Former Front Royal-Warren County Economic Development Authority Executive Director Jennifer Rae McDonald’s criminal trial will not commence on Oct. 11, as previously scheduled.
A U.S. District Court in the Western District of Virginia judge has put off Jennifer R. McDonald’s trial on fraud, money laundering, and identity theft charges until May 2023.
McDonald is accused of embezzling money from the Front Royal-Warren County Economic Development Authority while serving as its executive director and using the money to buy real estate and conduct other personal business.
The federal trial was scheduled to begin October 11, which had been pushed from an earlier date after McDonald’s defense attorney, Assistant Federal Public Defender Andrea Harris, requested more time given the voluminous amount of evidence she received from the prosecutor’s office as well as the additional electronic discovery that includes forensic examinations of multiple key electronic devices.
A June 23 motion filed in federal court by Harris stated that the “additional discovery is contained on a hard drive and takes up 356 gigabytes of space. One of the devices alone contains more than 45,000 emails and almost 10,000 documents.
“These particular electronic devices are likely to be critically important to further investigation of this case, and there will likely be the need for additional independent forensic analysis of one or more of these devices.”
Harris and U.S. Attorney Christopher Cavanaugh on June 21 filed a joint motion asking the court to designate the case as complex, to exclude time from the speedy trial requirements, and the defendant’s unopposed motion to put off the trial date. U.S. District Judge Elizabeth K. Dillon granted the motions on Monday, June 27.
Dillon rescheduled the trial to begin in mid-May 2023 and designated the case as complex under federal rules and ordered that the court exclude the time period of June 21, 2022-May 15, 2023, from the Speedy Trial Act deadline calculation.
Per law, a defendant’s trial date must begin within 70 days of the indictment filing date or the defendant’s initial court appearance. A judge can set a new date without violating a person’s rights under the act if failing to grant such a request would deny either party time needed to prepare their cases.
On August 25, 2021, a Grand Jury returned an indictment charging McDonald with 34 counts of bank fraud, wire fraud, money laundering, and aggravated identity theft, with some allegations dating back to 2014.
The indictment came following a complex and lengthy state and federal investigation conducted by a state special grand jury and the Federal Bureau of Investigations. (FBI) The investigation began in 2018, continued through Ms. McDonald’s indictment almost three years later, and continues today.
The motion states that the Federal Defender’s Office currently has two attorneys, an investigator, and two paralegals working on the case due to the volume of discovery and number of witnesses.
McDonald made her first appearance in the court on Aug. 31, 2021, with private counsel. The court then appointed a federal defender to represent McDonald. She was arraigned on September 3 and initially scheduled a one-day trial for November 3.
The defense filed a motion to continue on October 26, which the court granted; a six-week trial was scheduled to begin October 11, 2022.
A civil lawsuit filed in the Warren County Circuit Court by the Front Royal-Warren County Economic Development Authority claims defendants including McDonald participated in schemes using EDA money without permission to conduct real estate transactions and other personal business. McDonald and several co-defendants have since been dismissed as parties to the lawsuit through partial summary judgments.
The civil trials in the case are scheduled to begin in early July and will likely lead to further investigation Harris said and would involve overlapping issues and witnesses and are also relevant to effective preparation in McDonald’s criminal trial.
With over one million pages of discovery documents and the judge declaring the criminal case a complex one, it’s anyone’s guess when we’ll see McDonald in the courtroom.
WC EDA release describes history, intent, and timing of Avtex Conservancy Park initiative
Front Royal-Warren County EDA representatives presented to the Warren County Board of Supervisors on Tuesday, January 10, 2023. The Avtex Ad Hoc Committee members, Jorie Martin and Scott Jenkins, along with the County Director of Economic Development, were in attendance to discuss the Former Avtex Fibers Conservancy Parcel. The FR-WC EDA recommends conveying the Conservancy Parcel, consisting of 240 acres, from the EDA to the County.
Shortly after the final work shift concluded at the Avtex Fibers Plant in 1989, the community began to wonder about the future of the Avtex Property. In 1993, the Parks and Recreation Department released the document Front Royal’s Plan for Parks, Trails, Bike-paths, and Greenways. While the plan addressed the entire community, it was one of the first local plans that stated, “The Avtex property on the West side of Front Royal may be amenable to eventual Park use, following the resolution of issues concerning the EPA project to modify the land and ponds … retention of the area as an open-space/wildlife preserve is the most desirable use of this land following the completion of its cleanup in the following 10-20 years.”
Another document published in 2000, The Avtex Fibers Conservancy Park Master Plan Report, was the culmination of work by stakeholders and the community that focused specifically on the Avtex Property and stated, “The Master Plan recommends restoration of the basin area into a conservancy park that combines ecological restoration and conservation of native habitats with passive recreation opportunities for local residents and visitors.”
Remediation of the Superfund site began in 2000 and continues today, as the EPA and FMC consistently monitor the property to ensure it is currently safe and in the future. The FR-WC EDA recognizes that now is the time to fulfill the community’s vision by implementing the 2000 Master Plan. Nationally there is an increase in the public’s interest in accessible green space and passive recreation. Additionally, the Avtex Trail would provide more opportunities to experience Front Royal’s location along the Shenandoah River.
“Moving forward with implementing the Conservancy Master Plan is just the beginning of a process to revitalize the site,” said Ad Hoc Committee Member Jorie Martin. “Avtex Fibers was once an economic engine of Front Royal, and the new trail will begin to change the perception of the property and create a fresh outlook for redevelopment on the remaining parcels.”
The FR-WC EDA will continue to work with Warren County, the Town of Front Royal, EPA, and FMC to ensure that the development of conservancy property and, ultimately, the redevelopment of the entire Avtex Property is a top priority for our community.
For more information regarding the FR-WC EDA’s vision for the Former Avtex Fibers Conservancy Parcel, contact the Avtex Ad Hoc Committee Members Jorie Martin at email@example.com and Scott Jenkins at firstname.lastname@example.org, and the presentation can be found at wceda.com. Information regarding the EPA’s cleanup efforts and reports can be found at www.epa.gov.
About the Front Royal-Warren County Economic Development Authority:
The mission of the Front Royal-Warren County Economic Development Authority (FR-WC EDA) is to strengthen the economic growth of our community by fostering a friendly business environment and providing services to create and retain quality jobs in Warren County. The Authority also supports community tourism, recreation, and arts & cultural initiatives to provide a better quality of life for the County’s residents, workers, and visitors. Coordination with the Board of Supervisors, County staff, the Town of Front Royal, and State agencies are integral to promoting economic development and tourism throughout Warren County.
For more information, contact Jeffrey Browne, FR-WC EDA Board of Directors Chair, at 540-635-2182, email@example.com
WC EDA proposes County takeover of Avtex Conservancy Park’s 240 in-town acres; Supervisors approve six of seven Airport Lease Agreements
At a January 10th work session the Warren County Board of Supervisors received four staff reports beginning with members of the now unilaterally County-overseen but still legally named Front Royal-Warren County Economic Development Authority (Avtex Conservancy property proposal), and proceeding with Deputy County Administrator Taryn Logan (FY 2023 thru 2028 Draft Capital Improvement Plan), Finance Director Alisa Scott (Fiscal Policy Guidelines for Capital Asset Replacement Program), and Human Resources Director Jane Meadows (Department Updates and Position Reclassifications).
The board then convened a Special Meeting called to hold public hearings on seven lease agreements at the County-overseen Front Royal Airport (FRR), including with drone manufacturer and new FRR Fixed Base Operator Silent Falcon (for the “airport house”), new hangar maintenance contractor Aero Services LLC (for the “maintenance repair facility”), as well as Randolph-Macon Academy and four individual hangar tenants. All but one of those lease agreements was unanimously approved.
At the request of Finance Director Alisa Scott, item H-4, the hangar lease agreement with Michael W. Christensen was held – there were no speakers at any of the seven public hearings – but a vote on the Christensen lease was tabled at Scott’s request until the board had a chance to review and discuss with staff a note inserted from Christensen regarding terms in his lease.
The request for an altered motion to table the vote from the approval motion included in the agenda packet on all seven requests seemed to collectively confuse the board for about five minutes after North River District Supervisor Delores Oates observed Scott’s requested Christensen lease motion differed from the one in her agenda packet. But with some guidance from the county administrator and assistant county attorney, the adjusted motion to table a vote on the Christensen lease was eventually made and approved without dissent.
Want a 200-plus acre, riverside walking, biking trails park?
The work session opened with a presentation from the now more-commonly referenced Warren County EDA’s Board of Director members Jorie Martin and Scott Jenkins, with support from County in-house EDA Executive Director Joe Petty. Beginning with Martin, they explained a proposal to have the County take over possession and management of the Conservancy area, a total of 240 acres at the former 467-acre Avtex synthetic fibers manufacturing plant opened in 1940 as the American Viscose subsidiary of British Viscose. The plant was built as a war materials production facility out of the range of German bombers as World War II was engulfing Europe. In the late 1980s the plant was closed by state and federal regulators after byproducts of the plant’s manufacturing processes were linked to the production of carcinogenic materials being released into the environment on multiple levels. On the brighter side, Martin noted the property’s history, not only in the production of war materials for the battle against European fascism, but also materials used in NASA’s U.S. space program.
Walking trails on preserved land, including riverside acreage, connecting various portions of in-town properties including some schools, has been determined to be an optimal future use of the EDA overseen property due to more restrictive developmental restrictions placed on that area due to past uses. Portions of the Conservancy area were where the synthetic fibers manufacturing plant’s cleaning basins were located. The Conservancy area of the former federal Superfund site has been ruled unsuitable for development with buildings or any use requiring digging much below the surface. And it was explained that certain portions of the property will not be included in the proposed public access park area.
So, with the more restrictive developmental parameters WC EDA officials believe that County ownership under the umbrella of its Parks and Recreation Department would be a viable future direction for the property, the county, and the community. Would the supervisors agree after exploring operational dynamics, EDA officials are seeking to know.
“Is there a budget for this grand plan?” Delores Oates asked, perhaps drawing a green line in the sand on direct County involvement. “I see we have money available, it looks like $93,000 – $93,000 doesn’t go very far in government programs – So Joe, do we have a budget to maintain
this as a park for the county because I want to understand what it’s going to cost the County taxpayers should we accept this conveyance and what we’re getting ourselves into.”
Petty noted that the EDA was currently maintaining some trails in the Conservancy area and pointed to cost estimates done in 2017 when a plan for the park was being developed. “This is going to be a process. We know it’s going to take some time,” Petty began, pointing to available (ARCA) funding that might open the path to other state or federal grant funding for Conservancy area redevelopment. “I think the discussion tonight is if even the County board has the appetite to take this initiative on,” he told the county’s elected officials.
At this point County Administrator Ed Daley chimed in. “I might add to that, there is nothing anticipated with this that would require a capital investment by the County. So, this would be done when State or Federal money becomes available. If that takes two years, three years, five years, etcetera. What we’re looking at right now is there is a particular opportunity with lots of federal money available. But we’re not looking to add this on to the County budget or anything of that kind. There will be a maintenance cost, but quite frankly that’s going to be minimal,” Daley assured the supervisors.
“So, you said it would be minimal but this is 240 acres of maintenance,” Oates countered, estimating a cost to cover two additional employees “at least” for that job “on a regular basis.”
“No, mam,” Daley countered, pointing to a minimal amount of those 240 acres requiring actual maintenance, within the limited developmental guidelines for the property. “This is all going to be natural state,” Daley said of the the Conservancy parkland that will be available to the public.
“There is a Consent Decree for most of this property,” Petty pointed out, adding, “Even though we or anybody who owns this – the EDA currently does not maintain this. This is ARCA funding by (surviving former plant owner) FMC and they contract with a company called Parsons,” Petty explained, indicating that the EDA or any future owner’s maintenance responsibility would be limited to any new trail development, and that the Consent Decree would maintain FMC’s maintenance of existing areas requiring continued maintenance.
“Thank you for that clarification. I wasn’t aware that FMC had a Consent Decree arrangement with us,” Oates responded.
Asked for a timeline on a decision by Board Chair Vicky Cook, EDA board member Scott Jenkins replied, “We’d like to get that decision here in the first half of the year, so this fiscal year. We’d like to have the conveyance completed by June.” Petty added that the ARCA funding (referenced available $93,000) was done by the calendar year, and was already in the EDA’s possession for the coming year.
So, by June we should know if the county supervisors have bought into the idea of incorporating a portion of the base 240 acres designated to be a naturally maintained walking and biking trail park with riverfront aspects into the County’s Parks & Recreation Department system along the east side of the South Fork of the Shenandoah River. One might guess that a looming question to be answered is how deep did Superfund cleanup and remediation work on this section of the old Avtex property go, assuring potential users that they won’t be exposed to any lingering hazardous materials seeping up through the Conservancy park soil. Royal Examiner later posed that question to WC EDA Executive Director Petty, who noted it wasn’t the first time he’d heard it.
“I think that all parties will have the public’s health and safety as a number one priority if the trail moves forward. There will be continued conversations with the EPA to ensure it is safe to use for walking/biking trails, as we are not planning for any other public use on the site other than passive recreation.
“I’d also like to share this link to the EPA that refers to human exposure at the Avtex Site.”
Watch the County video of both the work session and special meeting. The EDA Conservancy Park Conveyance discussion begins 30 seconds into the video.
Judge notifies involved parties of denial of all defense motions to overturn jury verdicts in EDA civil liability cases
According to Front Royal-Warren County Economic Development Authority Board of Directors Chairman Jeff Browne, the now County overseen EDA has received notice from civil case Judge Bruce D. Albertson on his ruling in the five defense motions to overturn jury verdicts of liability in the EDA financial scandal civil litigations. That ruling on five civil cases totaling over $14 million dollars of liability is denial of those motions to overturn.
“We understand all motions were denied, which is a great victory for Warren County residents and the Warren County EDA,” Browne told Royal Examiner Tuesday afternoon by phone. Browne’s understanding is based on a December 13th letter from 26th Judicial District Judge Albertson to plaintiff and defense counsels in the five personal liability cases at issue. There are also two associated business liabilities.
“This matter was before me on November 30, 2022, for hearing on Motion(s) to Set Aside filed by Defendants. I deny each motion for reasons cited by Plaintiff,” Judge Albertson wrote involved counsel, citing preparation of a Final Order by plaintiff counsel and the noting of any defense objections to that order. It is possible defendants could appeal the court’s ruling to higher state courts.
The liabilities found by five Warren County Circuit Court civil case juries, four in July, and one in October, include:
- Truc “Curt” Tran ($1,821,192.01 compensatory, interest liabilities), Tran’s ITFederal company ($10,419,327.38 compensatory);
- Donald Poe ($604,973.12 compensatory, punitive, interest), Poe’s Earth Right Energy company ($948,646.25 in compensatory, punitive, interest);
- Samuel North (approximately $893,000 compensatory, punitive, interest, & statutory conspiracy);
- William Lambert ($296,555.34 compensatory, punitive, & interest);
- April Petty ($125,000 compensatory judgment liability).
See story on these motions hearings (Judge ponders rulings in multiple defense motions to overturn civil case jury finding of liability in EDA financial scandal cases) as well as other related trial stories on the Royal Examiner website under “News” category, subcategories “EDA in Focus” or “Crime & Courts”.
Judge ponders rulings in multiple defense motions to overturn civil case jury finding of liability in EDA financial scandal cases
After over five hours of arguments surrounding five EDA civil case defendants’ motions to overturn jury liability verdicts totaling over $14-million, Judge Bruce D. Albertson took those arguments under advisement Wednesday afternoon, November 30th. Some court officials anticipate rulings at some point in the coming week in the cases of April Petty ($125,000 compensatory judgement liability); William Lambert ($296,555.34 compensatory, punitive, & interest liabilities); Donald “Donnie” Poe ($604,973.12 compensatory, punitive, interest); Truc “Curt” Tran ($1,821,192.01 compensatory, interest); and Samuel “Sammy” North (approximately $893,000 compensatory, punitive, interest, & statutory conspiracy).
In addition to the above personal liabilities, Poe’s EarthRight Energy (ERE) company ($948,646.25 in compensatory, punitive, interest) and Tran’s ITFederal ($10,419,327.38 compensatory) were also handed down by Warren County Circuit Court civil case juries in recent months.
All but North’s trial were heard in July. North’s, also originally scheduled for July, was delayed to October by a later withdrawn bankruptcy filing. This week on the final day of November, attorneys for the defendants echoed arguments sometimes heard at trial during earlier motions for dismissal of cases or claims against their clients due to what defense attorneys asserted both then and now, was a lack of substantive evidence of collusion with EDA financial scandal central figure and former Front Royal-Warren County Economic Development Director Jennifer McDonald. Rather, some defense attorneys claimed their clients were unwitting victims of McDonald’s from various business or personal connections.
Those personal connections include North’s marriage to McDonald; Lambert’s former personal relationship with McDonald’s sister; what attorney William Schmidheiser called Petty’s casual acquaintance McDonald, acting as his client’s real estate agent in the sale of her home. On the business side, Poe’s ERE company was contracted through McDonald to perform various solar energy and energy maintenance projects for the EDA under what plaintiff EDA attorneys contended were false pretenses McDonald presented to her board of directors; and Tran’s ITFederal was recruited through the joint effort of McDonald and then Virginia Sixth District U.S. House Representative Bob Goodlatte to become the first commercial redevelopment client at the former Avtex Superfund site, also with what plaintiff counsel said were false contractual and asset information concerning ITFederal alleged to have been presented to the EDA board.
Several attorneys, most prominently Tran attorney David Jones Jr., also argued that several claims categories should not have applied to their clients at trial. Prominent among those were the “ultra vires” claim of profiting off the actions of an official acting outside the range of their legal authority, and associated claims of “conversion” and “unjust enrichment” being applied to their clients for actions of then EDA Executive Director McDonald. Consequently, Jones for Tran particularly and other defense attorneys argued that some jury instructions submitted were improper, creating an incorrect evidentiary scenario for those juries to deliberate on. So, procedural errors on bench rulings on evidence admissibility or jury instructions were claimed as grounds to overturn jury verdicts.
In Poe and ERE’s case, defense counsel William Ashwell also noted that some of the contracted work had been successfully completed by Poe’s company. He told the court that when payments were made by the EDA board to his client’s company: “The EDA eventually adopts her (McDonald’s) actions by their actions” and consequently his client is not the one who should be held liable for the return of money for work accomplished. Ashwell also sought to overturn any personal liability of Poe for payments made to his company.
In opening his arguments to overturn or limit Tran and ITFederal’s liability, Jones noted that he was “in the somewhat unenviable position of not being the trial attorney – Am I in the position of fresh eyes or of where fools rush in where angels fear to tread,” Jones wondered as he launched what would be an approximate hour of argument on his client’s behalf. During that hour Jones questioned the liability finding on a number of grounds and questioned whether ITFederal was, in fact, in breach of contract as claimed by the EDA in seeking recovery of the balance of the $10-million loan the EDA gave ITFederal for development at the former Avtex site.
Plaintiff counsel Cullen Seltzer and Karissa Kaseorg countered, as they had at trial, that McDonald’s assertions to her board about the source of funding for the ERE energy and electrical work being through grants that would compensate the EDA for its payments to ERE; or alleged government contracts held by Tran’s ITFederal company that were non-existent created the path for those payments, and a $10-million loan in ITFederal’s case, substantiating the juries findings of liability on ultra vires, conversion, and unjust enrichment, among other plaintiff claims.
In response to some of Jones’ arguments for reduction or dismissal of his clients’ liability, Kaseorg told Judge Albertson that the motions to overturn hearings should not be an opportunity for defense counsel to retry the case with a “what we wish we had done” at trial. Of Jones’ argument to dismiss based on the inclusion of the plaintiff’s “conversion” jury instruction, plaintiff counsel noted that the defense had agreed to the conversion jury instruction at trial.
In conclusion plaintiff EDA counsel asserted the judicial decisions from the bench at trial had been proper as to both evidence admissibility and jury instructions, and that those jury verdicts of financial liability based on both sides cases as presented at trial should stand as handed down by those five juries. And now we are awaiting a decision on how the court will rate its own performance at those trials based on the defendants’ challenges and the plaintiff’s counter-arguments in support of the judicial rulings made at trial.
EDA welcomes C-CAP into office complex, reports on operational reviews, prospects, budget, and civil case results
The Front Royal-Warren County EDA held their monthly meeting on Friday, October 28, 2022, at 8 a.m. at the Warren County Government Center. All five Board members, legal counsel, and the County Director of Economic Development were present.
As part of the Executive Committee Report, Board Chair Jeff Browne provided an update on the recent civil court cases and actions up to the present time. He also noted the FR-WC EDA’s building at 400 Kendrick Lane has a new tenant, as C-CAP recently moved into Suite B.
Treasurer, Jim Wolfe, presented an update on monthly financial statements and the reestablishment of the small business loan committee. The Board will provide feedback on their Fiscal Year-2023/24 budget request and plans to hold a special meeting in November to prioritize the request.
The Warren County Director of Economic Development, Joe Petty, provided an update on current activities related to prospects, small business loan, annual audit, upcoming programs, and marketing. Mr. Petty also mentioned that he had recently attended the VIED (Virginia Institute of Economic Development) training and is working with the County and Town staff on various projects. Additionally, the FR-WC EDA Board and Mr. Petty will continue to explore and complete items to provide greater awareness and attraction to development sites.
The Board approved three documents related to incentive and grant opportunities for the Nature’s Touch expansion located on Toray Drive. The Board also approved the release of a property once owned by the FR-WC EDA at 280 Kelley Drive in order to be compliant with the development’s covenants and restrictions.
As part of a review of the Board’s action items from the October Strategic Plan Meeting, the Board prioritized the list and determined which items may require funding obligations. In an effort to assist small businesses, the Board is reactivating its United States Department of Agriculture (USDA) loan programs and will be seeking qualified citizens to serve on its USDA Microloan and IRP loan committee. These loans provide financial assistance to help business owners with operating capital and other expenses.
The next regular monthly Board meeting will be held on Friday, December 2, 2022, at 8 a.m. at the Warren County Government Center Caucus Room.
The Board concluded the meeting with a closed session to discuss business opportunities and legal consultation, with no new business following the closed session.
(From a release by the Front Royal-Warren County Economic Development Authority, also known as the Warren County EDA in the wake of the Town of Front Royal’s circa 2020/21 decision to withdraw from involvement in post-financial scandal reform-restructuring of the half-century old joint-municipality EDA.)
Jury takes less than hour to find ‘Sammy’ North liable in wife’s ‘scheme’ to move $110,000 from EDA to real estate transaction for personal gain
After just over five hours of testimony, evidence, and opening and closing arguments by plaintiff and defense counsel Tuesday, a seven-person Warren County Circuit Court civil case jury found former Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald’s husband Samuel ‘Sammy’ North liable on all of its claims regarding his part in a 2015 real estate purchase on a parcel at 1309 Robinhood Lane achieved with the transfer of $110,000 in EDA funds. Those EDA claims included (i) fraud, (ii) unjust enrichment, (iii) conversion, (iv) conspiracy, (v) ultra vires (related to his wife’s exceeding her authority as an EDA official), and (vi) punitive damages.
Financially, North was found liable for the base compensatory claim of $110,000, as well as $165,000 on a finding of Statutory Conspiracy, another $350,000 in Punitive Damages on a ruling of Malicious Intent, bringing liability to $625,000. With interest, estimated at $268,000 added, North’s total liability is approximately $893,000.
Defense attorney Frank Reynolds indicated he would file a motion to overturn the verdict as unsubstantiated by civil case law just as counsel for four other EDA financial scandal civil defendants tried and found liable in July have done. Hearings on those defense motions are scheduled to be heard by Judge Bruce D. Albertson on November 30. A schedule for defense filings and plaintiff responses to facilitate the North case’s inclusion in that late November hearing was discussed prior to adjournment around 5 p.m. Tuesday afternoon, October 25. North’s civil liability trial was originally scheduled for July but was continued in the wake of a bankruptcy filing by North, which according to plaintiff counsel was later withdrawn.
Asked about the verdict, current FR-WC EDA Board of Directors Chairmen Jeff Browne, present for the trial as he was for the July cases, told Royal Examiner, “Well, it’s another win. It shows that we’ve got a good legal team and we had a good case. And it makes a real difference for the people of Warren County.”
Asked if he was concerned when alerted that the jury had reached a verdict so quickly – about 45 minutes, Browne said, “No, not really. My sense was that, that was a good sign.”
It might be noted that in closing arguments both sides’ counsel had called the evidence presented to the jury as “simple” in its nature, though disagreeing on the substance of that evidence as to the defendant’s knowledge or lack thereof on McDonald’s use of EDA assets.
“And the jury listened to that evidence and made a decision,” Browne noted of the verdict and the time taken to reach it. He noted that more civil cases will be coming to court in March to April of 2023. Of the November hearing on the recent defendant motions to overturn jury verdicts, Browne added, “I don’t think there will be any changes in November, I hope not. And we’ll have the opportunity to start gathering assets.”
With the North verdict and liability ruled by the jury added to the four made in July, pending no reversal of verdicts on November 30, the EDA is poised to recover over $15 million in assets on these five cases. Coupled with an out-of-court “no-fault” settlement with McDonald, on paper at least, involved civil case defendants have been ruled or offered liability for about $24 million of the estimated $26-million EDA “financial scandal” circa 2014-2018.
As with the July civil trials of April Petty, William Lambert, Donald Poe and Earthright Energy, and Truc “Curt” Tran and ITFederal related to the EDA financial scandal uncovered in 2018, plaintiff and defense arguments in the EDA versus North case revolved, at least in part, around what the defendant knew or didn’t know about Jennifer McDonald’s lack of unilateral authority to move EDA assets related to the defendant’s use of those assets in what plaintiff counsel referred to as “a scheme”.
Defense counsel Reynolds argued that plaintiff council had failed to present any evidence proving his client knew his wife did not have the authority to transfer $110,000 of EDA funds for his purchase of a townhouse at 1309 Robinhood Lane in September 2015. In fact, defense counsel argued that the $110,000 transfer to facilitate the $107,500 purchase, plus closing costs, by her husband could have been authorized by an EDA Asset Committee. Reynolds pointed to his client’s and Settlement Title staff’s recollection of the presence of then-EDA Board Chair Patty Wines, since diseased, at the Robinhood Lane property closing, to argue that it could have been an authorized transfer related to the EDA’s efforts to develop affordable workforce housing for young professionals.
However, EDA lead attorney Cullen Seltzer countered those arguments with one of the three witnesses he called, former Warren County and EDA attorney Dan Whitten. In fact, Tuesday’s trial was accomplished in one day with the calling of a total of only four witnesses: Closing company Service Title’s Records Custodian Kelly Shaney, Whitten, and Jennifer McDonald by the plaintiff, and defendant Samuel North by the defense.
Under direct examination Whitten pointed out that any transfer of over $50,000 of EDA funds for acquisitions would have to be approved by the full EDA Board of Directors in an open session vote. Whitten testified that McDonald’s 2015 transfer of $110,000 for her husband’s purchase of 1309 Robinhood Lane had never been discussed in open or closed session, and never approved by the EDA board. EDA counsel Seltzer also pointed to North’s invocation of his 5th Amendment right not to self-incriminate when asked at deposition why the Robinhood Lane parcel had been purchased.
On cross examination, Whitten expressed no knowledge of an EDA Asset Committee in 2015 that might have discussed or forwarded the transaction. Also on cross examination by the defense, McDonald testified that the EDA’s Asset Committee predated her 2008 to 2018 tenure as EDA executive director. During defense closing argument, Reynolds hammered at Whitten’s lack of knowledge of and absence from any EDA Asset Committee meetings to indicate a gap in the plaintiff’s case alleging the $110,000 transfer was unauthorized. But in his rebuttal closing argument, EDA attorney Seltzer countered that no EDA committee, likely comprised of two board members, could have authorized a transfer of $110,000 per the EDA policy on full-board approval of such transfers over $50,000.
Financial difficulty or not
In opening arguments and some evidentiary submissions, EDA counsel presented a scenario of financial difficulty by North and his wife in 2015 leading to the decision to move EDA assets to facilitate North’s purchase of 1309 Robinhood Lane. Seltzer presented records indicating that North’s plumbing business had lost over $71,000 between 2013 to 2016, while the couple was claiming gambling income/losses totaling $1.125-million over the same four-year period. Defense counsel countered that the “income/losses” tax claims actually indicated a break-even gambling scenario, rather than a high loss one of over $500,000 creating financial difficulty for the couple.
In closing, Reynolds told the jury that the plaintiff had failed to show “one bit of information here other than they were married to each other” to implicate his client in a conspiracy to defraud the EDA. North had testified on direct examination that his wife handled the couple’s taxes and financial affairs, and he had been unaware of the large gambling claims until shown them at deposition. In response to a question from his attorney, North estimated the most he’d ever lost gambling in a year was $2,000. Queried by EDA counsel about his signing off on tax returns he had not reviewed, North said he trusted his wife on such matters, adding that, “Finances were never my niche.”
Implication of 5th Amendment responses
One key piece of plaintiff evidence that opened their evidentiary case was a video excerpt of the above-referenced deposition given by the defendant to EDA counsel on March 30, 2021. During questioning on details of the Robinhood Lane purchase, North invoked his 5th Amendment right not to self-incriminate what Seltzer later told the jury was a total of 45 times. Called as the plaintiff’s final witness, questioned about her transfer of the $110,000 for her husband’s September 2015 purchase of the 1309 Robinhood Lane parcel, a parcel EDA counsel noted North would gift to his wife in November of that year, McDonald invoked her 5th Amendment right not to self incriminate about 11 times before Seltzer ended his direct examination.
During closing arguments plaintiff and defense counsel debated the implication of those 5th Amendment responses by both North at deposition and McDonald on the stand. Reynolds noted simple care in the face of possible criminal indictments on related matters, while Seltzer for the EDA stressed to the jury that the 5th Amendment is invoked specifically in support of one’s Constitutional right not “to self-incriminate” regarding potential criminal charges.
It would appear from its quick finding of civil liability that the latter plaintiff argument held the most weight for the seven jurors during their deliberations.