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I’ll see your $12 million dollars, and raise you another $1.5 million

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Truc ‘Curt’ Tran during Dec. 20, 2018 visit to the ITFederal construction site. At the time he expressed distress at the potential departure of Jennifer McDonald under increased scrutiny by her board and auditors. Royal Examiner File Photos/Roger Bianchini

On October 9, attorneys for ITFederal and its principal Truc “Curt” Tran filed a $13.5 million countersuit in response to the Front Royal-Warren County Economic Development Authority’s $21.3 million dollar civil litigation in which Tran and his company are named as two defendants liable for the return of over half of the EDA assets being sought for recovery.

Tran claims “substantial damages and reputational harm” to him and his company “from wrongful and deceitful acts that the Warren EDA – through its former Executive Director, Jennifer McDonald – committed against them”.

Tran also seeks a declaratory judgment that the $10 million dollar bank loan he and ITFederal received through the EDA “is a validly authorized transaction by the EDA” and “is not in default”. Tran notes in his countersuit that he is current on his monthly loan payments of $42,160 on a 30-year payback term beginning in January 2016.

Tran’s civil litigation counter attack on the EDA came five days after the EDA filed an amended complaint, adding detail of alleged fraudulent representations made by and/or on behalf of Tran/ITFederal in enabling his acquisition of the single largest amount of EDA assets being sought for recovery in its embezzlement and financial fraud scandal.

Those assets include the balance of the $10 million bank loan achieved by the EDA on Tran’s behalf in early 2016 and related vendor (minimum of $392,249) and direct payments (minimum of $1.43 million) to the company adding at least another $1.82 million dollars to the ITFederal portion of the EDA lawsuit.

So in claiming he was the one defrauded by the EDA and its former executive director, Tran has upped the EDA ante of about $12 million dollars filed against him by $1.5 million dollars – talk about high stakes gambling.

In January 2018 Jennifer McDonald attempted to explain her use of large amounts of cash in real estate transactions as a consequence of a three-year lucky streak at the Hollywood Casino slot machines in Charles Town. State Police have since said McDonald lost $750,000 gambling, including what she won. Some have asserted her losses may have been even greater based on playing with and without more easily traceable ‘tickets’.

The amended EDA complaint cites Tran as in default on the $10 million dollar EDA/First Bank & Trust loan despite past admitted renegotiations on its terms.

“To date, ITFederal has not satisfied the Construction Targets for either the $2 Million Deed of Trust or the $10 Million ITFederal Borrower Note,” the Amended EDA complaint states, citing the absence of an occupancy permit at this point.

“On information and belief, little to no proceeds of the ITFederal loan have been applied to the ITFederal Project. On information and belief, Defendant Tran has converted a substantial portion of the proceeds of the ITFederal loan to his personal benefit.”

The EDA’s Amended Complaint notes that on October 4, the day it was filed, “the Warren EDA provided notice of default to ITFederal as required by both the $2 Million Promissory Note and the $10 Million ITFederal Borrower Note,” and adds that it believes ITFederal “cannot cure the default within the time allotted by the $10 Million ITFederal Borrower Note.”

What was originally presented by ITFederal – a three building complex including an approximate 26,000 s.f. office building above; and below a two-building IT tech center, including a cloud center to upper left.

As one can see, the amended EDA litigation and Tran’s countersuit paint distinctly contrasting portraits of what the dueling litigations contend happened in Tran’s acquisition of the estimated $12 million dollars in EDA assets.

The Tran/ITFederal Countersuit contends, “The Warren EDA – through Ms. McDonald, who had apparent, actual and/or implied authority to act on its behalf – materially misled Mr. Tran and ITFederal through both affirmative misrepresentations and concealment.”

However the EDA’s Amended Complaint repeatedly references actions by “Defendant Tran and Defendant McDonald” alleged to have been made in concert, falsely presenting Tran, his company and its potential to the EDA Board of Directors and Town and County officials.

“Defendant Tran and Defendant McDonald represented to the Town, the County and the Warren EDA multiple times that (a) Defendant Tran was a high-net worth individual, (b) he did not need any financial assistance from the Town, County and the Warren EDA to make the ITFederal Project financially viable, (c) ITFederal/VDN Systems had procured a $140 million contract with the Nuclear Regulatory Commission to provide information technology services on a long-term basis and (d) Defendant Tran had the endorsement and support of the U.S. Congressional Representative Robert Goodlatte (Rep. Goodlatte) in connection with the ITFederal Project,” the amended EDA lawsuit asserts.

Contrasting portrait: what is of ITFederal as of dueling legal filings in October 2019 – an unfinished 10,000 s.f. office building accessed by Phase One of the West Main St. connector road.

That is followed by eight more paragraphs alleging coordinated efforts by Tran and McDonald to misrepresent the financial and business potential of ITFederal and its CEO to local officials. Among those allegations was that Tran didn’t need the $10 million dollar loan but would accept it at the behest of Rep. Goodlatte, who it has been represented by EDA officials wanted the loan to help attract further redevelopment clients to the Avtex Brownfield site in his Sixth Congressional District; that Tran would actually pay the $10 million loan back in 60 to 90 days; and that federal EB-5 Visa Program financing was coming to the project.

Tran attorneys are sure to point out that those “Defendant Tran and Defendant McDonald represented” assertions most often continue to elaborate “through Defendant McDonald”.

As Royal Examiner observed as the ITFederal scenario was developing from our launch in October 2016 through 2018, the elusive Tran generally let the EDA executive director take the point in responding to questions from municipal officials or the press about his project at the EDA controlled Brownfield site.

Tran’s Countersuit filing asserts that McDonald forged his signature at least twice to give the impression he was the “secret investor” in the Criminal Justice Training Academy Project; and at least one other time to indicate his involvement “related to real estate deals in which he had no involvement”.

The suit also alleges McDonald “falsely misrepresenting” that the EDA had received a State grant for the ITFederal construction project at the Avtex site; and that McDonald misled Tran about the environmental suitability of the Royal Phoenix Business Park site at the former Avtex Superfund site to the point of telling him the soil was “so clean you could eat off it.”

It’s a nice view toward the mountains but I don’t know that I’d eat off that turned dirt at the former Federal Superfund site. EDA civil case hearing testimony has indicated that Congressman Goodlatte’s endorsement contributed to the EDA board’s lack of due diligence in verifying assertions believed forwarded by ITFederal’s own ‘Three Amigos’ – McDonald, Tran and Goodlatte.

“These fraudulent actions have unnecessarily entangled Mr. Tran and ITFederal in this matter, resulting in the Warren EDA frivolously suing this respectable businessman and his company where they are victims of the Warren EDA’s and its Executive Director’s wrongdoing,” the Tran Countersuit states.

However Tran was singing a different tune to the press during an on-site visit December 20, 2018. During a lengthy EDA board closed session after which it was announced McDonald had resigned by email earlier that day, Tran was asked about the possibility McDonald might be terminated or asked to resign following the closed session.

“I heard about this and it’s blowing my mind. Oh that would be sad. She’s done so much for this area of the county and the town to redevelop, and even me – I was just about to move on and she,” Tran hesitated before adding of the prospect of a turnover at the top of the EDA, “So, so, we have to go do this with the next guy’s ideas or something?”

How things have changed in the wake of several “next guy’s” ideas – one civil suit filing in which Tran and his company have been cited as liable for around $12 million dollars in restitution to the EDA and McDonald somewhere considerably over $3 million; not to mention 28 felony financial criminal indictments against the former EDA executive director Tran once put so much faith into to present his development plans to local officials.

Sheriff, ITFed principal Tran, Donnie Poe named with McDonald in EDA civil suit

UPDATE: McDonald family members, business associates added as defendants in EDA civil suit

Tran credited McDonald with saving ITFederal project – but what was saved?

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EDA settles civil claim against McEathron estate for $90,000

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Following an hour-and-thirty-five-minute closed session on a variety of topics that opened its monthly meeting of October 23, the Front Royal-Warren County Economic Development Authority Board of Directors approved a motion agreeing to a settlement with the estate of late Warren County Sheriff Daniel McEathron.

The settlement amount agreed upon between the EDA and McEathron’s widow and two adult children is $90,000. McEathron was linked to the EDA financial scandal due to his partnership in former EDA Executive Director Jennifer McDonald’s DaBoyz LLC real estate company. In the EDA’s civil litigation initially filed in March 2019, McDonald is accused, among other things, of unauthorized moving of EDA assets to her own benefit through her real estate companies DaBoyz and MoveOn8. Still Sheriff at the time, McEathron along with McDonald and the two real estate companies, were on the initial list of civil case defendants.

Sheriff Daniel McEathron – File Photo/WCSO website

After taking early retirement effective May 1, 2019, just over a month after being named a co-defendant in the EDA civil litigation, the county’s long-time sheriff was found dead on his Bentonville property 28 days later, May 28, from an apparent suicide. Some questions about the death arose after Sheriff’s Office personnel, ostensibly alerted by McEathron to his planned suicide by phone, removed the body from the scene where it was discovered in proximity to an expended firearm before the Virginia State Police, the EDA criminal case investigating agency, was notified of the death.

On Friday, EDA Asset Committee Chairman Greg Harold, who made the motion to approve, addressed the McEathron Estate settlement prior to the vote.

“Mr. Chairman, I want the community to know that the EDA has negotiated in good faith for this settlement for a long time. This is something that we’ve taken very seriously; this is something that we have called back and forth with, with our attorneys and the estate’s attorneys. While we feel there are certain risks and rewards with these situations, I think the EDA is comfortable at this time that we have done the best that we can for the community and that it’s time to put this matter behind us as the motion is written,” Harold said.

EDA Asset Committee Chair Greg Harold, pictured during Friday’s ZOOM meeting, recounted the process leading to the settlement with the estate of late Sheriff Daniel McEathron. Royal Examiner Photos by Roger Bianchini

Thank you for that,” Board Chairman Jeff Browne responded. There was no other comment prior to the vote on Harold’s motion, seconded by James Wolfe, which then passed by a 4-0 margin of the members remaining after the closed session, the above three and Tom Pattison. Jorie Martin and Melissa Gordon were present for the 8 a.m. convening of the meeting into closed session but had left to other commitments prior to the closed session’s 9:45 a.m. conclusion.

The motion on approval of the settlement read into the record by EDA Administrative Assistant Gretchen Henderson states in part, “Whereas the Front Royal-Warren County EDA has certain claims against Daniel McEathron; Whereas the EDA and McEathron’s heirs desire to resolve any claims that may exist between them; Now therefore be it resolved the chairman and the secretary of the Front Royal-Warren County EDA Board are authorized to enter into an agreement … (with those heirs) for the purposes set forth in this resolution which agreement shall provide for the payment of $90,000 dollars to the EDA …”

The motion adds that if any FOIA request are received by the EDA related to the settlement, McEathron’s widow or her attorneys will receive notice of those requests having been made.

As initially reported by former Royal Examiner Editor Norma Jean Shaw, McEathron and McDonald’s first transaction in DaBoyz dated to October 2016 and the pair purchased a total of $2.8 million of real estate between then and 2019. The LLC was involved in a number of transactions cited in the EDA civil litigation filed to recover allegedly misdirected assets, including a mysterious one in which a property was bought and sold back to the owner a month later at a loss of $600,000.

January 2018 Royal Examiner file photo of Jennifer McDonald in her EDA office displaying tax receipts she said indicated winnings at Charles Town’s Hollywood Casino. Coincidentally, the blue star on her chair is the logo of her favorite football team, the Dallas Cowboys from whom the real estate LLC ‘DaBoyz’ name was taken.

A number of McDonald and her two LLC’s existing properties were frozen by the court early in the civil case process. However, civil claims against McDonald assets have been complicated by her recent filing of bankruptcy, which put her assets under control of the Harrisonburg-based bankruptcy court.

The EDA civil litigation has grown to 24 human and business entity co-defendants, with total claims, actual and punitive, of about $25 million dollars. And as previously reported, the Harrisonburg Special Prosecutor’s Office has turned the criminal investigation into the EDA financial scandal over to the U.S. Western District of Virginia federal prosecutor’s office.

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EDA approves short-term lease on Baugh Drive during Strategic Planning weekend meeting

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The EDA Board of Directors met, via Zoom, Friday, and Saturday, October 9-10. There was one item of new business before the board. On a motion by Jorie Martin and seconded by Greg Harold, the Board of Directors unanimously approved a short-term storage lease with ECOMNET for use of 426 Baugh Drive warehouse building.

File photo from October 2019 building tour with EDA.

The remainder of the evening, as well as the full-day Saturday, was devoted to the process of updating the EDA Strategic Plan. The board, along with EDA staff, invited members of the community and Board of Supervisors to share their insights on the role the EDA can play in improving the economic health of and shaping the economic direction of the Front Royal Warren County community.

Attendees included Walt Mabe and Delores Oates, Warren County Board of Supervisors; Ed Daley, Interim County Administrator; Melissa Chapman, President, Ninth Way Solutions; Jeanian Clark, Vice President of Workforce Solutions and Continuing Education, Lord Fairfax Community College; Scott Jenkins, owner of Mountain Home B&B; Chris Laurence, Realtor; Dee Sparger, Outreach Coordinator, Front Royal Presbyterian Church; and Kelly Sprague, owner/manager Blue Wing Frog restaurant.

EDA Board Director Jim Wolfe facilitated the program. The goals of this event were to begin to articulate a vision and mission statement for the EDA, plus develop a list of objectives that the EDA can accomplish within the next five years. While the EDA Board, staff, and participants represented diverse professional backgrounds, all involved share a common passion for this community and a hopeful outlook for the future.

Chair Jeff Browne stated, “A lot of good ideas came out of the sessions that give us terrific ideas to consider as we move forward. There was a strong consensus on important ideas, like Town-County cooperation on a common vision for our community.”

The Board of Directors is proud to have begun this community conversation and look forward to fine-tuning the plan in the coming weeks.

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‘This is BIG’ – EDA Chairman reacts to news feds handling EDA criminal investigations

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At 12:03 p.m., Thursday, October 8, Front Royal-Warren County Economic Development Authority Administrative Assistant Gretchen Henderson forwarded a press release from Rockingham County Commonwealth’s Attorney Marsha Garst to the media regarding the status of her office’s investigation of potential criminal charges related to the EDA financial scandal and resultant civil litigation.

As stated in that release posted on the Royal Examiner website earlier this afternoon, Garst and her appointed EDA prosecutor Michael Parker, a specialist in white-collar crime, came to a decision to hand their investigation over to the Western District of Virginia U.S. Attorney’s office in Harrisonburg in late February of this year.

Both FBI and VSP were on hand for April 16, 2019, removal of evidence from the EDA office regarding alleged embezzlement and asset misdirection by former EDA Executive Director Jennifer McDonald and thus far civilly accused co-conspirators. Royal Examiner Photos by Roger Bianchini

“Our primary goal with the prosecution is to assure a just outcome. Mr. Parker did an excellent job of assessing the case and putting the evidence together. In doing so, it became apparent that federal prosecutors would be able to gain the best outcome,” Garst wrote in her release dated October 7, continuing to note the late February turnover of the case to the federal prosecutor’s office in Harrisonburg.

“It was explained that my office cannot comment on the case further or jeopardize any potential federal prosecution. I want to assure the citizens of Warren County that my office is dedicated to seeing justice done. In light of an ongoing criminal action, I cannot provide any further information,” Garst concluded, referencing further inquiries to Western District U.S. Attorney’s Office Public Affairs Specialist Brian McGinn.

While anticipating a similar reply to Garst’s “no further information” qualifier, Royal Examiner did reach out to the federal prosecutor’s office to see if there were any clues on timelines on decisions that might be made public. And in a very quick reply to our emailed query, McGinn noted as we predicted, “As per DOJ policy, we cannot confirm or deny the existence of an ongoing investigation.”

Perhaps the judicial system is running silent, but deep on the EDA criminal front, like a submarine tracking its prey above the surface.

Garst’s release acknowledging the change in prosecutors from the state to the federal level in the EDA financial scandal criminal investigation over seven months ago comes just nine days after the Front Royal Town Council’s aggressively worded September 28th Resolution “demanding justice” condemning the lack of action on the EDA criminal prosecution front by the Rockingham prosecutor’s office, and Parker in particular.

We contacted the author of that Resolution, Interim Town Manager Matt Tederick who coming out of a meeting had not seen the Garst press release. Informed of its content, Tederick said, “Good news – mission accomplished,” in that a response containing some new information on the EDA criminal investigation’s status had been received.

“I’m sure there’s a rationale and a reason,” he added of the previous silence from the state special prosecutor’s office. “But when the public trust has been violated to this degree, the public deserves some assurance that they are still pursuing the case.”

Tederick noted that confidential information was not being sought in the Town resolution approved by a 5-1 vote, Thompson dissenting, on September 28, just that the case had not gone cold and been abandoned.

As a masked Matt Tederick listens, Lori Athey Cockrell reads a statement into the Sept. 28 council meeting record regarding her perspective on the EDA business at hand.

But as noted in our story “Town targets Special Prosecutor’s Office over EDA prosecution delays” it appears the Town pursued its Resolution initiative without any prior communications with the Rockingham prosecutor’s office.

That apparently was not the case with an inquiry launched by the EDA, according to Front Royal-Warren County Economic Development Authority Board of Directors Chairman Jeff Browne.

Having received Garst’s press release through the EDA, we contacted Browne about it. Browne indicated an EDA inquiry about the criminal case status through the EDA’s civil litigation attorneys was begun about a week before the Town resolution was publicly approved.

Browne said he believed local attorney and “B.E.E.R. Party” principal David Downes launched a separate inquiry to Garst’s office as well. Downes publicly criticized the Town Resolution’s message and tone in public comments at the September 28 council meeting prior to the vote on its approval.

Local defense attorney David Downes was critical of the message delivered by the proposed Town resolution on the pace of EDA criminal prosecutions at the Sept. 28 meeting. He then undertook a different path toward seeking information on the EDA criminal case status.

Contacted about the County’s knowledge of the origins of Garst’s press release, Interim County Administrator Ed Daley said the County had inquired about the status of the Rockingham prosecutor’s EDA investigation through State Senator Mark Obenshain’s office. It was through Obenshain’s office Daley indicated County officials became aware yesterday of Garst’s press release that may have first been circulated locally in the Harrisonburg-Rockingham County area.

Regardless of who, how, or why – the consensus is that the information that the case is active and in federal prosecutors’ hands is welcome.

“This is big – from our standpoint, it is really good news,” EDA Board Chair Browne enthused. “This shows that it is still on prosecutors’ radar. The people of Warren County deserve justice. And we want to see anyone there is evidence of involvement prosecuted for it.”

Of the EDA inquiry, Brown observed that he kept hearing that nothing was going to be done regarding criminal accountability for the at-this-point still alleged criminal misdirection of EDA, County and Town assets – “It made me mad and I wanted to let people know we’re still interested in achieving justice,” Browne said of the impetus for the EDA’s inquiry through its legal counsel to the Rockingham prosecutor’s office.

Some people have been working toward cooperation on the EDA legal front longer than the final weeks before Election Day. Here, newly elected Mayor Tewalt promises cooperation on his part in December 2019, as Jeff Brown, standing in the red shirt, Ed Daley, dark shirt seated left, Supervisors Vice-Chair Cheryl Cullers, behind Tewalt, among others listen. Ten months later have Tewalt’s council colleagues caught up to the idea?

And while the nature of the inquiries may have been different, Browne said he looked at it as a positive that both involved municipalities and the EDA were on the same page in seeking assurances that criminal accountability was still on the legal table at this point.

“We’re in this together, we should be working together,” he said of the Town, County, and EDA.

Perhaps another small step toward increased cooperation, as opposed to increased hostility and litigation, as this community moves forward toward an outcome, if slowly in a complex legal setting.

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Rockingham Prosecutor’s Office turned EDA criminal investigation over to U.S. Attorney’s Office

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The Front Royal Warren County EDA and Warren County officials, through the EDA’s attorney in the civil case, approached the Rockingham attorney two weeks ago to urge that office to reinstate the criminal charges in the EDA embezzlement case. The attached response is a press release from Commonwealth’s Attorney Marsha Garst.

My office was appointed to prosecute potential crimes occurring in Warren County. I authorized one of my most skilled prosecutors who specializes in white collar crimes, Michael Parker, to assist with the case. Our primary goal with prosecution is to assure a just outcome. Mr. Parker did an excellent job assessing the case and putting the evidence together. In doing so, it became apparent that federal prosecutors would be able to gain the best outcome.

Accordingly, working with our federal partners, we referred the matter to the United States Attorney’s Office for the Western District of Virginia in late February of 2020. It was explained that my office cannot comment on the case further or jeopardize any potential federal prosecution. I want to assure the citizens of Warren County that my office is dedicated to seeing justice done. In light of an ongoing criminal action, I cannot provide any further information.

Any further questions in this case should be referred to Brian P. McGinn, Public Affairs Specialist, of the Western District United States Attorney’s Office at (434) 295-8672.

Thank you,
Marsha L. Garst

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EDA unveils new logo featuring sunrise, logistical and transportation advantages

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The Board of Directors and Executive Director Doug Parsons are pleased to introduce the new Front Royal Warren County EDA logo.

Chair Jeff Browne and EDA staff worked with Mike Shotton, of Shotton Design, for several months on the design. The sunrise on the horizon is a feature which reflects a positive belief in the future of the Front Royal and Warren County area. Included are three of the many industry sectors that are important components of our community’s economic engine. Additionally, Front Royal and Warren County are uniquely situated, geographically, to offer businesses and industries the advantage of the I-81 business gateway, the Virginia Inland Port, as well as the I-66/Northern Virginia/metro D.C. corridors.

This new look goes along with the new Board of Directors, new staff, and a new commitment to encouraging business and industry growth and development in the Front Royal Warren County area.

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Update: County responds to Town announcement of FRPD financing

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This story has been updated. Here is the complete release. Page 2 of the release was missed and left out of the original post.

Warren County released the following press release on Friday, September 25, 2020:

The press conference held on September 23, 2020, announcing that the Town of Front Royal has secured permanent financing for the Front Royal Police Department building is great news for the citizens of our community! It closes a chapter on one aspect of the lawsuit the Town of Front Royal filed against the Front Royal-Warren County Economic Development Authority (EDA) and ends months of dispute between the EDA, the Town, and the County. It should be viewed as a path forward to a working relationship between the Town of Front Royal, Warren County, and the EDA.

As Warren County citizens, we were brokenhearted by the EDA scandal. The breach by those who were entrusted with our tax dollars and economic development is one that will take years to restore. Efforts taken by the Warren County Board of Supervisors to restore faith and oversight of the new EDA Board of Directors are well documented. Both the Board of Supervisors and the EDA Board of Directors have worked diligently to clean up the mess and recover the stolen assets for taxpayers.

The portrayal by some Town leadership that the County was unwilling to work with the Town to resolve the EDA issues could not be farther from the truth. The County has had every incentive to work with the Town to resolve the Police Station debt owed by the Town and has repeatedly approached the Town to work together on economic development issues critical to the success of our community.

Town and County residents expect us to resolve our differences and focus on big issues affecting our community. Rampant drug overdoses and deaths in our community, families on the margins suffering from the economic effects of the COVID-19 pandemic, teachers struggling to educate our children remotely, first responders working double overtimes…these are the type of issues we should be working together to resolve.

Our government needs to DO BETTER. We need to stop blaming one another and start focusing on what will better the lives of our citizens. The residents of our community deserve leaders who spend their tax dollars wisely. That includes streamlining our efforts to reduce duplication of the same services and waste of resources. THE CITIZENS of the Town/County are footing the bill for these lawsuits that are equivalent to suing ourselves. And in the case of Town residents, they are paying for lawyers and court costs on both sides.

The citizens of this community want their leaders to find ways to work together. They deserve it. We encourage the Town leadership to work with the County and the EDA to secure a better community!

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