Federal Prosecutors Office Issues Release on McDonald Sentencing

Below is a Press Release issued by the Western District of Virginia Prosecutor’s Office on May 29, the day of Jennifer McDonald’s sentencing in the Harrisonburg federal courthouse. It offers the prosecution’s perspective on the nature of the former Front Royal-Warren County Economic Development Authority Executive Director’s crimes centered on the unauthorized misdirection for personal use of EDA cash assets and acknowledges federal and state authorities work on the case.

Testimony at trial put that total misdirected to her personal use at between $5 million and $6.5 million. Here it is cited at $5.2 million, not coincidently the amount the prosecution asked for at Wednesday’s sentencing hearing and received from the court to be forfeited by McDonald as part of her sentencing. It was explained that “forfeiture” amount was separate from any restitution or court costs that might also be ordered by the court.

As readers will recall the total amount believed misdirected to fraudulent uses in the circa 2014-2018 EDA “financial scandal” was estimated at about $26 million. On paper in civil suits and out-of-court settlements the EDA has recovered around $20 million, tempered by an estimated $8 million in legal fees. However, most of the larger civil case jury verdicts of liability totaling around $20 million are being appealed by defendants (see the Royal Examiner “EDA in Focus” news category for details on those cases). To resolve pending civil liability claims against her, McDonald gave up an estimated $9 million in real estate held by one of her real estate LLC’s to the EDA.

Here is the Office of the Federal Prosecutor’s statement in its entirety:

Jennifer McDonald Used EDA Funds As Her ‘Personal Piggy Bank’

HARRISONBURG, Va. – The former executive director of the Economic Development Authority of Front Royal and Warren County (EDA), who was convicted in November of last year of stealing more than $5 million dollars in authority funds, was sentenced today to 14 years in federal prison.

Jennifer Rae McDonald, 45, of Front Royal, Virginia, was convicted following a 9-week jury trial in November 2023 of seven counts of wire fraud, six counts of bank fraud, sixteen counts of money laundering, and one count of aggravated identity theft.

The Western District of Va. Federal Courthouse in Harrisonburg where Jennifer McDonald was tried last year and sentenced this week. Below, McDonald on the job at EDA Board meeting with then-Chairman Patty Wines to her left. After her death, Wines became a key figure in McDonald’s defense narrative that there was a secret $6.5 million EDA payoff to her approved by Wines for not filing a sexual assault complaint against then high-ranking male County staff.

Jennifer McDonald, right, and then FR-WC EDA Board Chair Patty Wines on the job during earlier days.

“For more than four years, Jennifer McDonald used EDA funds as her personal piggy bank, diverting public funds to purchase real estate and to pay her personal expenses” United States Attorney Christopher R. Kavanaugh said today. “Today’s sentence reflects how serious this office takes fraud and the misuse of public funds. I am thankful to the FBI and the Virginia State Police for the tireless work they did to untangle the web of lies spun by this defendant.”

“The FBI is committed to investigating elected officials who abuse their positions for personal gain,” Special Agent in Charge Stanley Meador of the FBI’s Richmond Division said today. “I am proud of the work our team and partners did to uncover Ms. McDonald’s complex fraud scheme and to bring her to justice.”

The FBI and VSP on the scene at EDA headquarters on April 16, 2019, about four months after McDonald’s Dec. 20th resignation by email under increased scrutiny by her board. McDonald’s office and work computer were searched for evidence as a potential crime scene.

According to court documents and evidence presented at trial, McDonald was the Executive Director of the EDA, a public entity designed to attract and support businesses in Warren County and the Town of Front Royal. The EDA was overseen by a Board of Directors and supported by an administrative assistant, but at the center of the EDA was McDonald.

Beginning in 2014, McDonald began stealing money from the EDA and, for more than four years, McDonald used the bank accounts and credit facilities of the EDA to divert public funds to purchase real estate and to pay for her personal expenses. She falsified documents in order to mislead the EDA’s Board of Directors, external auditors, and Warren County and Front Royal government officials  so she could continue her scheme.

When confronted by law enforcement and others, McDonald drafted fake loan documents, encouraged others to lie before a grand jury and fabricated an outrageous story, alleging the fraud was part of a “secret settlement” and invented more fake documents to cover-up her fraud.

In the end, McDonald pilfered the EDA’s bank accounts and is responsible for $5,201,329 in losses.

At trial, evidence was presented that at least $2.4 million of the money McDonald stole was used to fund her gambling – including net losses of more than $750,000.

In January 2018 McDonald posed in her office with what she told this reporter were winning receipts totaling about $1.8 million from playing the slot machines at Hollywood Casino at the Charles Town racetrack through the previous three years. Evidence at trial indicated her luck was going the other way, in part explaining her decision to misdirect EDA assets to her personal use, including high-dollar real estate transactions that were beginning to draw attention.

The Federal Bureau of Investigation and Virginia State Police investigated the case.

Assistant U.S. Attorneys Sean Welsh and Rachel Swartz and Trial Attorney Andrea Broach are prosecuting the case for the United States. Updated May 29, 2024