Update: Federal Prosecutors charge McDonald on 34 criminal counts in EDA financial scandal

On Tuesday morning, August 31, former Front Royal-Warren County Economic Development Executive Director Jennifer McDonald was arrested on a 34 count indictment handed down by the Western District of Virginia Federal Prosecutor’s Office in Harrisonburg. The 40-paragraph True Bill elaborating on the charges to a Harrisonburg Grand Jury is dated August 25, and signed by Acting U.S. Attorney Daniel P. Bubar. Of those 34 counts, 16 are for money laundering, 10 for bank fraud, 7 for wire fraud, and 1 count of aggravated identity theft regarding someone identified only as “T.T.”

The charges and outline of the case in support of them (Jennifer McDonald Indictment) echo earlier criminal indictments filed at the state level before the State Special Prosecutor’s Office in Harrisonburg turned the case over to federal authorities in late 2019. The state special prosecutor had dropped the indictments it had filed to avoid speedy trial issues due to the volume of evidentiary material – estimated at 800,000 to over a million pages at the time. Failure to meet speedy trial deadlines could have led to defense motions for dismissal of charges on the criminal side of the EDA financial scandal case.

Jennifer McDonald booked during state criminal prosecution process in 2019. Royal Examiner File Photos by Roger Bianchini – Mug Shots RSW Jail

An attempt to reach McDonald attorney Peter Greenspun at his Fairfax office for detail on his client’s arrest and bond situation was unsuccessful prior to publication. However, a check of the RSW Jail website indicated no new booking of McDonald at the tri-county regional facility.

In a statement on the McDonald prosecution released by the U.S. Attorney’s Office in Harrisonburg at 3 p.m. Tuesday afternoon, it was noted that McDonald had an initial court appearance on the new federal charges earlier in the day and that she was released pending trial.

While not reaching McDonald’s attorney, Royal Examiner did reach Warren County EDA Board of Directors Chairman Jeff Browne, who circulated the indictment document Tuesday morning. We asked Browne for a reaction to the long-awaited development on the criminal side of the EDA financial scandal case.

“We’re going to continue to pursue the civil case and are pleased that justice is being served on the criminal side – it’s been a long time coming,” Browne said of the nearly two-year lag time on refiling of criminal charges related to what was a $26-million-dollar civil litigation related to the allegations of criminal misdirection and embezzlement of Town-County EDA assets. That total has climbed to a $62-million claim after McDonald’s bankruptcy filing involved the state bankruptcy court in the case.

The FBI and VSP were both involved in the April 2019 search of McDonald’s former office; below, being locked down after her resignation under mounting investigatory pressure by her board on Dec. 20, 2018.

“We don’t control the criminal side, but there are some familiar numbers in this criminal filing that reflect work done by the Cherry Bekaert staff,” Browne commented of the company the EDA contracted to investigate EDA financial records during the later years of McDonald’s executive director’s tenure. “Any help we can offer, we’ll be there for federal prosecutors. But our focus is on the civil side and bringing assets back to the community,” Browne added. He noted that federal authorities are forecasting a criminal trial for McDonald in 2022.

As recently reported out of the bankruptcy process, the EDA and McDonald have reached a no-fault agreement on a debt of $9-million by the former EDA executive director to the EDA. That agreement in which McDonald admits no wrongdoing, has also been accepted by EDA civil case Judge Bruce D. Albertson. Exactly how that agreement will result in payment of that debt remains to be seen on the civil case side.

Another perspective on FBI-VSP presence at EDA headquarters during April 2019 seizure of materials from McDonald’s former office. Federal prosecutors from the Western District of Virginia have begun to reinitiate criminal charges in the EDA financial scandal case.

Early in the civil process, then presiding Judge Clifford L. “Clay” Athey Jr. froze some real estate assets McDonald held in her name alone, while leaving others she co-held with other family members free of possible civil liability. However, since that time several of her family members have been named as co-defendants in the EDA civil litigation alleging a McDonald-led conspiracy to move EDA assets to the personal benefit of her and others. The defendant list in that civil case has climbed to as many as 23 co-defendants alleged to have conspired and/or benefitted from the alleged embezzlements.

What implication movement on the McDonald criminal case might have on charges against some, if any, of the civil case co-defendants, some who also previously faced criminal charges dropped by the state Special Prosecutor’s Office on speedy trial/dismissal concerns, remains to be seen.

Royal Examiner will publish additional information on this evolving situation as it becomes available. This story was updated at 3:55 p.m.