former EDA Administrative Assistant Henry faces. However the judge told the attorneys that while those Special Grand Jury materials could be reviewed, they could not be copied and must be kept confidential within the legal teams working the case.
In seeking a date for the continued hearing, Albertson noted he would be in Warren County January 22nd through 24th for a three-day trial on the EDA-related criminal charges against Donnie Poe. Henry’s hearing, during which a trial date may be set in her cases, was set prior to the start of Poe’s trial’s second day.
Henry was arrested on June 24 on two felony counts of embezzlement for the “unlawful use, disposal, conversion, embezzlement of property of the EDA”. Her arrest came exactly one month after her former boss Jennifer McDonald’s first arrest (May 24) on what has since climbed to 32 felony indictments against the former EDA executive director related to financial fraud allegations.
Dates attached to the Henry’s warrants are for actions occurring between October 1 and December 30, 2016 and September 1, 2014 to December 30, 2016. Henry was cited for involvement in dispersal of assets tied to the B&G Goods retail operation in the old Stokes Mart building that the EDA purchased in 2014, as well in a possible scheme related to the building’s purchase.
“MCDONALD is suspected of colluding with HENRY, LAMBERT, and possibly POE to acquire the Stokes Mart property under false pretense to facilitate several different embezzle schemes of which payments herein as repairs and maintenance for B&G or paid directly to LAMBERT are approximately $21,000,” CPA fraud investigator Cherry Bekaert wrote in its EDA financial investigation report.
Texts between Henry and McDonald that are part of the Cherry Bekaert report on its investigation of EDA financial affairs indicate discussion between the two of investment stakes in the B&G Goods business.
Due to judge transfers and recusals Henry spent a month in jail before Albertson, the chief presiding judge of Virginia’s 26th Judicial District took over the bulk of EDA cases. On July 23 Albertson granted Henry a $2500 secured bond on the two charges against her.
EDA hearings done for the day – Let’s go get McDonald again
Maybe that’s the reason the larger Warren County Circuit Courtroom “A” wasn’t available to move into to accommodate the full house in diminutive Courtroom “B” for the EDA criminal and County Supervisors Removal Petition hearings Monday morning – new indictments brewing from the EDA Special Grand Jury that often meets in the larger Courtroom A.
According to the Rappahannock-Shenandoah-Warren County Regional Jail website former EDA Executive Director Jennifer McDonald was arrested Monday afternoon on four new felony indictments related to the EDA financial scandal.
She was arrested by the Virginia State Police and booked at 1:25 p.m., an hour-and-25 minutes after the Removal Petition Show Cause Hearing adjourned at noon to close the day’s open court proceedings regarding the EDA. She was released just over an hour later at 2:26 p.m. on what appeared to be a $5,000 secured bond.
If our memory serves us that is McDonald’s third arrest, raising the number of financial felony charges she faces to 32. She was arrested on four initial counts on May 24, saw that number climb to 14 while incarcerated without bond as a flight risk. She was eventually granted bond by new presiding Judge Bruce D. Albertson on July 31. Albertson took over EDA cases as Judge Clifford L. Athey Jr. left for the Virginia State Appeals Court.
The 42-year-old McDonald was arrested on 14 new charges on August 23, the same day her husband Samuel North and business partner Donald Poe were arrested on related charges, Poe for the second time after first being charged on three counts in the EDA case on July 23. After spending the weekend in jail, all three were bonded out Monday, August 26.
On Monday, October 28, McDonald was out on a $50,000 secured bond on the 28 previous charges she has been arrested on. Noting the fluid nature of the Special Grand Jury investigation regarding his client, at an earlier hearing McDonald’s criminal attorney Peter Greenspun had asked for some arrangement to prevent repeated, prolonged incarcerations for every new charge levied against his client.
Perhaps that ability to post a smaller, secured bond to obtain immediate release is that arrangement.
The new charges are Fraud, Uttering; Larceny – Embezzlement – $200 plus; Money Laundering – Financial Transaction from known felony activity; and Fraud – Obtain money by false pretenses, $500 (or more).
County officials, EDA board members have good day in court – will it last?
After hearing combined arguments from attorneys for 11 of 13 County municipal and Economic Development Authority defendants present on why ancient English Common Law did not create 21st Century legal grounds for criminal prosecution regarding unintentional dereliction of the oversight duty of their office, Judge Bruce D. Albertson ruled for those defendants.
Also on Monday Albertson denied a Removal Petition request that all five sitting County Supervisors be immediately removed from the conduct of their office prior to the resolution of a Show Cause Hearing on that Removal Petition filed October 18.
“For me as a judge to act now is potentially influencing the outcome of the election,” Judge Albertson observed in denying immediate removal.
However in a possible harbinger of things to come, the judge added that “there are other conceivable outcomes civil and criminally” as to a potential final resolution of this citizen-elected official dispute.
On a motion by defense counsel for the supervisors that petition was sent to the County Registrar for verification that the required 10% of county voters in each voting district signing the petition, were in fact registered county voters. A return date of November 22 at 8:45 a.m. was set to get the result of that Registrar’s Report.
More on that initial Removal ruling later, but first to the court decision quashing the criminal charges against those county supervisors, the county administrator and past and present EDA board members.
After retiring to chambers to consider his ruling after an hour and seven minutes of legal arguments and counterarguments, 13 minutes later Judge Albertson returned to sustain the collective motions to quash the three misdemeanor indictments against all 11 defendants whose attorneys were present and participating in the arguments.
Upon that ruling, an observing co-counsel for Tom Sayre and Tony Carter, whose counsel was not present due to a scheduling conflict, both rose to ask that they or their client be included in the ruling, drawing some laughter from a packed courtroom.
“That makes sense,” Judge Albertson said, allowing the joining of the two in the judgment as had been discussed earlier were the ruling to go that way.
Albertson noted he was unable to find any evidence codifying misfeasance and nonfeasance as prosecutable misdemeanor offenses in the Commonwealth of Virginia, even under English Common Law at the base of U.S. law. He said the only related legal reference to the two charges he could find was in a 1967 civil case in England.
“What else is out there? It’s like finding a black hole by the gravity moving around it,” Albertson said, noting that the closest DCC Code that was found to bring the charges under was “solicitation”.
Solicitation of what, the court may have asked.
Acting Commonwealth’s Attorney Bryan Layton argued that while “as ill-defined as it may be, there is a legal precedent” for the charges, in arguing against the motions to quash the indictments.
Several attorneys jumped on that argument.
“ ‘As ill-defined as may’ be is repugnant to Virginia Law,” David Crump, who represented four defendants, replied to Layton’s assertion of precedent.
“ ‘As uncertain and vague as it is’ supersedes due process and fairness and is repugnant to the Virginia Constitution,” David Silek, representing former EDA Treasurer William “Billy” Biggs, added.
As Royal Examiner reported on September 8, of the three “feasance” failings of public office only malfeasance is codified as criminal by the Virginia Legislature, and that as a misdemeanor offense, though one that could lead to more serious charges.
The dividing line between malfeasance and misfeasance and nonfeasance is intent.
Malfeasance is defined as “intentional conduct that is wrongful or unlawful” while nonfeasance is defined “as a failure to act where there was a duty to act” and misfeasance is described as “conduct that is lawful but inappropriate”.
All the charges relate to the County and EDA Boards’ continued allowance of former EDA Executive Director Jennifer McDonald to operate without oversight, restrictions or direct supervisory control as a financial investigation of EDA affairs was closing in on her between September and late December 2018. McDonald resigned under mounting pressure from that Cherry Bekaert financial fraud investigation on December 20, 2018, admitting to liability for the return of $2.7 million in EDA assets. The EDA claims her liability is much higher.
The misdemeanor indictments cited McDonald’s movement of around $309,000 to her own benefit during that four-month period at the end of 2018, setting the groundwork for the charges. While the EDA civil litigation is seeking return of a total of $21.3 million now, due to the one-year statute of limitations on misdemeanor charges, earlier transactions could not be included in the indictments.
Removal on hold
Helping fill Circuit Courtroom B Monday morning were a number of citizens involved in the Removal Petition filed against all five County supervisors on October 18. As noted above, they left disappointed.
Not only was their request for immediate removal of the Warren County Board of Supervisors denied, but the foundation of their petition, the criminal misdemeanor indictments against the supervisors regarding a lack of due diligent oversight of EDA operations the last four months of 2018 were quashed as not legally prosecutable by Virginia law, no matter how deep you dig back to its roots in English Common Law.
Following adjournment, Removal Petition attorney Tim Johnson said he did not believe the quashing of the criminal indictments was a major blow to the Removal initiative. While no longer under criminal indictment for a lack of supervisory oversight of EDA finances at the hands of an executive director under increased scrutiny, misfeasance and nonfeasance can be “grounds for impeachment of a high official” Johnson told the press outside the courtroom.
So involved supervisors still on the board in the wake of the November 5 Election can be held accountable for past failures, Johnson believes. As noted during the hearing two of those supervisors, Board Chairman Dan Murray and Linda Glavis are not seeking reelection. Tom Sayre is running for reelection against Walter Mabe in the Shenandoah District. And Archie Fox and Tony Carter are not up for reelection for another two years.
With the citizen petition filed with the Court, the Commonwealth’s Attorney’s Office has taken up the Removal case for the plaintiffs. Acting Commonwealth’s Attorney Bryan Layton called the citizen loss of faith in their County elected officials “an unusual circumstance in my experience”.
In arguing for the plaintiff’s request for the immediate suspension of the supervisors said he believed “the damage to the public trust is so severe” as to justify the immediate suspension of their powers to govern.
County Attorney Jason Ham and co-counsel Jim Cornwell countered that there was no basis in the facts of the citizen petition to justify such a radical suspension of the municipal government function.
Cornwell said in arguing four such cases he had never seen immediate removal authorized by the court. The only case he was familiar with where the judge did order removal, with a six page Opinion he noted, was a Norfolk City Treasurer who had been convicted on six embezzlement charges – “Here’s there’s none of that,” Cornwell argued. “There is some vague reference that ‘something may happen.’ There is no evidence, it is a feeling of some people … Why suspend on an opinion?” he asked the court.
At the request of the Commonwealth, Albertson retired to chambers to watch Royal Examiner videos of two county meetings, on October 1 and October 25, with counsel from both sides before rendering that decision. Arguing on behalf of the petitioners, Layton said he believed the videos illustrated the unusual and high level public “loss of faith in the Board of Supervisors” due to the EDA financial fraud situation.
Court adjourned at 11:20 a.m. and reconvened at 11:42 a.m. following the video viewing.
Judge Albertson observed of what had been viewed, as one video segment that “devolved into yelling” and another that had been “very respectful” in its conduct of public speakers expressing themselves.
County Attorney Ham summarized what he had seen as less than ten people expressing public dissatisfaction at the hiring of legal counsel for the supervisors at taxpayer expense. He argued against overturning the electoral will of the full voting population of the county for a vocal minority of its citizens.
Layton countered that while only 10 citizens may have spoken publicly, many more were there in support of those 10; and the citizens’ petition when verified would represent 10% of the voting population, not just 10 citizens.
However Judge Albertson denied the immediate removal request.
He called it a “drastic remedy” adding that the Removal Petition itself was a “drastic measure” itself and perhaps a “pressure valve” on public discontent.
And as noted above, he worried over a judicial action that could influence a looming legislative election just two week away and alluded to other possible legal directions this citizen-elected official dispute might take.
EDA plows toward future amidst multiple, evolving litigations
The largely revamped, yet still embattled Front Royal-Warren County Economic Development Authority held its October monthly meeting Friday morning, October 25.
The EDA board went through monthly Executive, Finance, Assets, and Communications Committee reports before getting an Executive Director’s report from Doug Parsons.
Two Board officer appointments were made and approval of the Greehan, Taves & Pandak Law Firm as the independent EDA legal counsel was finalized.
Into the meeting Board Chairman Ed Daley suggested the EDA move aggressively to determine exactly who is owed how much by whom related to the various litigations the EDA is involved in related to the Cherry Bekaert financial fraud investigation conducted from September 2018 into 2019.
The EDA civil litigation is seeking recovery of what has risen to $21.3 million allegedly misdirected or embezzled during the tenure of former Executive Director Jennifer McDonald. The Town of Front Royal has also filed a lawsuit against the EDA claiming “up to $15 million dollar” in misdirected or otherwise lost assets.
The Town also withdrew from a joint Town-County-EDA effort to smooth out future EDA operations and participation in an EDA Reform Committee, though both the EDA and County government continue to retool EDA operations.
See the monthly meeting updates, discussions and votes in this Royal Examiner video: