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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

After hearing slightly over two hours of prosecution and defense arguments in support of their conflicting sentencing recommendations – 22 years by the prosecution, 6 years by the defense – Western District of Virginia federal Judge Elizabeth K. Dillon went down the middle, sentencing former Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald to 14 years in prison for her role in the circa-2014 to 2018 EDA “financial scandal”. However, following a defense request that McDonald be allowed not to report to prison prior to June 18, and a request by lead prosecutor Sean Welsh that the court be reasonable in not extending imposition of the defendant’s imprisonment for too long a period, Judge Dillon granted the request that McDonald remain free on her existing bond conditions and self-report to prison authorities “not earlier than June 24th”. It was not clear whether a recent unanticipated hospital visit by McDonald this past weekend impacted that request. It was also confirmed by attorneys post hearing recess that per federal guidelines defendants are generally required to serve 85% of non-mandatory sentences, though how that standard is applied can vary from facility to facility. If our calculation is correct, full implementation could cut 2.1 years off the 47-year-old McDonald’s 14-year sentence.

An estimated $26 million was moved to unapproved or believed falsely presented uses during McDonald’s leadership of the Town-County EDA. Trial testimony indicated that as much as $6.5 million of that went directly to McDonald’s personal use. On November 1, 2023 a federal court jury of six men and six women found McDonald guilty on all 34 criminal counts she was charged with, including bank fraud (10 counts), wire fraud (7 counts), money laundering (16), and aggravated identity theft (1 count). Judge Dillon later overturned four of those convictions citing inadequate evidence by statute.

Jennifer McDonald has about a month before she must again dress in incarceration garb. Below is the Harrisonburg federal courthouse where she was sentenced to 14 years on Wednesday, May 29. Royal Examiner File Photos

The first phase of what was initially said to be a three-part sentencing hearing was held on April 9, with part 2 initially forecast to be held within a week, leading to a sentencing date then being set after the court had time to review submitted arguments. But with a month-and-a-half delay to Phase 2, it appeared the court had sufficient time to review applicable case law in anticipation of those Phase 2 arguments leading to her sentencing decision coming at the conclusion of those Wednesday, May 29th arguments.

As previously reported, after inheriting the case from two state prosecutors offices, Warren County (recusal due to staff work familiarity with some defendants) and Rockingham County (complexity, time involvement), on August 25, 2021, a 10th Western District of Virginia Federal Grand Jury handed down 34 federal criminal indictments against McDonald on the charges cited above. McDonald was initially arrested and charged criminally at the state level in mid-2019.

Also during Wednesday’s hearing, McDonald was hit with a series of financial penalties. Those included $5.2 million ($5,201,329 to be precise) forfeiture of assets which the prosecution sought, what appeared to be $3,000 in court costs, as well as a “Restitution” amount cited at $2.7 million.

While a statement of financial impacts on the EDA was cited as submitted, and quite an amount of time was spent on arguments about the financial and governmental impacts of McDonald’s crimes related to the illicit movement of EDA assets, only one person rose to the court’s call for impact statements from “victims” of her crimes. That person, perhaps ironically, was ITFederal principal Truc “Curt” Tran. Tran and his company have been cited as the largest single beneficiary of illicitly moved “financial scandal” EDA assets at $12 million alleged to have been moved to it under “false pretenses” for re-development of 30 acres of the former Avtex property. Those false pretenses appeared to be publicized access to about $40 million in federal government contracts, evidence later indicated Tran’s company only had a right to bid on, and none of which was apparently won. Readers may recall one of this reporter’s first stories at the newly formed Royal Examiner in mid-2016 was that the 30-acre parcel publicly discussed for purchase by ITFederal at $2.1 million, was gifted to Tran and his company for one dollar behind closed meeting doors. It might also be recalled that former U.S. Sixth District of Virginia Congressman Bob Goodlatte championed Tran and ITFederal as outstanding economic development partners for this community.

“Jennifer, Jennifer, Jennifer, what have you done,” Tran began from the courtroom podium, looking directly at McDonald to his left at the defense table with her federal court-appointed attorneys Andrea Harris and Abigail Thibeault. One of McDonald’s convictions was of “Aggravated Identity Theft” for allegedly using Tran’s name as an interested party in one of the later-discovered-to-be fraudulent real estate transactions. Tran did cite that transaction of the time – “I still don’t know where the Buck Mountain property is,” he told the court, pointedly looking at McDonald.

However, twice Judge Dillon had to caution Tran to return to impacts of that real estate transaction in which his name was used without his knowledge when he appeared to pivot to blame McDonald for his lost government contracts to enable the Avtex site development. After the second caution, Tran ended his impact statement. Tran was found liable for over $12 million to the EDA in one civil liability case heard in Warren County Circuit Court. His finding of liability is on appeal, along with several other high-dollar EDA civil case defendants.

In an emailed letter dated Friday, May 17, Front Royal-Warren County Economic Development Authority (EDA, FR-WC EDA) Secretary Hayden Ashworth announced his resignation, effective immediately. Ashworth cited the workload associated with his employment as the reason for his decision:

“Please accept this letter as formal notification of my resignation as Secretary of the Board for the Front Royal Warren County Economic Development Authority, effective today, May 17, 2024.

“Due to the demands of my current work schedule in Washington DC, I am no longer able to dedicate the time and effort necessary to fully support the EDA in its important mission. This decision has not been easy, and I want to express my sincere appreciation for the past year I have served alongside this dedicated board.

“I am truly proud of the work we have accomplished together in creating opportunities for Warren County residents and fostering future economic growth. I have the utmost confidence that the EDA will continue its success in attracting new businesses and investments to our community.

“Thank you for the opportunity to serve. I wish the EDA continued success in its endeavors,” Ashworth wrote to his fellow board members, county officials, including County Director of Economic Development Joe Petty, whose last day in that position was also Friday, May 17.

Hayden Ashworth, far left at December 2023 EDA Asset Committee meeting. Also pictured around the table from Ashworth’s left are John Stanmeyer, Joe Petty, Rob MacDougall, and Jorie Martin. Royal Examiner File Photos Roger Bianchini

Ashworth was appointed to the EDA Board of Directors on March 7, 2023. His term was to expire February 28, 2025. We asked current EDA Board Acting Chairman Jd Walter about Ashworth’s loss. “The EDA Board of Directors has really appreciated Hayden’s time as a member, and are disappointed that he is unable to continue serving. Hayden has been a integral part of our Asset Committee, which has done the lion’s share of the work over the last year getting contracts on the remaining EDA properties. He also served as our Secretary and has been a great contributor and valued voice in our discussions. But we understand that work commitments are a priority, and we hope that at some point in the future, he may be able to return to the board,” Walter responded.

In recent months, citing conflicting time commitments to his seasonally based Mountain Home Bed & Breakfast business, then EDA Board Chairman Scott Jenkins did not apply for reappointment to the EDA board when his term ended February 29. Treasurer Jim Wolfe has also left the board recently and Jorie Martin has announced her intention to resign, though has put that resignation on hold temporarily.

Hayden Ashworth, center right of table, joins former chairman Scott Jenkins, left head of table, Treasurer Jim Wolfe, center left of table, and County Director of Economic Development Joe Petty, near left back to camera, in leaving the County’s EDA mix in recent months. And Jorie Martin, partially obscured to Wolfe’s left, may also be leaving soon. Board of Supervisors Chair Cheryl Cullers, observing upper center, may need a scorecard soon to keep up with the EDA roster substitutions.

Readers may recall that when then-EDA Board Chairman Jeff Browne and member Greg Harold applied for reinstatement at the end of their terms in March of 2023 after helping guide the EDA through the immediate aftermath of the “financial scandal” of 2014-2018 (both were appointed in 2019), that the board of supervisors rejected their reinstatement requests. See related story (published April 5, 2023): “Did not seeing eye to eye with supervisors on property sales priorities lead to replacement of two longest-tenured EDA board members?”

The run of county government administrative departmental staff defections continues to expand with a notice on the Warren County website about “Job Opportunities” now including the County’s in-house Director of Economic Development. It is a position held by multi-faceted County staffer Joe Petty since the position’s creation in early 2022. Petty verified that he was hired to the in-house County EDA Director’s position on February 1, 2022. The position was created in the wake of the Front Royal-Warren County Economic Development Authority (FR-WC EDA, EDA) becoming unilaterally overseen by the County in the wake of the Town of Front Royal’s post-financial scandal withdrawal as it attempted to distance itself from financial liability for project costs or losses during the 2014-18 FR-WC EDA “financial scandal” time-frame under the EDA executive directorship of Jennifer McDonald.

Two perspectives of Joe Petty on the job, above reporting to the WC Board of Supervisors on work at the now unilaterally County-overseen FR-WC EDA; and below at an EDA Asset Committee meeting. Remember, Petty’s soon-to-be former position was with the County, not the EDA. By state law EDAs are an independent “quasi-governmental” entity of its creating municipality, or as in this case, municipalities. – Royal Examiner File Photo

Contacted about his departure, Petty verified that his last day will be Friday, May 17. “I’m happy to have been at the County for so long. I’m leaving on good terms. I have a new opportunity in the community, so, I’ll still be around. I’ll miss the people here,” he added of leaving the Warren County Government Center where he has been employed since January of 2018. His history with the Warren County government began the first month of 2018 when he was hired as Zoning Officer. In July 2019 he was promoted to Zoning Administrator and became Planning Director in April 2021, before being named Warren County’s first in-house Director of Economic Development in February 2022. He pointed out he initially held down double duty there, continuing his work with the Planning Department until Matt Wendling was hired as Planning Director in May of 2022.

The starting salary for the County Director of Economic Development and Tourism position is advertised at $93,308.80 “depending on qualifications and experience, with an excellent benefits package.”

Asked about his new opportunity locally, Petty declined comment, saying he would let the announcement come from the organization that was hiring him. Asked if we should call a historical or perhaps “heritage” society for that verification, Petty was non-committal. At publication we were still awaiting a return call from the Warren Heritage Society from someone in position to verify their pending hiring of a new director, or not.

Petty’s departure follows a growing list of lost administrative staffers and institutional knowledge beginning about six years ago in the wake of the pressured resignation of long-time County Administrator Doug Stanley, whom some thought was being scapegoated by a newly-elected board for a lack of preventative County EDA oversight regarding the “financial scandal”. Offered Stanley’s job, then long-time Deputy County Administrator Robert Childress declined, choosing rather to leave for employment elsewhere. Following Childress eventually to other employment opportunities, not necessarily higher-paying ones, have been County Attorney Dan Whitten, also long-tenured Planning Director Taryn Logan, Assistant County Attorney Caitlin Jordan, along with several finance directors over a relatively short period of time as the county government has dealt with the financial and litigation aftermath of the FR-WC EDA “financial scandal” circa 2014-2018.

For an interesting perspective on the financial aftermath of the EDA financial scandal, check Royal Examiner’s OPINION page for a new Letter to the Editor from recent former EDA Treasurer Jim Wolfe, who left the EDA board when his four-year term expired at the end of April.

The Front Royal-Warren County Economic Development Authority (EDA) convened its monthly meeting on April 26, 2024, discussing significant developments in regional economic projects and workforce programs. The meeting at 8 a.m. saw the participation of six Board members and the EDA’s legal counsel.

The session opened with updates from Joe Petty, the County Director of Economic Development, who highlighted the ongoing budget meetings for the Fiscal Year-2025. Petty also touched upon various initiatives aimed at bolstering workforce development in the area, signaling robust efforts to enhance local employment opportunities and economic growth.

A major portion of the meeting was dedicated to discussions on real property and strategic legal matters. The Board made several key decisions after a closed session focused on these issues. They approved a substantial contract with Plein Smith, totaling $6,260,000, for Happy Creek Technology Park developments. This project is anticipated to settle within 2024 and promises to boost the local technology sector.

Furthermore, the Board agreed on the fourth amendment of the contract with Executive Land Holdings IV, LLC concerning Stephens Industrial Park. This amendment is part of ongoing efforts to enhance industrial infrastructure and attract more businesses to the region.

A new agreement was also set in motion regarding a gas line easement with Columbia Gas. This agreement is pending formal acceptance by Executive Land Holdings IV, LLC, and is expected to facilitate better utility services for upcoming developments.

The next EDA meeting is scheduled for May 17, 2024, at the Warren County Government Center. As the community looks forward to further economic developments, these decisions mark significant progress in Front Royal-Warren County’s trajectory towards enhanced economic vitality and infrastructure growth.

(From a Release by the FR-WC EDA)