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EDA in Focus

Follow the money: EDA-ITFederal financial roadmap tricky to navigate

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FRONT ROYAL – Nearly four years ago, on June 12, 2015 former Congressman Bob Goodlatte (R-VA) announced an economic development agreement that would bring ITFederal, LLC to Front Royal.  In a press release from the Sixth District congressman’s office, Goodlatte said, “I am happy to have supported the efforts leading up to this announcement and commend Front Royal and Warren County officials for their hard work to ensure it came to fruition.”

Goodlatte’s release further stated that details of the land purchase agreement were being “worked out between the EDA and ITFederal” and indicated that details were likely to be finalized the following week.

What Goodlatte’s office never released—what no office ever released—was details of the sweetheart deal in which ITFederal owner Truc “Curt” Tran payed just one dollar for a 30.11-acre tract of land.  In fact, no one knew just how great a deal Tran had scored on the property until Royal Examiner broke the story Nov. 1, 2016. See Related Story:

http://royalexaminer.mystagingwebsite.com/feds-ok-dollar-special-first-avtex-property-sale/

On Oct. 26, 2015, Goodlatte showed up to join local dignitaries and shovel some dirt at the official groundbreaking for ITFederal at the former Superfund site where Tran’s company was slated to begin building shortly thereafter.  Little did the community realize no other shovels would touch the soil on the project until over two years had passed.

Three months after Tran closed the deal on the former Avtex Fibers site, the Front Royal-Warren County EDA went to extraordinary lengths to ensure that he would have plenty of cash to begin building what he pledged at the time would be a complex featuring 67,000 square feet of mixed-use office space, retail space and a cloud data center.  The project, according to Goodlatte’s press release of June 12, 2015 would “create over 600 high paying jobs for the community.”

On Sept. 14, 2015, after being told by the EDA that Truc Tran needed a $10 million bridge loan “to start construction” on the $40 million project, the Town of Front Royal agreed to loan the money for one month.  The loan was eventually extended to three months and paid back by the EDA after it obtained a loan from another entity.  Though Tran had money in hand, construction did not begin until over two years later, in Dec. 2017. Disbursement Authorization

Just two days later, on Sept. 16, 2015, the EDA used the money loaned by the Town of Front Royal to structure a loan to Tran at 3% interest, amortized over 30 years, with a possible rate adjustment every seven years.  The loan agreement required monthly payments of $42,160 and payment in full by Sept. 16, 2045.  After the initial seven-year period, a total of approximately $8,440,000 will remain on the principal balance. Attachment to Note

In December of 2015, the EDA managed to secure a $10 million loan from First Bank & Trust of Lebanon, Va. through its Winchester commercial loan office (not to be confused with First Bank of Strasburg, Va.). The loan was secured to “provide funding for economic incentive for ITFederal, LLC,” according to loan documents.

The loan has an interest rate of 4.35%, with the balance due after seven years. The required monthly payment was $40,000.  Moreover, the EDA secured the loan with a Deed of Trust on the remaining 117 acres of land at the former Avtex site.

Additionally, it was secured by a Promissory Note that was endorsed to First Bank & Trust by the EDA.  After seven years, the Principal balance due will be approximately $9,672,000. Loan Agreement

It appears that the EDA is losing money each month on the loan to Tran:

Principal Amount $   10,000,000.00 $   10,000,000.00
Interest Rate 3.00% 4.35%
Annual Interest if no repayment of principal $   300,000.00 $   435,000.00
Interest for 7 Years (No repayment of principal) $   2,100,000.00 $   3,045,000.00
Difference $   (135,000.00) $   (945,000.00)

Now that Tran has admitted that ITFederal will not open, and the EDA is left paying back a substantial amount of money that opens the door for Warren County citizens to ask some tough and pointed questions of the Board of Supervisors, who are using taxpayer money to perform an outside, mostly secret audit into the finances of the EDA.

The audit began around the time that Royal Examiner broke the story last fall that the Town of Front Royal was owed nearly $300,000 related to debt servicing payments by the EDA. See Related Story:

http://royalexaminer.mystagingwebsite.com/eda-may-owe-town-of-front-royal-nearly-300k/

Interim EDA Executive Director John Anzivino said in a telephone interview Tuesday morning that moving forward, he felt the EDA would “operate in transparency.”  He said the office is short-staffed and that he is dealing with many Freedom of Information Act (FOIA)requests, as well as working with the board regarding the ongoing audit and going through the agency files, which he admitted were sometimes lacking in terms of detailed record-keeping.

Anzivino said that over the years, the EDA had been instrumental in some very positive developments for the community, citing the corridor development along Routes 340/522 and believed the agency would foster economic growth in the future.  The EDA board, he stated in the conversation, was devoted to moving forward with transparency and was hopeful regarding the future and marketing the community to prospective businesses.

Anzivino said that while he worked in nearby Fauquier County over the years, he often noted how well development was moving along in Warren County.


View all EDA loan documents related to ITFederal and Truc Tran here:

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EDA in Focus

Tederick to WC: Town can dissolve EDA unilaterally and take half what’s left

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Warren County Administrator Doug Stanley, left, watches as Interim Front Royal Mayor Matt Tederick gears up for some EDA liaison discussion.

Town-County Liaison meetings have tended toward briefly informative, not to mention municipally dry in recent years – enter Interim Front Royal Mayor Matt Tederick and soon-to-be-retiring County Board Chairman Dan Murray.

While it may have been the LAST agenda item to be discussed Thursday, July 18, the Tederick-propelled discussion of dissolution of the Front Royal-Warren County Economic Development Authority was FIRST on the list of NOT brief, nor dryly peripheral in recent memory.

One can only wonder what might happen when the full County and Town elected boards and staff gather in one room to continue the discussion. That meeting is being plotted for sooner, rather than later.

But we should work together to straighten this all out, or not: Warren County Board Chairman Dan Murray, County Administrator Doug Stanley and Interim Front Royal Mayor Matt Tederick search for common EDA ground.


Watch a surprisingly direct discussion of the future of the EDA in this exclusive Royal Examiner video – right after the dryer part of the meeting that led up to that municipal conversation:

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EDA in Focus

Meet EDA Board members Jeff Browne and Greg Harold – into the firestorm

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Greg Harold, Jeff Browne and Roger Bianchini in the Royal Examiner's studio. Photo and Video by Mark Williams, Royal Examiner.

In this July 18 video interview, Royal Examiner introduces two of the three newest Economic Development Authority Board of Directors members. Jeff Browne and Greg Harold were appointed by a unanimous vote of the Warren County Board of Supervisors on June 18. They were selected from an interview pool of 19, according to County staff.

They replaced two of the board’s longest-serving members, Greg Drescher and Ron Llewellyn, who jointly announced their resignations at the March 22 EDA board meeting, effective the following day.

Browne and Harold will join the EDA board’s newest member, Marjorie Martin, in their second, Martin’s first, EDA board meeting the morning of July 26.

Martin, whom Royal Examiner hopes to soon interview, was appointed Tuesday, July 16, following the unexpected resignation of EDA Board Vice-Chairman Bruce Drummond last week.

Drummond’s resignation continues turnover within the EDA board and staff as the investigation into financial fraud in EDA operations and consequent civil litigation and related criminal charges have proceeded.

Related or coincidental, that turnover includes the retirement or resignation of the entire three-person EDA staff: Marketing Director Marla Jones (retired) late 2017; Executive Director Jennifer McDonald and Administrative Assistant Michelle “Missy” Henry, resigned in December and March respectively; as well as three-decade Board Treasurer William “Billy” Biggs and long-time EDA bookkeeper Josie Rickard who both retired last October; as well as the above-mentioned Drescher, Llewellyn and now Drummond board resignations.

McDonald and Henry are the only two people thus far charged in criminal indictments related to the EDA fraud investigation. Both are currently jailed out of county, McDonald without bond on 12 felony embezzlement or fraud charges, Henry on two embezzlement counts. Henry is scheduled for a once-delayed (June 25) bond hearing tomorrow, Friday, July 19.

Why jump into the EDA firestorm now, we asked Browne and Harold to open our interview:

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Crime/Court

Judge shake up threatens a second Henry bond hearing on Friday

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Is ‘Missy’ Henry facing a second delay in consideration of her request for bond related to two EDA-related financial felony charges? Photo RSW Jail website

As noted in our story on the Town of Front Royal’s $12 million amendment to its June 21 civil suit for recovery of lost assets through fraudulent financial activity within operations of the Town-County Economic Development Authority, a motions hearing in the EDA’s $21.1 million civil suit was removed from the Warren County Circuit Court docket on Wednesday, July 17.

The EDA civil motions hearing joins Jennifer McDonald’s scheduled July 15 plea hearing in awaiting appointment of another 26th District Judicial District judge to replace two Warren County Circuit Court judges, Clifford L. Athey Jr. and William W. Sharp.

Athey, who has heard all the civil and criminal case hearings stemming from the EDA financial fraud investigation, is phasing out of local court duties as he prepares to join the Virginia State Appeals Court on September 1.

On July 12 Sharpe submitted a written recusal from all EDA-related cases due to his knowledge of so many involved players, including defendants and potential witnesses. That knowledge, Sharpe wrote, comes from past professional and personal associations. Assistant Commonwealth’s Attorney Bryan Layton noted some of the personal associations date to Sharpe Front Royal Rotary membership. Primary EDA defendant Jennifer McDonald held the annual Rotary president’s chair, circa 2016-17.

Rotary connections are believed to be part of the reason Judge Sharpe has recused himself from hearing all EDA-related cases. Royal Examiner File Photos/Roger Bianchini

It remained unclear Wednesday if McDonald’s former EDA Administrative Assistant Michelle “Missy” Henry’s second scheduled bond hearing would again be continued due to the absence of a judge either eligible or familiar enough with the case to render a bond decision. Circuit Court Clerk Janice Shanks has told media that it appears Judge Athey has handed the county circuit court bench over to Judge Sharpe. However, she also observed that Athey was expected to be at the courthouse Friday, July 19, when Henry’s second bond hearing is scheduled.

Athey has twice denied McDonald bond, citing her as a flight risk if she has access to even a tenth of the money cited in the EDA civil suit which seems to revolve around her actions or assertions to the EDA Board of Directors. But while McDonald is believed to have moved several million dollars to her own benefit, Henry’s charges related to the Stokes Mart buildings purchase and a B&G Goods EDA small business loan appear to involve considerably less money being directly accessed by Henry.

“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. A $36,000 small business loan is also referenced in that section of the EDA fraud report, though it appears one of McDonald’s real estate companies paid that loan off.

Henry was arrested on two felony counts for the “unlawful use, disposal, conversion, embezzlement of property of the EDA” on June 24, exactly one month after McDonald’s arrest on the first four of what currently stands at 12 felony financial charges related to fraudulent use of EDA assets. In Athey’s absence from court on June 25, retired substitute Judge Thomas Horne deferred a decision on Henrys’ bond request due to his unfamiliarity with the case.

At that June 25 hearing Assistant Commonwealth’s Attorney Bryan Layton argued that like her former EDA boss Jennifer McDonald, Henry should be denied bond. He pointed, not only to her believed involvement in the Stokes Mart/B&G Goods situation, but her normal administrative assistant’s role in aiding McDonald with wire transfers. Layton did acknowledge that Henry has yet to be charged related to McDonald’s alleged wire transfer frauds. Layton called the existing two charges against Henry “a betrayal of the public trust”.

“The prosecution is trying to shoehorn her on to collateral charges against the other, main defendant,” attorney Ryan Nuzzo said in rebutting Layton’s portrayal of his client on June 25.

Decision on former EDA Administrative Assistant bond deferred to mid-July

Nuzzo also pointed to Henry’s long and broad community ties. Defense counsel noted that the dates of the charges related to the B&G Goods transactions at the base of his client’s case were between October 1 and December 30, 2016 and September 1, 2014 to December 30, 2016.

“These are very old actions …If she was a flight risk she would have fled by now,” Nuzzo told the court.

Stay tuned to see if anyone is available to re-listen to those arguments and render a decision on Henry’s bond status this Friday, July 19.

The courthouse drama Friday will involve the presence or absence of a judge eligible to hear and render a decision on bond arguments for Michelle ‘Missy’ Henry.

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EDA in Focus

Warren County Board of Supervisors appoints new EDA board member

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Board of Supervisors at the July 16th meeting. Photos and video by Mark Williams, Royal Examiner.

FRONT ROYAL — The Warren County Board of Supervisors during its Tuesday meeting unanimously appointed a new member to the Front Royal-Warren County Economic Development Authority (EDA), action that seemed overshadowed by Town and County citizens concerned about the EDA’s current financial entanglements.

The board of supervisors discussed the EDA Board of Directors during its closed session last night. Ultimately, the supervisors unanimously appointed Marjorie Martin of Front Royal, Va., to fill an unexpired term ending Feb. 28, 2022.

Martin will be joining the EDA board as it tries to maneuver a financial fiasco in which two former EDA staff  — Executive Director Jennifer McDonald and Administrative Assistant Michelle “Missy” Henry — each are in jail on multiple felony counts for their alleged involvement in the misappropriation or embezzlement of some $21 million in EDA assets.

The ongoing investigation and resulting lawsuits have left residents less than trusting of their local officials.

Melanie Salins of Front Royal, for instance, last night told the supervisors she was concerned about their continued closed session meetings and ongoing purchasing of properties “while we’re in the middle of this scandal.”

Melanie Salins voices her concerns about their continued closed session meetings and ongoing purchasing of properties.

Under the Virginia Freedom of Information Act (FOIA), the board of supervisors during their July 16 meeting held a closed session to discuss four items: the EDA Board of Directors personnel issue; acquisition of real property located in the Fork Magisterial District within the Town limits; and two consultations with legal counsel regarding possible litigation.

“I would like to ask you to please listen to your citizens,” Salins told the board of supervisors. “Stop doing this, right now at least — not forever, but at least for right now. Please stop buying more properties until we get this mess figured out.”

Paul Gabbert of Front Royal agreed.

Paul Gabbert agreed with Melanie Salins.

“To talk about purchasing more land right now, that’s ludicrous,” he told the County supervisors. “What are you all thinking? You buy this, you buy that, like money is coming off trees and then you raise taxes.”

Following the board of supervisors’ hour-long closed session, members returned to the dais.

The supervisors then made their EDA board member appointment, which wasn’t without a bit of drama.

Supervisor Thomas Sayre first put local EDA activist Mark Egger’s name into nomination, seconded by Supervisor Archie Fox. The move drew confused looks from Supervisors Linda Glavis and Tony Carter, who joined Board Chairman Daniel Murray in defeating Egger’s nomination by a 3-2 vote.

Murray then commented on the Fork District acquisition discussion held during the board of supervisors’ closed session.

“For clarification, since 2011 we have had an individual coming to the County offering their property for sale,” Murray explained. “The only reason why it was on our closed session tonight is because another letter came. We’ve taken no action.”

“A citizen sent a letter asking if we were interested in his property,” Supervisor Carter told the Royal Examiner. “The board has no interest at this time in this property.”

Residents continued to lament the EDA situation during the general public presentations comment portion of the supervisors’ regular meeting prior to adjournment.

“The EDA scandal is by far the No. 1 topic on the minds of most citizens and they feel angry and they feel betrayed,” said Walter Mabe of Front Royal, who announced his candidacy to represent the Shenandoah District, currently represented by Sayre, on the Warren County Board of Supervisors.

Walter Mabe is on the ballot in November for Board of Supervisors representing the Shenandoah District, currently held by Sayre

“I will work hard to renew their confidence in our local government leaders,” said Mabe, who among his professional skills has 21 years of experience as a project manager in the telecommunications industry and five years of service in the U.S. Marine Corps.

Mabe said that citizens have discussed many of their concerns with him and he’s chosen six topics to include in his platform: a balanced budget; managed taxes; improving the educational system; keeping the Shenandoah River clean; tourism; and smart county growth.

“I believe it is extremely important for the board of supervisors to put the county first,” Mabe said.

Bentonville, Va., resident Kristie Atwood voiced her concerns about the local $600,000 that she said has been spent to receive a preliminary report on the EDA’s current situation by the accounting firm Cherry Bekaert LLC.

Kristie Atwood voiced her concerns about the local $600,000 that she said has been spent to receive a preliminary report

“I have found so many errors in this report that it’s unbelievable,” Atwood said. “They were guided on a trip that someone wanted them to take” because the company had limited information to work with in its investigation and subsequent report.

“Now you four board of supervisors members, I am pleading with you,” she said, palming the podium, “you need to step in — and I take Mr. Carter and Doug [Stanley] and Whitten out of the picture,” she said, referring to the supervisor, county administrator and county attorney. “Y’all need to ask the FBI and the Virginia State Police … to come in here and do something that is fair because what’s going on now is not fair.”

Atwood thinks there is much more money unaccounted for than what’s been reported thus far.

“But you’ve gotta get the people’s hands out of it that want to cover their butts,” she told the board of supervisors.

The Royal Examiner’s camera was there:

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EDA in Focus

Town ups lost assets claim resulting from ‘sophisticated’ fraud scheme

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The EDA action or lack thereof, continues at the Warren County Courthouse. Royal Examiner File Photos/Roger Bianchini

In addressing the Town of Front Royal’s amendment to its lawsuit upping its estimate of lost assets due to financial fraud in the workings of the local Economic Development Authority from $3 million to $15 million, Town Attorney Doug Napier commented on what he perceived as a somewhat surprising degree of sophistication in how alleged embezzlement and misdirection of EDA, and consequently Town, assets was accomplished.

In its July 12 filing to amend the amount being sought for recovery from the EDA, the Town legal department notes that the “Financial Study” it had unsuccessfully been seeking a copy of from Warren County and the EDA over several months of FOIA requests had been “voluntarily” sent to it by County-contracted investigative accounting firm Cherry Bekaert. Information from that 2900-page report on signs of fraud within the EDA in hand, Town staff amended its original complaint upward by $12 million.

Asked about the additional loss estimate Napier told Royal Examiner, “During our review of the Cherry Bekaert financial study of the EDA, including the interviews of the EDA Board of Director and staff members some new facts and circumstances were brought to light which caused me to think that the Town’s consequential damages in particular, and even direct damages, might be larger than the Town had originally thought. So I thought the Town would be well served by getting out in front of this.”

Speaking of peripheral losses – what’s up with the Afton Inn in the wake of the project being cited by Cherry Bekaert as a conduit for McDonald embezzlements? That $2.5 million redevelopment Albatross is hard for town staff to ignore across the street from Town Hall.

Asked to elaborate, Napier added, “There are some indirect losses – we can’t blame it all, or say she took it all herself. But there are consequential damages or peripheral losses, a sort of ripple effect. And we wanted to be careful and aim higher, rather than lower in estimating our total losses.”

“She” is former EDA Executive Director Jennifer McDonald, jailed since May 24 on financial fraud charges. Related to some of the Cherry Bekaert information Napier observed, “In ways it is really complicated – her ability to figure out how to alter the books, forge documents – if what is in the report is what happened, if the (EDA) board is telling the truth about not signing those documents, it is really sophisticated. It makes you wonder if she had an advisor or she’s just really smart, or both. I really don’t know – but it took somebody who really knew what they were doing, to pull off.”

In the Town’s initial June 21st filing of a nine-page civil action against the EDA there was scathing criticism of a lack of oversight of McDonald through 2018, even after the May 2018 Town staff discovery of years of debt service overpayments to the EDA totaling over $291,000; and an apparently volatile August 23 confrontation between town officials and auditors with McDonald in the presence of then-EDA Board Chairman Greg Drescher and EDA Attorney Dan Whitten.

Somebody in town government was paying attention prior to mid 2018 – Councilwoman Bébhinn Egger faces off with Jennifer McDonald in October 2016. Unfortunately, none of Egger’s colleagues were paying attention.

“It was Town employees and agents who, on August 23, 2018, caused McDonald to admit, in person and while in the presence of the EDA/County Attorney and in the presence of the Chairman of the Board of Directors of the EDA, that McDonald had personally submitted false, and thereby knowingly and fraudulently, billing invoices to the Town for payment … Notwithstanding the events of August 23, 2018, the EDA Board of Directors, inexplicably, allowed McDonald to retain her position as Executive Director of the EDA with all of her rights, privileges and duties as before, with no known restrictions as such,” paragraphs 18-B and 18-D on page seven of the nine page complaint states.

As Royal Examiner reported at the time “inexplicably” was the operative word in the Town suit’s description of EDA board and staff behavior over the following four months preceding McDonald’s resignation under mounting evidence from the EDA and County’s own investigation by contracted accounting firm Cherry Bekaert.

“The EDA Board of Directors inexplicably did not immediately fire or otherwise discipline McDonald … inexplicably did not restrict McDonald’s access to the EDA offices or her duties … inexplicably did not immediately call law enforcement to investigate McDonald or her activities … not withstanding that the Town’s auditor on that date rightfully and appropriately personally called out McDonald for committing fraud upon the Town in the presence of McDonald … the EDA’s Chairman of its Board of Directors and in the presence of the EDA’s attorney,” paragraph 18-D of the initial Town complaint reads.

Better late than never – EDA board members and legal staff oversee the lockdown of Jennifer McDonald’s computer, work cell phone and office following announcement of her Dec. 20, 2018 resignation. Town officials wonder why such action didn’t come at least four months earlier.

But if the EDA and County Boards remained “inexplicably” oblivious to possible financial misdeeds by McDonald post-August 23, the Town did not.

“It was the Town …who almost immediately after August 23, 2018 contacted the Virginia State Police (VSP) and requested a complete law enforcement investigation of the EDA and McDonald, which the Virginia State Police immediately began, and continue to investigate to this date,” the Town complaint of June 21, 2019 reads.

The June 21st Town Complaint was served on two of those involved in that August 23, 2018 meeting: Whitten at his County Office as EDA attorney and McDonald at the Fairfax Adult Detention Center to which she was transferred from RSW Jail on June 11. The third recipient was new EDA Executive Director Doug Parsons, served at his Kendrick Lane EDA office. Parsons told Royal Examiner on July 17 that he hopes an accurate assessment of any money owed to either municipality by the EDA can be agreed upon and that the EDA will eventually be able to make right on its legally-verified debt to both the Town and County.

McDonald was arrested by VSP on May 24, after the first four of what now stands at 12 felony embezzlement and fraudulent movement of EDA assets indictments were handed down by the Warren County Special Grand Jury empanelled on April 1, 2019.

That empanelment followed a March 26 request to do so by Warren County Commonwealth Attorney Brian Madden. Madden’s request came the same day the EDA’s $17.6 million civil suit was filed. That suit is now amended up to $21.1 million the EDA is seeking recovery of from McDonald, her two real estate companies and five other surviving defendants: ITFederal and its CEO Truc “Curt” Tran; Earth Right Energy LLC and its principals Donald Poe and Justin Appleton.

A ninth defendant, former Warren County Sheriff Daniel McEathron, died on May 28 from what VSP described as “an unattended death with a firearm nearby”. McEathron was named in the suit due to his involvement in McDonald’s two real estate businesses and financial questions surrounding development of the criminal justice police training academy the EDA was involved in.
Recent motions filing in that EDA civil action will be the subject of coming Royal Examiner stories. In fact, a motions hearing on the EDA civil suit scheduled for today (Wednesday, July 17) was continued to an as-yet-undetermined date due to the judicial shuffling occurring in the wake of Judge William W. Sharpe’s July 12 recusal from all EDA matters.

McDonald criminal plea hearing postponed

At the time of the special grand jury empanelment request Madden said, “Since August of last year we have been working with the Virginia State Police as they investigated suspicious financial activities. Yesterday’s lawsuit filed by the EDA’s attorneys raises issues that are not presently being addressed by the VSP.

Local authorities, VSP and the FBI worked together during April 16 search of EDA headquarters and Jennifer McDonald’s office, the latter unused and apparently sealed since her Dec. 20, 2018 resignation.

“In reviewing the bill of complaint most of the allegations arise from an outside investigation conducted at the EDA’s request. To date this office has not been able to review any report generated by the outside investigation,” Madden observed.

Madden requests, Athey empanels special grand jury in EDA case

In the wake of Judge Athey’s May 22 order that EDA civil counsel produce the evidence upon which its now $21.1-million civil action is based, that is no longer true – even for the Town of Front Royal which had initially been blocked by EDA and County officials in its efforts to acquire information on the EDA fraud investigation.

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Crime/Court

McDonald criminal plea hearing postponed

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The anticipated entry of pleas on the initial 12 felony criminal financial charges against Jennifer McDonald did not occur on Monday, July 15, due to judicial recusal. Royal Examiner File Photo/Roger Bianchini

The entry of pleas to the 12 felony criminal charges of embezzlement or fraudulent misdirection of EDA assets by former Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald has been put off to a yet-to-be determined date. McDonald’s plea hearing was scheduled as part of the 9 a.m. docket on the July Grand Jury-Term Day on Monday, July 15.

However newly-seated Circuit Court Judge William W. Sharpe, who is moving from Domestic Relations Court to replace Judge Clifford L. Athey Jr. who is taking a seat on the Virginia Appeals Court on September 1, entered a written recusal from EDA-related cases on Friday, July 12. In the wake of that recusal notice neither McDonald nor her criminal attorney Peter Greenspun were in court Monday. McDonald was transferred from RSW Regional Jail to the Fairfax Adult Detention Center on June 11. Greenspun’s office is in Fairfax.

In his recusal Sharpe writes, “It is necessary for this judge to recuse from all cases that may relate to the Warren County Economic Development Authority and Jennifer McDonald, in order to ensure that all parties can be confident the judge has no association with any persons who might be involved in a particular case, either as parties or a witness.”

Sharpe prefaces that statement by pointing out that, “a number of persons who are named as defendants in the pending EDA civil action against Jennifer McDonald and other parties, as well as members of the EDA Board and persons who it appears may be material witnesses in the civil action filed by the EDA, as well as other related civil actions or filed and possible criminal proceedings arising out of the same transactions, are personal friends or former clients or persons with whom the judge has otherwise had regular associations.”

Discussing the recusal with Assistant Commonwealth’s Attorney Bryan Layton outside the courtroom, he observed that Sharpe knew many of those involved from his Rotary membership. In fact this reporter ran into Judge Athey outside the courthouse on Friday, July 12. During a brief conversation about the coming week’s EDA-related hearings Athey explained that he would be phased out of the EDA hearings equation during the coming week to accommodate both his pending move to the state appeals court and the transfer of judicial authority over the EDA civil and criminal cases to other 26th Judicial District judges.

Athey was aware of Sharpe’s recusal and even commented that had he not been moving off the Warren County bench as the EDA cases progressed toward evidentiary hearings and trial he likely would also have recused for similar reasons to those stated by Sharpe, personal or professional familiarity with involved parties. He said he felt it acceptable to hear early motions prior to evidentiary testimony becoming involved in order to keep the cases moving forward in their early stages.

Athey’s primary rulings thus far have been to deny McDonald bond as a flight risk in her criminal cases and an order that EDA civil counsel produce the evidentiary basis for what is a currently a nine-defendant civil suit seeking recovery of a total of over $21-million dollars. That order led to the release into court files of public accounting firm Cherry Bekaert’s “working papers” from its contracted investigation of indicators of financial fraud in EDA operations.

Above, former EDA Executive Director Jennifer McDonald was arrested by Virginia State Police on May 24, making her the first person to face criminal charges stemming from the EDA fraud investigation. McDonald’s Administrative Assistant Michelle ‘Missy’ Henry, below, was the second person arrested in the case. Henry has been jailed since June 24 awaiting a once-delayed bond hearing. Photos RSW website


On Monday Assistant Commonwealth’s Attorney Bryan Layton said it was unclear how the coming judicial appointments might impact other scheduled EDA hearings this week. Motions in the EDA civil action are scheduled for the 9 a.m. docket Wednesday, July 17 and former EDA Administrative Assistant Michelle “Missy” Henry’s already once-delayed bond hearing is scheduled on the 9 a.m. docket Friday, July 19.

Henry was arrested by VSP on sealed special grand jury indictments on June 24. Retired substitute Judge Thomas Horne deferred a decision on bond for Henry on June 25, citing his unfamiliarity with the case. It now remains unclear if the ongoing judicial juggling may again delay a bond decision for Henry this week.

The Warren County Special Grand Jury empanelled to investigate potential criminality connected to the EDA civil case is also scheduled to meet through the latter part of the week.
In a not directly-related criminal case, former Front Royal Mayor Hollis Tharpe has a motions hearing scheduled Monday afternoon at 2:30 p.m. on his solicitation of prostitution misdemeanor case.

Ranking presiding 26th Judicial District Judge Bruce D. Albertson will be responsible for appointing judges to hear EDA-related cases that Sharpe has recused himself from. According to the Virginia Judicial website, active 26th District judges besides Sharpe and the soon-to-be-departed Athey, include Clark A. Ritchie, Kevin C. Black, Alexander R. Iden and Thomas J. Wilson.

However, it is possible Judge Albertson could appoint another substitute judge, including retired court officers who still help the district fill its judicial requirements when shortages and recusals occur.

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23
Tue
1:30 pm Botanical Drawing 1 @ Art in the Valley
Botanical Drawing 1 @ Art in the Valley
Jul 23 @ 1:30 pm – 4:00 pm
Botanical Drawing 1 @ Art in the Valley
Learn and practice the art of botanical drawing in pencil with local artist and instructor Elena Maza. Tuesdays: 1:30pm – 4:00pm, July 9th – 30th. Classes will be held in our upstairs studio at 205[...]
Jul
26
Fri
6:30 pm Pour Me Another Fluid Art @ Strokes of Creativity
Pour Me Another Fluid Art @ Strokes of Creativity
Jul 26 @ 6:30 pm – 8:30 pm
Pour Me Another Fluid Art @ Strokes of Creativity
Two classes in July – the 18th and 26th at 6:30pm. Pre-Registration is a must! Pour Me Another is an actual class. You will learn the ins and outs of paint pouring and go home[...]
Jul
27
Sat
10:00 am Build a Whimsical Clay House @ Explore Art & Clay
Build a Whimsical Clay House @ Explore Art & Clay
Jul 27 @ 10:00 am – 1:00 pm
Build a Whimsical Clay House @ Explore Art & Clay
In this clay workshop you will make a whimsical house, using several decorating techniques to achieve textures, that you can later highlight with color. Perfect for beginners and potters alike. Choose to make it a[...]
3:00 pm Teacher Classroom Door Hanger @ Strokes of Creativity
Teacher Classroom Door Hanger @ Strokes of Creativity
Jul 27 @ 3:00 pm – 6:00 pm
Teacher Classroom Door Hanger @ Strokes of Creativity
Welcome in the new school year with a Personalized Classroom Door Hanger! Make your choice of a pencil, bus, apple or cloud sign. Must preregister with deposit of $10 and the choice of shape by[...]
Jul
28
Sun
12:00 pm Crop With Us @ Strokes of Creativity
Crop With Us @ Strokes of Creativity
Jul 28 @ 12:00 pm – 5:00 pm
Crop With Us @ Strokes of Creativity
Come Crop With Us Sunday, July 28, 12 noon to 5:00 pm. Receive a gift for pre-registering and attending. $15 No refunds. Feel free to bring your own snacks or drinks!
Jul
29
Mon
10:00 am Design a chair for the SPCA CHAI... @ SPCA of Winchester, Frederick, and Clarke Counties
Design a chair for the SPCA CHAI... @ SPCA of Winchester, Frederick, and Clarke Counties
Jul 29 @ 10:00 am – 5:00 pm
Design a chair for the SPCA CHAIR-ity Brunch @ SPCA of Winchester, Frederick, and Clarke Counties
Calling all artists!! Design a chair for the SPCA CHAIR-ity Brunch and save homeless animals. Pick up a chair from the SPCA Thrift Shop, build a chair, up-cycle a chair, paint a chair, or upholster[...]
10:00 am Let’s Explore Art @ Strokes of Creativity
Let’s Explore Art @ Strokes of Creativity
Jul 29 @ 10:00 am – 12:30 pm
Let's Explore Art @ Strokes of Creativity
Monday July 29th – Wednesday July 31st – Friday August 2nd 10:00 AM -12:30 PM Ages: 6-9 $100 per student: Includes an art supply kit and snack & drink Day One: Lines, lines, they go[...]
Jul
30
Tue
1:30 pm Botanical Drawing 1 @ Art in the Valley
Botanical Drawing 1 @ Art in the Valley
Jul 30 @ 1:30 pm – 4:00 pm
Botanical Drawing 1 @ Art in the Valley
Learn and practice the art of botanical drawing in pencil with local artist and instructor Elena Maza. Tuesdays: 1:30pm – 4:00pm, July 9th – 30th. Classes will be held in our upstairs studio at 205[...]
Jul
31
Wed
10:00 am Let’s Explore Art @ Strokes of Creativity
Let’s Explore Art @ Strokes of Creativity
Jul 31 @ 10:00 am – 12:30 pm
Let's Explore Art @ Strokes of Creativity
Monday July 29th – Wednesday July 31st – Friday August 2nd 10:00 AM -12:30 PM Ages: 6-9 $100 per student: Includes an art supply kit and snack & drink Day One: Lines, lines, they go[...]