Attorneys for multiple Front Royal-Warren County Economic Development Authority civil litigation defendants argued for dismissal of their clients’ inclusion in that list in Warren County Circuit Court on Thursday, December 12. After hearing over 4-1/2 hours of testimony surrounding a 45-minute lunch break, Judge Bruce D. Albertson took those arguments and plaintiff counsel counter-arguments under advisement.
After an explanation to defendants present, including Donald Poe, April Petty and Jesse Poe, about the reason for the time he will take before returning to court to make a ruling on their and other defendants’ counsel arguments, Albertson set a date of January 10, at 2:30 p.m. to make his ruling.
That is the same date the judge continued a scheduled Show Cause hearing on a Civil Contempt charge against primary EDA civil and criminal defendant Jennifer McDonald earlier during the Thursday docket. McDonald’s civil contempt hearing will follow an already scheduled McDonald criminal hearing on the 1 p.m. docket on January 10.
McDonald’s criminal case attorney Peter Greenspun informed Albertson he was taking over his client’s civil case as well in the wake of the withdrawal of her former civil attorney Lee Berlik.
Greenspun told the court he needed additional time to familiarize himself with the civil aspects of McDonald’s legal situation.
A third EDA-related hearing on Thursday morning’s docket was Donald Poe counsel William Ashwell’s motion to Quash a Perjury charge regarding the Earth Right Energy principal’s testimony to the EDA Special Grand Jury. That case went forward first on what was slated to be an 8 a.m. start to Thursday’s docket, delayed by late arrivals of a court reporter and McDonald’s Northern Virginia-based attorney.
After hearing Ashwell and new Rockingham County prosecutor’s arguments, Albertson deferred a ruling on dismissal of Poe’s perjury charge to the January 22 date on which that trial is scheduled to begin.
Ashwell told the court that his client was the one defendant “not on the continuance train” with an originally slated perjury trial date of December 6 having been moved to a three-day slot in January to accommodate the recent placement of a new prosecutor’s office to handle all the EDA criminal cases. Incoming Warren County Commonwealth’s Attorney John Bell has recused himself from EDA cases and current County Commonwealth Attorney Bryan Layton has withdrawn due to his pending departure from the office.
In addition to McDonald on her case and Donald Poe, April Petty and Jesse Poe who were present with counsel Thursday, EDA civil defendants represented in Thursday’s Demurrer motions hearing were Truc “Curt” Tran and ITFederal and Poe’s Earth Right Energy Solar Panel Installation company.
The basis of those defense counsel arguments for dismissal of their clients from the civil case revolved around several points. Primary among those is the plaintiff notion of an overarching conspiracy that somehow links the various defendants to central figure and former EDA Executive Director McDonald; and that there were definable contractual breaches by those defendants making them individually liable for funds that came their way through McDonald.
Lead plaintiff attorney Cullen Seltzer argued that there did not have to have to be direct knowledge among all defendants of each interlocking conspiracy McDonald is alleged to having been a party to for that conspiracy to exist.
He used an analogy to a gang that planned to rob every Bank of America in Richmond, saying a gang member assigned to one “bank job” did not have to know the detail of every other bank robbery to be criminally liable for the entire take.
Seltzer dismissed defense arguments that “McDonald is a rouge tornado dumping all this EDA money into all these pockets” without the recipients’ knowledge that something illegal was transpiring that they were beneficiaries of.
However, Jesse Poe and April Petty’s attorney William Schmidheiser argued that such a conspiracy theory did not apply to his clients, whose alleged “unjust enrichment” did not go directly to them, but rather to real estate companies handling the closings on their homes.
Schmidheiser noted his clients’ limited incomes, telling the court the reason he represented them both was a necessity to pool their resources to finance their defenses. He called their being packaged as part of an alleged $21 million civil suit conspiracy for mortgage payoffs of $125,000 (Petty) and $280,000 (Jesse Poe) was, short of the loss of a child or a cancer diagnosis, one of the worst things that could happen to an average person.
He said that while there might be “unjust enrichment” claims the plaintiff could argue – we’ll deal with those down the road, he told the court – the circumstance of his clients’ involvement distanced them from the plaintiff EDA counsel’s conspiracy theory.
He compared his clients’ circumstance to that of the casino McDonald is alleged to have lost at least $750,000 gambling at, noting that while the casino received cash from McDonald that could have been EDA assets, the casino was not a defendant.
In arguing that Earth Right Energy’s (ERE) contracts with the EDA through its then-executive director were valid and binding, attorney Ryan Huttar told the court that at the time those contracts were enacted “Jennifer McDonald (was) the EDA”.
That was a point the EDA legal team disputed, noting that large dollar (over $10,000) transactions had to be approved by the EDA Board of Directors, which they stated, did not happen.
ITFederal attorney Brandon Elledge argued that the EDA Board did approve the $10 million dollar loan it is seeking recovery of from his client, as well as the subsequent vendor payments of $1.4 million also in dispute.
Sands Anderson plaintiff counsel countered that the loan and the vendor payments were received under false pretenses concocted by Tran and McDonald in concert.
Elledge also stressed that Tran remains current on his loan payments, and that no proof had been offered that his client personally benefited from the payments, rather than professionally as intended. Oddly however, the Deed of Trust on the property was amended so that Tran only has to spend $2 million of the $10 million loan on the Front Royal property.
In setting the January 10 date for a decision on the motions to dismiss the defendants from the civil suit, Judge Albertson compared himself to a student.
“The attorneys teach us their view of what the law is” related to their cases “and it will take several weeks to fact check their arguments – I will treat this seriously, please be patient,” he asked the defendants present.
EDA completes audits for 2018 and 2019; 2020 audit is next
The Board of Directors of the Front Royal and Warren County Economic Development Authority accepted its audited financial statements for fiscal years 2018 and 2019, today, October 5, 2021. The audit of the financial statements was conducted by the firm of Brown Edwards, CPAs of Harrisonburg, VA.
“We have received the final outside audits conducted for 2018 and 2019,” said EDA Board Chairman Jeff Browne. “This was a huge effort on the part of Brown Edwards, and they have done very good work in challenging circumstances. Getting these two financial audits completed is a major step forward in putting the EDA’s past difficulties behind us. Now we can better focus on economic development issues to benefit the community.”
“The auditors’ letter points to three areas for improvement of internal controls,” Browne said. “It was important to make each improvement recommended by the CPAs, and we have done just that. The Warren County staff now administer the check-writing duties, collection of rents, and have layers of approvals for expenses within EDA and the County administration that were not there three years ago.”
The audited financial statements show that, at the end of the fiscal year 2019, the EDA’s total net assets were $38,036,737, and its net liabilities were $44,575,435, resulting in a deficit net position of $6,538,698. The EDA will work with Warren County’s auditors starting with the fiscal year 2020, which audit can now be undertaken.
The EDA Board of Directors will have their next regular monthly board meeting via Zoom on Friday, October 29, 2021, at 9 a.m.
EDA reminds rental tenants, Small Business Loan Program clients to now send payments to WCGC
Starting October 1, 2021, the Warren County Finance Department will take over and manage payments made to the EDA for rents and the Small Business Loan Program (RBEL and IRP). The EDA will no longer be accepting payments at their office or office address.
Please continue to make your check or money order to the EDA. You must hand-carry or send your payments to:
Warren County Government
ATTN: Finance Department
220 N. Commerce Ave.
Front Royal, VA 22630
Any payments sent to the EDA will be returned. As a result, you may incur fees for late payment. We appreciate your cooperation. Thank you for your attention to this matter.
EDA briefed on structural and legal options in closed session; gets open session updates on committee work during transition phases
The EDA Board of Directors met Friday, September 24, for their regular monthly meeting. The Board went into closed session for approximately 90 minutes to discuss transition, personnel, 2018- 2019 draft audits, loan restructuring, and disposition of property. The Board returned to open session at approximately 10:20 a.m. Jeff Browne, EDA Chair, opened the session with an overview of the transition. Browne asked each board member to report on their assigned transition project.
Search Committee-Transition: Dr. Tom Patteson, reported the committee met and reviewed applications. Three applications were submitted to the county administrator. The county and EDA will work together in selecting replacements for the Administrative Assistant and Executive Director.
Finance Committee-Transition: Jim Wolfe reported the “numbers” on the 2108 and 2019 audits are final. Jim Wolfe stated the management letter will be revised and recommended a special meeting for next week to finalize and accept the audits for 2018 and 2019. The Board agreed and the date of the meeting will be announced. Mr. Wolfe will also be meeting with the finance personnel at the county in the next several weeks.
Marketing Committee-Transition: Scott Jenkins, Chair reported the 38-page PowerPoint presentation is complete. The marketing material can be tailored to specific clients. The marketing is targeted on the Core Industries: Advance Manufacturing, Transportation and Logistics, Information Technologies, and Food Processing. Scott reviewed documents and key data. The marketing material is organized and stored on the EDA network. The September Marketing Committee report included other updates and visions including Small Business opportunities, focus on the Strategic Plan, and marketing opportunities with VEDP, Site Selector Guild, and Trade shows in 2022.
Administration Committee-Transition: Jorie Martin reported Gretchen Henderson prepared an Operation Manual for future reference. The manual is detailed in all the operations of the office including resources to use. The new administrative assistant as well as the EDA Board are well prepared to transition smoothly. Mrs. Martin reported The EDA now has the capability to update portions of the website in-house. This week a meeting section was added so the public can go to the site and see upcoming meetings.
Asset Committee: Greg Harold reported the transition and updates on the assets of the EDA were complete. Doug Parsons worked closely to make sure all projects are up to date.
Greg Harold presented the Project Management – Stage-Gate: The Stage-Gate is a comprehensive document standardizing the process for disposition of property. The document will be reviewed and discussed at length at the October board meeting.
Motions coming out of Closed Session: The Board approved the technical revisions to the EDA By-Laws adopted at the August meeting. The Board approved the Board Chair, and Secretary to sign documents for the restructuring of the EDA debt with First Bank and Trust. All documents will be reviewed by legal counsel.
Other items that the Board of Directors addressed included an expression of gratitude for all the work done by Executive Director, Doug Parsons. Jeff Browne expressed and the boards’ appreciation for all the hard work and effort to bring the EDA where it is today. Through Doug’s efforts, the EDA has sold property, expanded business, and brought new business to the town and county.
The next monthly EDA Board Meeting is scheduled for October 22, 2021.
County moves toward restructured EDA staffing in hopes of restored municipal cooperation – 6 CUPs approved, 5 for short-term tourist rentals
At its meeting of Tuesday evening, September 21st, the Warren County Board of Supervisors made the first official move toward an altered structure of its, and the Town’s, Economic Development Authority futures. That move was unanimous 5-0 approval, on a motion by Delores Oates, seconded by Walt Mabe, of County Administrator Ed Daley’s presentation of a “Request to Create a Warren County Office of Economic Development”. As reported in our recent story, County work session takes unexpected turn on EDA front – ‘Reunited’ operational option broached, the supervisors elected to have Daley forwarded an idea originally slated for Closed Session discussion at a September 14 work session, in open session that day. That idea is to have an Economic Development Director’s staff position under the municipal government umbrella, rather than as a staff position hired by the board of an independent Economic Development Authority (EDA), albeit an EDA board appointed by the municipal government or governments that created it.
As we understand it from subsequent conversations with Daley following last week’s supervisors’ work session, that in-house EDA director’s position would work in the best interest of both the county’s municipal governments, networking what it appears at this point will continue to evolve into two unilateral Town and County EDAs. Now theoretically, both the existing WC EDA and FREDA – the Front Royal EDA that is in the interview stage of establishing a board of directors – could create their own independent Offices of Economic Development with their own executive directors. But the impetus after last Thursday’s resurrected Town-County Liaison Committee meeting appears to be to work together to select an executive director who will work to the mutual benefit of both municipalities while networking with two EDA Boards of Directors.
Confusing? Perhaps – but it would cut payment of the six-figure salary range position in half if both municipalities could agree on the concept and a person to fill that conceptual central administrative position. For with a statewide trend toward regional EDA cooperation in a highly competitive economic development environment, what future would this community’s economic development have with dueling EDAs competing, not only with other regional governments’ economic development structures but with each other’s, particularly when the WC EDA has control of significant portions of economic development properties inside the town limits?
The answer to that question has, perhaps, already been given in the pending October 1st departure of WC EDA Executive Director Doug Parsons, to a county directly to our east where as one local observed upon hearing the news, “Warrenton isn’t suing Fauquier County” (or perhaps more accurately, its EDA).
And a move toward “us and us” from “us versus them” in County-Town relations was a reoccurring theme for several supervisors involved in last week’s first Liaison Committee meeting since January. Both Board Chair Cheryl Cullers and Delores Oates commented on the positive feeling they carried out of that meeting that the deteriorated relationship featuring hostile litigation involving the Town and existing WC EDA, and canceled face-to-face meetings of elected officials on matters of mutual interest, might be turning a corner. Of course, as the third county board member at that Liaison Committee meeting, Walt Mabe, wondered during it: Why can’t we return to one, re-tooled EDA working to both the County’s and Town’s benefit, with one executive director not alleged to have had their hands in both municipalities’ economic development pockets?
And in a loosely related item, as part of the September 24th WC EDA monthly board meeting, departing Executive Director Doug Parsons’ last, the agenda includes the information that the long-awaited 2018 and 2019 EDA audits have been completed by the contracted auditing company and are awaiting EDA Board approval. Stay tuned for more developments on the auditing front. – Maybe the completed audits could even establish exactly how much of whose money went where and is owed to who by whom, negating the necessity for the continued dueling Town-WC EDA civil litigations. As previously reported, the sitting council ignored then-Mayor Gene Tewalt’s 2019 advice to accept the offer of the WC EDA to sit down with accountants rather than attorneys to follow the money to establish exactly who was owed what on the back end of the EDA’s now $62-million-dollar financial scandal.
But off that “movie script”, in other business the supervisors approved six Conditional Use Permit (CUP) requests Tuesday, five for Short-Term Tourist Rentals, and one for alterations to a Kennel Permit. See all these discussions, public comments, and votes in the County video; and see the meeting agenda cover page with the full list of CUP application public hearings linked here:
County work session takes unexpected turn on EDA front – ‘Reunited’ operational option broached
What had been an hour-plus work session update on Capital Improvement Projects (CIPs) by County Project Manager Jeff Hayes took an unexpected turn about an hour and a quarter into that work session at the conclusion of Hayes PowerPoint presentation. I say “unexpected” because the only open session agenda cover sheet item was Hayes’ CIP report. However, the board elected to take what was labeled “Closed Session” discussion of “Personnel re: Economic Development Authority” into open session discussion.
What followed was County Administrator Ed Daley’s presentation on organizational opportunities presented by the pending October 1st loss of the second and final member of the two-person EDA staff. As previously reported, following Administrative Assistant Gretchen Henderson’s August 27 departure to the Northern Shenandoah Valley Regional Commission, Executive Director Doug Parsons announced his resignation, effective October 1, to take the EDA executive director’s job in Fauquier County.
And what Daley presented to the board in open session echoed what EDA Board Chairman Jeff Browne told Royal Examiner in the wake of the pending loss of the entire EDA staff – this can be an opportunity, rather than a derailing of the EDA’s recovery from the multi-million-dollar financial scandal uncovered in 2018-19 under previous executive and board leadership. And while Browne focused on replacement personnel selection as the opportunity, Daley used that as a jumping-off point to explore previous supervisors discussion dating to early 2020 about an organizational realignment of the EDA. The County has already taken on the role of Financial Agent of the EDA. Continuing the broached realignment would bring the EDA staff into the Warren County Government Center, functioning more like a County Department. That option was first considered by some supervisors in the wake of the Town of Front Royal’s decision to operationally withdraw from the half-century-plus old joint EDA, in favor of creating its own unilateral Front Royal EDA (FREDA).
That decision was driven by the Town Council’s decision, against the advice of then-Mayor Gene Tewalt, to civilly sue the old EDA for a larger portion of the allegedly embezzled and misdirected EDA assets related to County and Town business dealing handled by the EDA. Rather than costly and divisive litigation, Mayor Tewalt urged council to accept the new EDA leadership’s offer to have staffs simply sit down and follow the money to determine who was owed what. However, a council majority wasn’t listening to its then mayor. Consequently, the Town and EDA are currently engaged in dueling civil litigations.
And while Daley’s presentation began as a logistical exploration of processes of incorporating the EDA into the county governmental apparatus, it took a turn when one supervisor posed a legal question. “I’m going to call the elephant out in the room,” North River Supervisor Delores Oates said in pointing out that the existing EDA was jointly founded by the county and town governments over a half-century ago, and legally remains a Town-County EDA. So, can the County legally bring the EDA into its sole administrative oversight, she wondered.
“If I were sitting where you sit, I would invite the town council to participate in a staffed economic development department that works for the EDA but can also work for us in the County and the Town on economic development projects,” the county administrator replied. And as Daley pointed out, neither EDA currently has a staff, though at least one, the old EDA, has an exceptionally competent and proactive re-tooled board of directors.
“And I think that would be the best tactical advantage for the community, is if we would actually collaborate and not create independent organizations. Because otherwise we’re spending twice the money to do the same job,” Oates said in response to Daley’s suggestion.
The first face-to-face discussion of this latter option of reestablishing a jointly functioning Town-County EDA will apparently take place this Thursday, at the first Town-County Liaison Committee meeting since the Town Council decided to cut those quarterly meetings off in the wake of initiating the now dueling Town-EDA/County civil litigations. Daley noted that Liaison Committee opportunity was presented by the inclusion on Thursday’s Liaison agenda of a Town presentation on the status of development of its unilateral Town EDA.
Members of both council and the board of supervisors have recently suggested an altered, more collaborative Town-County path forward from the divisive and litigious one launched by council during the tenure of Interim Town Manager Matt Tederick. So, it will be interesting to see how Thursday’s Liaison Committee discussion develops with a new town manager involved; and how the full council will react to the idea of realigning into a jointly functioning EDA apparatus, possibly including collaboration in selecting the new FR-WC EDA staff were a speedy, positive reaction achieved.
The EDA discussion begins at the 1-hour-16-minute-30-second mark of the linked county video; Oates calls out the “elephant in the room” at the 1-hour-44-minute-45-second mark. The Capital Improvement Project PowerPoint and Q&A takes up the first hour-and-15-minutes of the video. And between the CIP and EDA portions of the work session, Board Chair Cullers gave an update on news of the birth of her newest grandchild Tuesday evening. – Welcome to the world on September 14, 2021, Ella Louise.
About those CIP projects
Prior to that turn toward the EDA and Town-County relations regarding cost-effective cooperation versus costly, counterproductive competition in future economic development initiatives, there were some interesting turns on the CIP front. Those included discussion of downtown Front Royal parking issues and the County’s ability to impact those issue with owned property in the Historic Downtown Business District vicinity. Also, under board scrutiny was the cost and effectiveness of air purification devices under consideration for other County facilities after being installed at the Warren County Courthouse to allow more normal judicial proceedings to be reinitiated during the COVID-19 Coronavirus pandemic. Discussion of the potential effectiveness against, not only the COVID-19 Coronavirus but other virally spread illnesses was broached in considering the purchase of as many as 60 of the machines at a cost of $2100 per unit.
See Hayes’ CIP power point on renovations to the Commonwealth Attorney’s Office; the Parks & Rec Department Splash Pad Pavilion; Rivermont Volunteer Fire Company 2 renovations; Shenandoah Farms Company 6 renovations; the Morgan’s Ford Boat Landing project; and Juvenile and Domestic Court renovations and related parking issue, including the observation that you “don’t build a court facility over or under a parking deck – BOOM!” (due to domestic terrorist concerns).
On the downtown parking deck front, Ed Daley noted that the Winchester City Council was scoffed at for proposing a downtown parking deck 20 years ago, adding that now the city has four.
EDA develops transition plan through staffing losses
The Front Royal/Warren County EDA’s Executive Committee met on September 10, 2021, at 9:00 a.m. to discuss personnel matters arising from the upcoming vacancy of its executive director, and a transition plan for continuity of EDA operations.
The Executive Committee is developing a detailed plan to handle all aspects of the EDA’s operations including business retention and attraction, finance, legal, personnel, and day-to-day office operations. Both the Board and the Executive Director are confident that this plan will ensure a seamless transition and ensure the EDA remains a competitive entity for investment and expansion of businesses in Warren County.
(From a Sept. 10 Press Release by the WC EDA)