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Attorney John Bell has recused himself from EDA cases and current County Commonwealth Attorney Bryan Layton has withdrawn due to his pending departure from the office.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.
Supervisors ponder EDA financial needs as the ‘Ides of March’ approaches
The full Front Royal-Warren County Economic Development Board of Directors was present Tuesday night, January 14, in support of its officers’ presentation of its financial status to four of five Warren County Supervisors, Tony Carter absent. That status, as reported during the EDA’s January 10 Board meeting, is the likelihood of an inability to continue meeting monthly debt service payments and operational expenses at some point in March.
Might that date be the mid-month “Ides of March” that laid Caesar low in 44 B.C.? It would be fitting as online research indicated that March 15 “Ides” date was also notable as the ancient Roman calendar “deadline for settling debts”.
However, legal variables impacting EDA operations and debt service obligations cited by County Attorney Jason Ham indicated that EDA’s cannot declare bankruptcy and must remain operational until their bond issues and debts are resolved. Other information presented at the Tuesday Supervisors work session indicated that were the EDA to remain unfunded when it hits its financial wall in March, the debt service obligation would fall to its controlling municipality, in this case, primarily at least, Warren County. The total EDA debt on past loans and credit lines on projects for the Town and County was cited at $41 million.
Parsons later told Royal Examiner that the County has already been subsidizing the EDA’s debt service payment on the Baugh Drive warehouse property. And as reported Tuesday, Truc “Curt” Tran continues to cover $42,160 monthly on the EDA’s $10 million ITFederal bank loan.
So, it would appear the County will end up paying much of that EDA debt one way or the other. EDA Executive Director Doug Parsons later verified those net monthly expenses at $90,038.27 in unsubsidized debt service payments and approximately $40,000 in operational costs, for a total pending monthly EDA budget need of just over $130,000.
Of course, as EDA Board Vice Chairman Jeff Browne told the supervisors Tuesday evening, the above “Ides of March” EDA insolvency scenario will occur “if nothing changes” in the EDA’s financial situation.
Things that could push that financial wall back are the sale of a number of properties the EDA is currently marketing – some prospects have been cited – or the Town of Front Royal beginning to settle its unpaid and undisputed debt of nearly $8.8 million to the EDA for construction of the Front Royal Police Headquarters.
Several EDA board members, primarily Asset Committee Chairman Greg Harold, have publicly accused the Town government of acting in bad faith in withholding scheduled FRPD construction invoice payments from the EDA which oversaw and financed that project. The Town is disputing the interest rate on the FRPD project but not the amount due in principal.
In the audience Tuesday night were three Town officials, Mayor Eugene Tewalt, Councilman Gary Gillespie and Interim Town Manager Matt Tederick. Tewalt has publicly called for good faith negotiations on the Town-EDA financial situation rather than the increasingly hostile and expensive litigation the Town Council has turned to in recent months.
While the Town of Front Royal withdrew from EDA board appointment authority when the County assumed its share of Town operational funding several years ago as part of its North Corridor Agreement compensation arrangement with the Town, Front Royal continues to share in debt service payment obligations regarding its EDA projects.
However, in its current budget and projected in the FY 2021 budget summary presented to the town council on Monday, annual debt service payments of about $141,000 to the EDA have been re-budgeted to pay for Town legal and auditing fees regarding its civil litigation against the EDA.
Town officials have yet to provide any documentation on the Town’s civil claim of “up to $15 million” in alleged assets lost or misdirected as part of the EDA financial scandal under previous EDA executive and board leadership.
If the Town Council’s intent toward the EDA remains hostile and litigious, newly-elected Shenandoah District Supervisor and newly-appointed Board Chairman Walter Mabe gave a glimpse into his perspective when he said, “To turn our backs on our EDA is ludicrous.”
Following the first of its newly-scheduled second Tuesday work sessions, the Board of Supervisors took the looming EDA funding needs, as well as a request for reimbursement of $36,827 in legal fees to several past and two remaining (Blanton and Patteson) EDA board members regarding dismissed misdemeanor charges related to the special grand jury investigation into the EDA financial scandal.
Several board members said they were torn on how to approach the request. It was noted that EDA board members serve without compensation. And it was observed that a precedent was indicated when the board agreed to compensate its own members served on the same now-dismissed misdemeanor misfeasance and nonfeasance charges.
Several options were discussed, including covering a portion of the request or making the County’s contribution to those EDA legal fees a loan, that the EDA would pay back when able.
See these discussions and public comments about the EDA in the exclusive Royal Examiner video:
McDonald has bad day in civil court – how bad remains to be seen
Former Front Royal-Warren County Economic Development Director Jennifer McDonald remains free on bond.
On Friday afternoon, January 10, former Front Royal-Warren County Economic Development Director Jennifer McDonald was found guilty of civil contempt regarding the movement of a piece of property frozen by the court during earlier EDA civil litigation hearings; and had a default judgment regarding a failure to respond to civil court orders for information on her two real estate companies, go against her as well.
McDonald was fined $375 to cover County-EDA legal costs pursuing the civil contempt judgement, and ordered not to repeat what she and her sister Gail Addison into whose name the frozen real estate parcel was moved, testified was a simple mistake. Those two sanctions were all EDA attorneys were seeking in the way of punishment on the civil contempt ruling.
As for the default judgement for failing to heed court-requested documentation on her two real estate companies, DaBoyz and MoveOn8 named along with her as three of 14 defendants in the amended EDA civil litigation, a date of April 17 was set for attorneys to argue McDonald’s liability on that ruling.
Judge Bruce D. Albertson will hear, not only those civil case arguments on April 17, but further motions arguments from a number of EDA-related criminal case defendants who were in court on the 1 p.m. docket.
On Friday afternoon Judge Albertson also granted the Commonwealth’s request to nolle prossed (drop) all current EDA-related criminal charges against Earth Right Energy principal Donald F. Poe.
Prosecutor Michael Parker restated the reasons cited in his written submission of the previous day, regarding the amount of material recently received concerning the Poe prosecutions and gaps in that material and a lack of time available with Poe’s first criminal trial on a count of perjury slated to begin January 22.
Poe attorney William Ashwell did not object to the prosecution’s request.
“We could jump up and down and say we want (the charges) out altogether now … but functionally this is a great example of the State acting as gatekeeper (of legal processes),” Ashwell told the court.
The amount of material involved in the EDA civil and criminal litigation – cited as approaching a million pages – played into many of the motions arguments heard Friday. Like Special Prosecutor Parker of the Harrisonburg Commonwealth’s Attorney’s Office before him, EDA civil counsel Cullen Seltzer told the court that the amount of involved material and documentation was in issue in their respective cases.
Seltzer said the volume of material made it impractical and prohibitive cost-wise to reproduce traditionally in hard copy. He said a data base was being created with portions flagged to different defendants’ names to ease the online search process.
In arguing against the civil contempt charge against his client, McDonald attorney Peter Greenspun, pushed into dual criminal and civil case duties due to McDonald’s financial problems that led her initial civil case attorneys to withdraw, pointed out once the real estate movement mistake was discovered, the sisters’ corrected their mistake.
“When the attorney said, ‘wait, can we do this,’ she did everything to restore the situation without court intervention,” Greenspun told the court.
Greenspun argued that the involvement of local attorney David Crump in the transaction indicated it was, in fact, a mistake rather than an act of contempt of a court order installed by initial EDA Judge Clifford “Clay” Athey Jr.
“This was not done in a parking lot or a jail cell – her conduct was not contemptuous; it was a mistake that was corrected,” Greenspun told the court.
However, EDA co-counsel Lee Byrd pointed to Addison’s own testimony to argue that deceit was a motivation in the transfer. Addison said the move was made so she, a former real estate agent, could market the parcel in her name rather than her sister’s due to “the bad name” McDonald had developed as a result of the EDA litigation.
And while Greenspun pointed out the jailed McDonald was not present for any of the three-day hearing at the end of which Athey froze some McDonald real estate assets, EDA counsel pointed to the courthouse documentation on the court order freezing McDonald assets and scoffed at the idea the experienced real estate agent wouldn’t know how to find out which of her assets had been frozen by the court.
“Their only excuse is ‘I wasn’t aware’ – they can’t say the order didn’t exist,” Byrd told the court.
And it was the plaintiff argument that held sway with the judge.
EDA faces looming cash-flow crisis as Town treads water on $8-million debt
A summary of the Front Royal-Warren County Economic Development Authority’s financial situation was presented by its Finance Committee Chairman Marjorie “Jorie” Martin at the Authority’s Friday, January 10, board meeting.
That situation includes a net of $481,995 in cash assets in banks when coming debt service and operating payments are deducted, with five months left in Fiscal Year 2019/2020. Martin told her board the EDA’s monthly operating expenses was $45,000 – a number she called “not bad”.
However, with all debt service variables considered Martin said the EDA faced running “out of money in the middle of March”. That projection would appear to assume the Town of Front Royal will not have paid the $8.77 million dollars it owes the EDA in undisputed, but thus far withheld principal payments on construction of the Front Royal Police Headquarters now in use across Kendrick Lane from EDA headquarters.
A copy of a letter sent to Town Finance Director B. J. Wilson detailing that Town debt to the EDA was also included in Martin’s Finance Committee Report.
“I would have thought the police department situation would have been settled long before now, but at the rate we’re going I left it in (as bad debt) till they (the Town of Front Royal) figure out what they’re doing,” Martin explained during her presentation of an FY 2020/2021 draft EDA budget to the board.
Interested observers at Friday morning’s meeting were newly-installed Warren County Board of Supervisors Chairman Walt Mabe and North River District Supervisor Delores Oates. No one from the Town of Front Royal was present.
The EDA adjourned to closed session after an hour-and-10-minute open meeting. Mabe and Oates were invited to stay and remained to attend the closed session. EDA staff said the only anticipated action after the closed session was approval of a motion to present a summary of the EDA’s financial situation and proposed FY 2021 Budget to the full County Board at the Supervisors’ upcoming, January 21 meeting.
While the County and Town pay their respective shares of the EDA’s debt service accumulated on their behalf, the County alone now funds the EDA’s operational budget. That arrangement was reached several years ago as part of the County’s continued negotiation on compensation to the Town for central water sewer extension into the Route 522/340 North Corridor.
So, it appears the operational fate of the existing Town-County EDA after March will rest in the board of supervisors’ fiscal hands. Unless the Front Royal Town Council agrees to make good on at least portions of its $8.77-million debt to the EDA on the FRPD construction project.
Other EDA-Town finances
Two interesting asides to EDA-Town finances were also discussed during Friday’s meeting. One was the discovery that the EDA has been billed and paid for Town sewer service to its building at 404 Fairgrounds Road since 2002. EDA Executive Director Doug Parsons told the board during his Executive Director’s Update that it has been discovered the building is not, and apparently has never been connected to the Town sewer system extension into the North Corridor. A $4,000 adjustment to a pending purchase contract on the building was suggested to account for the condition and anticipated repairs to the property’s septic system.
During discussion of what the EDA has paid for that unprovided sewer service it was not receiving over an 18-year period, Harold asked, “Does anyone know what the (banking) interest rate was during those years?” to which it was replied, “Pretty high,” drawing some laughter. The question-answer appeared to be a reference to the Town claim it was promised a 1.5% interest rate on construction of the FRPD headquarters, a rate never achieved. The EDA is currently paying 4%, down from an initial 4.75% rate.
And the EDA has informed the Town of winterization costs for the Afton Inn building as a resolution to that redevelopment situation is explored. Harold told his board that the Memorandum of Understanding (MOU) between the EDA and Town of Front Royal on the EDA marketing and redevelopment of the Afton Inn property for the Town includes the Town’s agreement to be responsible for such necessary expenses. Harold told the board the winterization bid was $15,700.
It was also noted during the Asset Committee Report that a response from Afton Inn developer 2 East Main Street LLC was expected within days on whether it hopes to continue with the project or file a Notice of Intent to Terminate its redevelopment agreement with the EDA, current owner of the property on behalf of the Town.
Workforce Housing parcel
A positive Asset Committee development is a scheduled meeting with the Cornerstone LLC group which somehow purchased the 3.5-acre Royal Lane Workforce Housing property from the EDA in late November 2018 for $10. The property was originally “gifted” to the EDA for $10 by former EDA Executive Director Jennifer McDonald’s aunt and uncle, Mr. and Mrs. Walter Campbell in 2014-15. However, due to unmet developmental deadlines qualifying the Campbells for tax credits for their gift, the parcel was eventually purchased from them by the EDA at a cost of $445,000 in 2017. Due to forensic audit questioned post-purchase expenditures it is written off as a $640,000 loss in the Cherry Bekaert Report on EDA finances during McDonald’s executive tenure.
Asset Committee Chairman Greg Harold told his board he was optimistic about the upcoming meeting with Cornerstone LLC representatives to determine an equitable resolution to the Royal Lane property situation. That situation arose when the Deed of Sale was sent to Cornerstone as the buyer with no price on it after then-Chairman Gray Blanton’s signature was acquired on the deed’s signature page. Local Real Estate attorney Joe Silek Jr. was filling in on the transaction for then-EDA attorney Dan Whitten. Whitten had recused himself from the transaction due to a perceived conflict of interest as County Attorney.
See details of these EDA Board discussions and all Friday’s business in this exclusive Royal Examiner video:
Donnie Poe EDA criminal charges dropped – but could be re-filed
On Thursday, January 9, Rockingham County Assistant Commonwealth’s Attorney Michael Parker filed a motion to nule prossed (drop) charges brought by a Warren County Special Grand Jury against Earth Right Energy principal Donald F. Poe, at least for the time being.
The Special Grand Jury was empanneled to investigate potential criminality tied to the $21.3 million Economic Development Authority (EDA) financial scandal. Parker was appointed special prosecutor for EDA criminal cases in December following the announced recusal of incoming Warren County Commonwealth Attorney John Bell and his staff and the withdrawal of Acting Commonwealth’s Attorney Bryan Layton as his tenure in the department drew to a close.
During previous hearings related to the EDA civil and criminal litigations it has been noted that the EDA financial scandal and consequent investigations has generated an unusually large amount of documentation, cited at between 700,000 and one-million pages.
In the prosecutor’s motion to drop the charges at this point Parker wrote, “The Commonwealth received its portion of discovery, purportedly containing all evidence that has been considered by the special grand jury to date, via hard drive on 12/30/2019. Initial review of that hard drive indicates that it may be missing a substantial number of exhibits considered by the grand jury.
“It would be imprudent for the Commonwealth to prosecute any criminal matter for which the investigation has not concluded.
“Even if the ongoing investigation reveals nothing further with respect to Defendant, the Commonwealth cannot prepare for trial when its existing evidence remains unclear.”
Of the decision not move forward with the Poe prosecutions with a motions hearing and possible three-day trial on the perjury charge against Poe looming on January 22, Parker told Royal Examiner in a Thursday afternoon email, “This decision was not made lightly. As the gatekeeper of criminal charges, it is my responsibility to determine whether to prosecute and how to prosecute. Making those decisions requires a thorough grasp of the evidence supporting any allegation. Unfortunately, I am not fully caught up with the ongoing special grand jury investigation, thus I do not have a thorough grasp of the evidence that might pertain to Mr. Poe’s charges. I believe it would be unethical to attempt a prosecution under these circumstances.”
Motions hearings for Poe and other EDA criminal and civil defendants are scheduled for Friday afternoon, January 10. Parker said the motion for the nolle prosequi dropping of the charges against Poe will be heard during those hearings on the 1 p.m. Warren County Circuit Court docket.
“If the motion is granted by the Court, the charges will be dropped without prejudice to the Commonwealth. This would not prevent the Commonwealth from prosecuting the same charges in the future,” Parker explained in a Thursday afternoon email.
Removal Petition organizer comments on judge’s motions ruling
Royal Examiner asked Warren County Removal Petition organizer Bonnie Gabbert about Judge Bruce D. Albertson’s January 2 written ruling on cross motions in the civil case filed in October seeking removal of all then sitting county supervisors. As noted in our related story on that ruling only Happy Creek Supervisor Tony Carter and Fork District Supervisor Archie Fox remain impacted by the petition due to retirements (Dan Murray and Linda Glavis) and one electoral loss (Sayre) in November.
Nonetheless, Gabbert was buoyed by the judge’s dismissal of the supervisors’ motions for dismissal of the petition on legislative immunity and separation of powers arguments.
“I think we have a really good chance of winning this case, as does our attorney Tim Johnson. Judge Albertson ruled for the petition on a majority of the issues and is giving us a chance to clean up the wording going forward,” Gabbert began in an emailed response.
“It is long overdue that the citizens not only be heard, but listened to and it finally looks as if that’s going to happen. I hope the message that all current and future elected board members are getting from this is the concerned citizens will no longer stand by and let this kind of oversight happen. We elected you to do a job and if you cannot perform the duties of the job then step down and let someone else take over that can,” Gabbert, whose husband and fellow grass roots activist Paul has interviewed for the vacant Front Royal Town Council seat set to be filled Monday night, said.
“This is not about whether or not the board members are good people – I would like to think they are all good people. This is about them doing the jobs that they were elected to do.
“This case not only affects Warren County as I have had citizens from numerous other counties contact me to let me know they are closely following what is happening with the petition; are asking questions about how we did it and are hoping we come out on top,” Gabbert concluded.
And while a final judgement on removal of the remaining impacted supervisors is an unknown number of legal arguments away, the fact the court has thus far ruled that citizens’ concerns about perceived negligence in the conduct of the office of elected officials deserves its day in court is encouraging to those who have devoted their time and energy to that effort.
Supervisors Immunity arguments denied, Removal Petition moves forward
On January 2nd Judge Bruce D. Albertson filed a written decision on dueling motions in the citizen’s Removal Petition against two Warren County Supervisors not retired or turned out of office in the new year. The Removal Petition targeting the entire elected county board was filed on October 18. However, after retirements and the November Election result only two of the then-sitting supervisors, Happy Creek’s Tony Carter and the Fork District’s Archie Fox who were not up for re-election in 2019, remain impacted by the Removal effort.
Judge Albertson gave the petitioners, now represented by Rockingham County Assistant Commonwealth’s Attorney Michael Parker (and privately-secured attorney Timothy Johnson), 21 days to file an amended petition; and denied a defense motion seeking dismissal of the Removal Petition against County Supervisors on claims of Legislative Immunity and Separation of Powers.
The court ruled that, “legislative immunity does not apply to exempt the governing bodies of localities when there have been allegations of ‘unauthorized’ appropriation or misappropriation of funds,” continuing to observe that, “In this case embezzlement is the main contention of the petition for removal. Therefore, Respondents (defendants) cannot succeed on a plea of legislative immunity in this case for that reason as well.”
As to the separation of powers argument that the judicial branch of government should not be involved in interfering with the legislative branch process, Judge Albertson split some fine legal and political hairs.
“In this case, if the Court were to find against the Board on all counts and award the full relief sought, no legislative act would occur. The Court would be exercising ‘the essential function of the judiciary – the act of rendering judgement in matters properly before it’ and not ‘the function of statutory enactment, a power unique to the legislative function.”
In prefacing that observation the judge wrote that, “the separation of powers doctrine and legislative immunity are distinct concepts lying with separate entities: the first establishing our form of government and ensuring the protections of the people against aggrandizement leading to tyranny, and the second ensuring the independence of a legislator. One belongs to and is for the benefit of the people while the other belongs to and is for the benefit of the individual legislator.”
So, Judge Albertson appears to be ruling that in cases of alleged misappropriation of public funds, neither the legislative immunity nor separation of powers doctrines can be utilized to protect legislators from legal scrutiny demanded by their constituents.
As to the rewording of the original petition the judge noted that during the December 17 motions hearing both sides agreed that several paragraphs reference “inapplicable statutes” because while Warren County has an elected county board, its legislative-administrative form of government is not categorized as a “county board form of government”.
“As a result, the Petition does not outline a cause of action as currently written with regard to those paragraphs,” the judge wrote, adding that, “The Commonwealth asserts that other statutes and authorities implicitly impose some or all of the duties outlined in Paragraph 3 of the Complaint, so leave to amend is granted.”
So amended to reference the proper codes the Commonwealth asserts will support the Removal Petition’s claims of administrative negligence against county supervisors, it appears the case will continue to revolve around the dueling arguments as to whether the county board of supervisors had the necessary level of direct administrative oversight to stem the alleged activities of former EDA Executive Director Jennifer McDonald through 2018 after alleged “red flags” appeared; and more particularly over the final three-plus months of that year.
Those red flags eventually led the County and EDA Boards to contract a financial fraud investigation into EDA finances in September of 2018. Despite that investigation that zeroed in on the activities of EDA Executive Director McDonald, the Removal Complaint asserts that McDonald’s financial authority was not adequately reined in by either her board of directors or the county supervisors who appoint the EDA board.
Now dismissed criminal misdemeanor charges of misfeasance and nonfeasance against past and current EDA and county board members cited McDonald’s movement of $309,000 of allegedly misdirected EDA assets over the last three-plus months of 2018 as the Cherry Bekaert investigation of EDA finances was under way.
McDonald resigned on December 20, 2018, under increased scrutiny by her board in the wake of closed session reports from contracted forensic auditor Cherry Bekaert regarding McDonald’s use of EDA assets. She has since been named the central of 14 human or business entity defendants in what is now a $21.3 million EDA civil litigation; and has been indicted on 32 financial felony counts related to the Cherry Bekaert findings. However, many involved citizens wonder if the EDA investigation’s focus has been too narrow in determining peripheral accountability.
McDonald and a number of her fellow EDA-related criminal defendants are scheduled to be in court on civil and/or criminal motions hearings Friday, January 10.