EDA ‘Task Force’ appointed to liaison with audit investigators – Town, County reps excluded from closed session audit report

EDA Board member Ed Daley, hand a flashing blur at right, may have been volunteering to join the EDA ‘Task Force’ with Interim Executive Director John Anzivino, brown jacket at top right. The 2-man task force will liaison with accounting consultant and legal counsel in preparing a report on the long-brewing audit of EDA finances. Photo/Roger Bianchini

After an hour-and-thirty-eight minutes behind closed doors – much of it devoted to an initial report from the confidential accounting consultant hired to help with the four-month-and-counting audit of EDA finances – the Front Royal-Warren County Economic Development Authority Board of Directors’ newest member Ed Daley was appointed to assist Interim Executive Director John Anzivino in working with those contracted consultants in “the ongoing investigation” of EDA finances.

“And the task force is set,” EDA Board Chairman Gray Blanton said after Daley’s appointment was approved by a 5-0 vote on a motion by Ron Llewellyn, seconded by Vice-Chairman Bruce Drummond, with Greg Drescher absent and Daley abstaining.

With the term “task force” raising the specter of multi-jurisdictional governmental probes so much in the national consciousness these days, following adjournment of the nearly three-hour January 30 monthly meeting we asked EDA Attorney Dan Whitten exactly what the newly formed, two-man EDA Task Force’s role would be.

“The task force’s work is (with) the consultant working with our outside legal counsel to basically complete any investigation that’s necessary,” Whitten told media present.

That outside legal counsel is Richmond law firm Sands-Anderson. Sands-Anderson attorney Dan Siegel has long served as a bond consultant to the EDA and Warren County. Accompanying Siegel at Wednesday’s meeting, including the closed session, was Sands-Anderson attorney Cullen Seltzer. Sands-Anderson was contracted on January 8 by the county supervisors at a rate of “up to $50,000” to provide an ongoing legal presence in the now three-pronged EDA audit.

Those three prongs are the EDA’s traditional auditor Yount-Hyde-Barbour; the accounting consultant referenced in the motion to go into closed session whose identity has not been revealed due to a claim of attorney-client privilege and which was authorized for a payment of $90,000 by the County on December 21 for three months work already done; and Sands-Anderson.

Of Sands-Anderson role in the audit Whitten elaborated, “They’re representing the EDA’s interests in providing legal services … they’re helping me out so I can go back to representing the County full time.” The county attorney also serves as EDA attorney.

There had been some hope expressed by EDA Board Chairman Blanton in recent weeks that the audit might be completed by the board’s January meeting. However in the wake of the closed session report from the still-redacted auditing consultant, Whitten says February is now the target for completion of the audit.

“It could be the first or second week of February but definitely by the end of February,” Whitten said of completion of the audit, as well as any additional reporting on the audit the consultant deems necessary.

“Our financial consultant is working with our regular auditor on finishing up the audit so the EDA board can approve it,” Whitten said of the now multi-faceted review of EDA finances. That review began in the wake of the May 2018 discovery of eight years of capital improvement debt service overpayments by the Town of Front Royal to the EDA. Board Chairman Blanton has previously told the media that when asked about the Town overpayments, McDonald assured him, “Yes, we have the money.”

Of the work of the auditing consultant, Whitten said in December, “Basically it’s an outside eye coming in outside of your normal accountant and normal auditor … they do fact-finding, intrinsic review – that type of thing. It’s just basically they’re looking for indicia of any improper activities.”

Prior to asking for a motion to adjourn the 8 a.m. open meeting to closed session at 9:09 a.m., Board Chairman Blanton read a statement explaining why County and Town representatives present – including County Supervisor Tony Carter and Front Royal Mayor Hollis Tharpe – would be excluded from the closed session.

“Today, we will receive information from our consultants which we, as a board, will hear for the first time. The information will provide us a direction of how we will need to proceed as a board as we work toward better understanding the actions of our former Director in operating the Authority. To ensure that we, as a board, have a clear understanding of the information and make the best decisions going forward we will be including only the board, designated staff and our outside counsel in our closed session.

“We will, in the near future, and when we are certain that we have all the information and answered all our questions, be requesting time with the full Town Council and the Board of Supervisors to brief them and present our plan for moving forward.”

Former EDA Executive Director Jennifer McDonald submitted her resignation to the board by e-mail shortly before a scheduled December 20 closed session at which her job performance was to be discussed for the second time within a week.

As Royal Examiner’s Norma Jean Shaw first reported, during an internal review of town finances last August Town Finance Director B. J. Wilson discovered over $291,000 in capital improvement debt services overpayments to the EDA over an eight-year period.

Of the accounting discrepancies discovered on the Town side last year, McDonald told this reporter on November 27, one day after a divided town council approved by a 4-2 vote a resolution detailing what had been discovered concerning Town-EDA financing irregularities, “We have acknowledged the issue and are working on it and are committed to making it right.”

As reported above, three weeks later, her job performance under continued scrutiny McDonald resigned; and within another three weeks the County had authorized the expenditure of up to $140,000 to bring additional accounting and legal eyes to bear in what board member Ron Llewellyn termed in his “task force” appointment motion Wednesday morning, “the ongoing investigation” of EDA finances.

Could it be “much ado about nothing” or something “rotten in the state of Denmark” to double quote the Bard of Avon. Tune in next month for the EDA audit report in what has become Warren County’s own little Shakespearean drama.