In a work session following the Front Royal Town Council meeting of Monday, August 12, the format and parameters of the joint meeting of the full council and Warren County Board of Supervisors regarding the future of the Town-County Economic Development Authority was a hot topic of conversation. That joint Town-County-EDA meeting is scheduled for tonight, August 13, at 6 p.m. at the Villa Avenue Community Center.
The proposed agenda send to Interim Mayor Matthew Tederick included a presentation from the County side with updates on the distribution of property along with a time frame update. However Mayor Tederick brought this to the council with hesitance, stating, “We need necessary and pertinent information, but is that the best use of this joint meeting?”
Councilman Jacob Meza agreed, stating, “I would rather be able to sit down with the board of supervisors and discuss the greatest disaster between the County and the Town than sit through a 45-minute presentation given to us by the EDA board.”
Councilman Eugene Tewalt appeared to hit a middle ground, saying, “I want to get information – and I want to ask them some pertinent questions.”
It seemed that council was willing to move forward with the meeting including an EDA presentation, so long as EDA officials and the county board complied with giving information that council wants.
Tederick propelled the joint meeting forward with his July 18 Town-County Liaison Committee meeting statement that the Town could dissolve the EDA unilaterally and take half the remaining assets. If palpable tension was apparent in the wake of that assertion, it might be explained by some events leading up to it. After having a series of Freedom of Information Act (FOIA) requests for details of the EDA fraud investigation rejected by EDA/County Attorney Dan Whitten, the Town filed a lawsuit initially seeking return of about $3 million in Town assets, a number since raised to an estimate of $15 million in recoverable assets the Town believes it is owed by the EDA.
The issues with miscommunication between the EDA and Town Council became apparent when the next agenda item, financing of the new Front Royal Police Department headquarters, was reached. Due to confusion over what the EDA owes the Town, issues concerning the Town Budget cannot be resolved, town officials indicated.
“Who’s currently paying the debt service on this building – the EDA who has not provided the proper services and documentation to make those payments?” Tederick asked, adding, “We should not discuss any financing for the police department until we get documentation from the EDA.”
The Town’s elected officials and staff will seek some clarity on FRPD financing obligations, and the Town’s overall financial relationship with the EDA at tonight’s meeting.
See the work session discussion and Vice Mayor William Sealock’s response to Royal Examiner questions in the following videos.
(Roger Bianchini contributed to this story)
Removal Petition hearing on County Board continued to December
An as-yet undetermined date in December was set for the continuation of a hearing on the citizen-launched Removal Petition against the five sitting Warren County Supervisors. The hearing was on the Warren County Circuit Court docket Friday morning, November 22, at 8:45 a.m.
Judge Bruce D. Albertson heard motions and the reasoning for the continuance by video hook up from his home courtroom base in Harrisonburg. When a suggested date of December 6, when Albertson will be in court on EDA-related criminal hearings, did not work for one of the two defense attorneys, James Cornwell, the judge said he would like a specific December date agree upon within two working days.
As he had the previous day during hearings on EDA-related criminal charges, Commonwealth’s Attorney Bryan Layton notified the court of his intention to remove himself from EDA prosecutions with a newly-elected Commonwealth’s Attorney John Bell slated to take over at the turn of the year, prior to any EDA-related trials getting under way. And with Bell planning to recuse himself from EDA prosecutions to assure there is not even a perception of possible conflicts of interest that might impact future EDA legal proceedings, Layton suggested that despite his desire to continue with the EDA cases, that they, like yesterday’s criminal cases, be turned over to the office of Rockingham County Commonwealth’s Attorney Marsha Garst.
Rockingham Assistant Commonwealth’s Attorney Michael Parker appears poised to take on the bulk of cases Layton has been working, along with the EDA Special Grand Jury investigation. Layton again noted Parker needed time to get up to speed on the background of the various cases he is taking on.
Defense co-counsel Cornwell and Acting County Attorney Jason Ham had no objection, by remote phone hook up, to Layton’s call for the continuance of the Removal Petition hearing.
During Friday’s hearing it was reported that notice of certification of the required amount of signatures had been received from Warren County Voter Registrar Carol Tobin. That certification, which came despite the loss of 107 signatures that could not be verified as registered county voters, allows the Petition for Removal from office of the supervisors to proceed.
The filing required a minimum of 10% of the number of registered county voters who voted in the last election. That number is cited as 6,958, requiring a total of 696 countywide. Even with the 107 lost signatures, the petition contained 835 verified signatures.
The petition was filed October 18 as part of the grass roots public reaction to the Front Royal-Warren County Economic Development Authority financial scandal that has led to a number of dueling civil litigations surrounding the EDA’s attempt to recover $21.3 million dollars in allegedly misdirected or embezzled EDA assets. The EDA civil litigation alone has already cost the County and its taxpayers $1.31 million dollars in legal and investigative financial audit costs.
And with a $750,000 cap on attorney’s fees payable to the Sands Anderson law firm of Richmond removed by the supervisors on Tuesday, that number is anticipated to keep climbing over the coming year or more as the civil cases proceed and what is anticipated to eventually be in the neighborhood of a million pages of related documentation is submitted for those civil, and related criminal, cases.
The Removal Petition contends the County’s elected Supervisors were directly negligent and in dereliction of their official duties in allowing the alleged EDA financial embezzlements to develop under their indirect stewardship since at least 2014-15.
After the Front Royal Town Council voluntarily abdicated certain oversight functions several years ago when the County took over the Town’s operational funding of the EDA, the County Board alone now appoints EDA Board of Director members. It is those appointed members of the quasi-governmental EDA that have direct oversight authority of EDA staff, a defense motions filing in the Removal Petition case states.
The Removal Petition cites the board members’ three misdemeanor criminal indictments on misfeasance and nonfeasance charges filed September 20 as one primary legal basis of the recall. Those charges targeted the supervisors, along with current and former EDA board members, for an absence of due diligent oversight of the actions of former Warren County Economic Development Executive Director Jennifer McDonald in the final four months of 2018.
However, the fact those indictments were dismissed by Judge Albertson as non-criminal by Virginia Statutes, even dating to English Common Law under which they were filed, may complicate the petitioners’ argument.
Just two days before Friday’s hearing defense co-counsel Cornwell and Ham filed a Demurer with the court seeking dismissal of the petition. Grounds cited for dismissal include a lack of jurisdiction for the filing; a lack of legal authority for the supervisors to act directly to limit the activities of EDA staff; and “Legislative Immunity” precluding the Judicial Branch of State Government from a “quasi-criminal” investigation of a Legislative body such as the county supervisors regarding how they conduct their business.
It would appear that while the timing of the defense Demurrer filing might have precluded proceeding with arguments Friday, a December hearing date could see arguments on these crucial legal points of contention.
On October 28, Judge Albertson denied a petitioner’s motion to immediately remove the five sitting supervisors prior to any arguments on the legal dynamics of the Removal Petition.
Targeted by the Removal Petition are Daniel J. Murray of the North River District, Thomas H. Sayre of the Shenandoah District, Tony F. Carter of the Happy Creek District, Archie A. Fox of the Fork District, and Linda Glavis of the South River District. As of the turn of the year in the wake of Murray and Glavis’s retirements and Sayre’s defeat at the polls in November, only Carter and Fox will be impacted by the Removal action.
See Related Stories:
Delays in EDA criminal cases due to transfer of prosecutorial authority
On Thursday, November 21, four Front Royal-Warren County Economic Development Authority criminal defendants saw preliminary hearings, and in one case trial dates over the objection of Donald Poe’s attorneys, continued to future dates. Those defendants were former EDA Executive Director Jennifer McDonald, her husband Samuel North, former EDA small business client B&G Goods principal William Lambert, and former EDA solar panel contractor Earth Right Energy principal Donald Poe.
A date of January 10, at 1 p.m. was set for motions hearings and possible trial date settings on joint defense-commonwealth motions in McDonald’s, North’s and Lambert’s cases. Only Poe co-counsel William Ashwell objected to the delays, noting his client was in a somewhat different position that the other defendants.
That position is trial dates on all four charges against Poe already set for December 6 (perjury to the grand jury) and three financial charges of obtaining or conspiring to obtain money by false pretenses set for a three-day trial January 22 to 24.
Ashwell told the court his client was “pretty anxious to clear his name” adding, “I think we need to get things going now.”
Noting the defendant’s objection, Judge Bruce D. Albertson included the Poe cases in the continuations granted Thursday to the 1 p.m. docket on January 10.
As explained by Commonwealth’s Attorney Bryan Layton, primary among the reasons for those continuations is the naming of a new prosecutor’s office to handle the EDA-related criminal prosecutions. Layton has been leading the Special Grand Jury empaneled to investigate potential criminality tied to the $21.3 million dollar EDA civil litigation since former Warren County Commonwealth’s Attorney Brian Madden left the office to assume a judicial appointment in Frederick County.
However, with a newly-elected Commonwealth’s Attorney, John Bell who was hand to observe Tuesday’s proceedings, poised to take office at the turn of the year Layton notified the court he was withdrawing as special prosecutor for the EDA grand jury investigation into EDA affairs.
And Bell told the court due to peripheral past legal representations or political affiliations, he would recuse himself from EDA prosecutions to “avoid any appearance of impropriety so the people of Warren County are assured there are no thumbs on the scales (of justice).”
Chief 26th Judicial District Circuit Court Judge Albertson, himself a replacement after all Warren County Circuit Court judges recused or left for higher court appointments prior to pending recusals, accepted Layton’s recommendation of the Rockingham County Commonwealth’s Attorney’s Office to take over the EDA criminal prosecutions.
Rockingham Assistant Commonwealth’s Attorney Michael J. Parker was present to represent the office of Rockingham Commonwealth’s Attorney Marsha Garst. Courtroom discussion indicated Parker would take the point for Rockingham’s work on the EDA cases.
Related to various motions hearings scheduled for Thursday afternoon’s 4 p.m. docket, Layton noted the “voluminous material” related to the EDA cases and asked the court for “an extra period of time to get Mr. Parker up to speed.”
That voluminous material was referred to as a “terabyte” of digitized information ordered by the Virginia Supreme Court to handle what has been referred to in previous hearings as 700,000 to one million pages of related documentation.
Despite his counsel’s objection and Poe not joining the other defendants in waiving their rights to speedy trials, Earth Right Energy principal Poe will join the other three defendants in court for hearings on January 10 on the 1 p.m. docket.
Judge Albertson continued Poe’s scheduled jury trial on his perjury charge from December 6, to the previously scheduled first day of an anticipated three-day trial on the EDA financial fraud charges, January 22, with the following dates available were that trial to go beyond one day.
Albertson also set a hearing for the aborted December 6 perjury trial date to set a new date for Poe’s now in limbo financial charges trial.
Albertson also granted North attorney Frank Reynold’s request for a Bill of Particulars on the three charges his client faces related to actions cited as occurring “on or about August 1, 2015” to be responded to by January 8, two days prior to the newly scheduled motions hearing date.
Reynolds, like Lambert attorney Phil Griffin, told the court he and his client did not want to have to navigate the perhaps digital planetary-sized “terabyte” of EDA financial fraud-related documentation for information on a limited, yet thus-far unspecified accusation against his client.
McDonald is facing 32 felony financial fraud indictments; her husband North three; Lambert three, and Poe four, including the perjury charge, related to information contained in the $500,000 County-EDA contracted Cherry Bekaert financial fraud investigation of EDA financial affairs during McDonald’s executive directorship of the EDA.
EDA authorizes litigation to recover Workforce Housing parcel or its value
Following an hour-and-a-half Closed Session Friday morning, November 15, the Front Royal-Warren County Economic Development Authority Board of Directors unanimously approved a motion to authorize litigation to sue Cornerstone, LP, LLC, its principals and affiliates to recover “EDA land improperly conveyed to Cornerstone without EDA authority or collect the full value of the conveyance and such other damages to the EDA”.
The land in question is the 3.5-acre Workforce Housing parcel sold to the Cornerstone group on November 28, 2018, at a price of $10 dollars.
After initially receiving the parcel as a $10 gift from the aunt and uncle of former EDA Executive Director Jennifer McDonald, local realtors Mr. and Mrs. Walter Campbell, the EDA Board agreed to purchase the property for $445,000 in April 2017 after missing a previously undisclosed developmental deadline that would have enabled the Campbells to pursue tax credit compensation for the gift of the land to a public purpose.
It is believed that Cornerstone, LP, LLC, is a branch of regional developer the Aikens Group. Aikens was cited by former EDA Executive Director McDonald as a behind-the-scenes, private sector player in the Workforce Housing financial riddle from its inception in late 2014.
When contacted in April about the transaction Gray Blanton, who signed the Deed of Sale to Cornerstone for the EDA as board chairman in November 2018, told Royal Examiner he had only seen the final signature page of the four page document. Blanton seconded the motion made by Greg Harold to authorize the litigation.
Local real estate attorney Joe Silek Jr., who represented the EDA due to the recusal of then EDA Attorney Dan Whitten for a potential conflict of interest as EDA and County Attorneys, told us in April there was no price on the deed of sale when it was forwarded from the EDA to the Winchester law firm of McCarthy-Akers for completion.
Asked why the EDA would agree to take a $444,990 loss or even a $651,690 if disputed EDA developmental and peripheral purchase costs are included, Silek said, “I don’t think they did,” and referred us to attorney Doug McCarthy of the McCarthy-Akers law firm for further information.
As we first wrote in April, as of publication there has been no response to a phone-message inquiry about the transaction from the attorneys who represented the buyer in the now legally-disputed sale.
Of the transaction, the initial March 26 filing of the EDA civil suit says, “When interviewed on December 6, 2018, Defendant McDonald continued to maintain that the Aikens Group would refund the Warren EDA the full cost of the Royal Lane Property and any improvements, when she knew said property had been conveyed by the Warren EDA on November 28, 2018 to Cornerstone for consideration of $10.”
That transaction came as scrutiny of McDonald’s executive leadership of the EDA was intensifying as the Cherry Bekaert financial fraud investigation progressed. Following several hours of closed session discussion of the Cherry Bekaert findings and her job performance on December 14, 2018, McDonald had her contract, check-writing and administrative authority over EDA bank accounts stripped by the EDA board.
Facing a second closed session on the same topics a week later, McDonald submitted her resignation by email, and according to the EDA lawsuit attempted to cap her financial liability to the EDA at $2.7 million dollars.
As previously reported, in initial defense motion filings McDonald’s now former civil case attorney Lee Berlik claimed his client was being vilified and scapegoated for past bad decisions of the EDA Board of Directors.
However, the EDA civil action alleges a lengthy pattern of gaps, conflicting or misinformation from McDonald to the EDA board regarding what is termed the “Royal Lane Property Embezzlements” among other allegations of financial fraud that have led, not only to civil liability claims against the former EDA chief executive, but also 32 felony financial fraud indictments from a Special Grand Jury empanelled to investigate potential illegalities tied to the EDA civil suit.
And now it seems the Aikens Group finds itself on the perimeter of that EDA civil litigation regarding what has been a twisting and often inexplicable, five-year saga surrounding the attempted transfer of the Campbells’ 3.5-acre Royal Lane parcel to a public use.
Also unanimously approved after the Closed Session, on a motion by Jorie Martin, seconded by Blanton, was authorization for Executive Director Doug Parsons to forward Adjusted Journal Entries developed by retired County Finance Director Carolyn Stimmel and Hottel & Willis’s Heather Tweedy to the Yount-Hyde-Barbour accounting firm for use in development of the EDA’s 2018 Audit Report; and on a motion by Harold, seconded by Tom Patteson, acceptance of the Commission Agreement for the sale of the EDA-owned McKay Springs property, subject to receiving the Agency Agreement within 14 days.
Open Session Business
The pending McKay Springs property transfer and a County Planning Commission Public Hearing two days earlier on Wednesday, November 13, were topics discussed During County Administrator Doug Stanley’s Report during the open portion of Friday’s meeting.
That open portion of the meeting was eventful as the full EDA Board received monthly reports and six-month Strategic Priorities Lists from the EDA’s Asset Management, Finance, Communications and Executive Committees; as well as the monthly report on County business; and Executive Director Parsons’ Strategic Priorities List.
Major topics included the status of the Afton Inn as far as the developer resuming work on site; the status of removal of the Earth Right Energy-installed solar panels on the EDA’s Kendrick Lane Office Complex to allow roof repairs to facilitate empty space rental marketing; and the status of resolving payment issues with the Town of Front Royal on the new Police Station across Kendrick Lane.
As part of the Asset Committee Report Jorie Martin told the board that there had been three replies on the solar panel RFP, with one of particular interest. That one was from a non-profit with the expertise to remove the panels, and then market them for resale at no cost to the EDA. Martin added that it was possible the EDA could even see some revenue from the arrangement.
The EDA is abandoning the idea pushed by McDonald to provide sustainable solar power to the EDA Office Complex, ostensibly as an incentive to help attract a high-end commercial client to the county, supposedly Amazon according to one former board member. Issues include a lack of individual unit metering equipment and the fact the Town has sole authority to charge for the provision of power inside the town limits.
During discussion of the Kendrick Lane roof-solar panel situation it was noted that one positive was that the solar panels were not bolted to the roof in any way, and rather are just sitting on the roof on the panel row bases. Executive Director Parsons pointed out that it had been established that the roof damage did not come from the solar panel installation, but was a consequence of “faulty roof work ages back”.
Also during the Asset Committee Report Harold said the committee “was sad to report that the majority of current bad debt and aging receivables is owed by the Town of Front Royal for their municipal projects”. Primary among those projects is the $8 million to $11 million Town Police Station project financed through the EDA.
Interim Town Manager Matt Tederick was present and in response to a question told the EDA that “the Town is in receipt of the invoice that was most recently sent” regarding the police station and that it would be discussed at a coming council work session.
Tederick also said the Town had received an EDA FOIA request and that the Town Finance Director had scanned relevant material which should be forthcoming shortly. The Interim Town Manager said he had discussed with the Town Attorney setting up a conference call for 3 p.m. Monday to discuss Town-EDA issues.
The Town has filed civil litigation against the EDA to collect “as much as $15 million” in assets it believes were misdirected or lost by the Town during McDonald’s executive leadership of the EDA.
Talking to the press after the EDA went into Closed Session Tederick said he believed the referenced FRPD project invoice was for $8.7 million dollars, with assessed interest calculated at 3.5%, which he added, “differs from the agreed-upon terms the Town was originally offered by the EDA.”
Tederick confirmed the Town’s perceived agreed-upon interest rate on the FRPD project involved New Market Tax Credit Program (NMTC) financing, which is believed to calculate at about 1% over the life of the bond payback.
“So it’s all coming to a head and we’re trying to figure out how to best move forward,” Tederick said. Asked if the Town and EDA were trying to make the financing dispute less adversarial, the Interim Mayor replied, “Make it less adversarial, of course. But we have to agree upon what we can agree upon. And what we can’t agree upon we have a judge to determine what the right numbers are.”
As Royal Examiner has previously reported, a council majority decided to gamble on a best case New Market Tax Credit scenario brought forward by McDonald during consideration of a bond issue on a number of Town or County Capital Improvement Projects. That NMTC Program would have offered a seven to nine-year interest free payback term over an estimated 20 or 30 year payback.
However, that gamble was made over the advice of then-Town Manager Joe Waltz, Town Finance Director B. J. Wilson and NMTC Regional Administrator People Inc. representative Brian Phipps.
Due to uncertainties with the NMTC Program’s future, as well as municipal competition for limited regional funds controlled by People Inc, Waltz, Wilson and Phipps all recommended to Council that a bank-offered, locked-in 2.65% interest rate over a 30-year payback term was the best bet because its favorable interest rate was locked in and the money was not subject to being lost in a municipal competition for funding.
It was also later established that the FRPD headquarters project didn’t qualify for the NMTC program because it was a capital improvement project that did not create jobs, a primary goal of that federal and state overseen program.
“Here comes the judge,” as comedian Flip Wilson used to say.
Watch the entire open session EDA Special Meeting, with the above-referenced discussions and reports, among others of high interest in the exclusive Royal Examiner video:
Earth Right Energy countersues EDA for $20 million in damages
According to a November 7 filing with the Warren County Circuit Court Clerk’s Office Earth Right Energy (ERE) has joined in countersuing the Front Royal-Warren County Economic Development Authority for damages it claims the company incurred as a result of cancellation of a contract it asserts was validly put in place during the tenure of former EDA Executive Director Jennifer McDonald.
As previously reported attorneys for EDA civil defendant ITFederal and its principal Truc “Curt” Tran filed $13.5 million countersuit against the EDA on October 9. The EDA is seeking recovery of as much as $12 million in EDA assets from Tran and ITFederal.
Along with Tran and his company, Earth Right Energy and its principal Donald Poe and Managing Partner Justin Appleton were among defendants named in both the original EDA civil litigation of March 26 and the Amended EDA civil complaint of October 4.
The EDA is seeking recovery of a total of $21.3 million from what has climbed to a total of 15 defendants alleged to have been involved in, or beneficiaries of fraudulent financial schemes surrounding the former EDA executive director. McDonald is now facing 32 criminal felony financial fraud indictments related to the EDA civil litigation and the County and EDA-contracted Cherry Bekaert public accounting investigation of EDA finances at the base of that litigation. Poe is scheduled for a three-day trial January 22 to 24 on three criminal felony charges – two “obtaining money by false pretenses” and one “perjury” – related to the EDA litigation.
The Amended EDA complaint states that ERE, Poe, Appleton “and others, entered into multiple agreements with Defendant McDonald purporting to oblige the Warren EDA to pay for solar installation at Warren County Public Schools, even though Defendant Poe knew, that the Warren County Public Schools did not approve of any agreement to purchase and install solar power equipment from Defendant Earth Right Energy for any Warren County Public School properties.”
While that $27.3 million dollar solar contract for the schools was never acted upon the EDA civil suit cites payments authorized by McDonald to ERE “without permission or authorization by the Warren EDA” totaling $1,279,888. The EDA litigation notes an August 27, 2018 reimbursement payment made by ERE at McDonald’s request to the EDA of $334,851, reducing the total sought for recovery from ERE to “at least $945,037”.
However in its countersuit, ERE attorneys allege that the public schools solar contract was legitimately negotiated and confirmed at some levels in a mid-August 2018 phone conversation witnessed by “Earth Right’s representatives and Mrs. Michelle Henry”. Henry is also facing criminal charges and civil liability in the EDA case.
“Earth Right extended a formal offer in August in the form of an unexecuted written agreement memorializing the terms of the offer.
“In mid-August (2018), representatives from Earth Right, met in person with Jennifer McDonald, then the Executive Director of the EDA, to inquire as to (1) whether the EDA had approved and agreed to the terms in the Offer, and (2) whether the Warren County School Board was amenable to being a third-party beneficiary of the agreement and would endeavor to aid Earth Right and EDA in fulfilling the terms of therein.
“Jennifer McDonald, as Executive Director and in the presence of Earth Right’s representatives and Ms. Michelle Henry, telephoned Mr. Greg Drescher, then Chairman of both the EDA and the Warren County Public School Board (writer’s note: actually Drescher was superintendent of schools, not a member of the School Board).
“Mr. Drescher confirmed to Jennifer McDonald during the above-mentioned telephone conversation that the EDA had approved the agreement and that the Warren County School Board would endeavor to take whatever reasonable steps the EDA and Earth Right needed to have solar installed on the Roofs of the schools subject to the agreement,” four consecutive paragraphs of the ERE counterclaim contend, adding that “on September 4, 2018, Jennifer McDonald … on behalf of the EDA, formally executed the agreement with Earth Right …”
Of the agreement the ERE Counterclaim states, “The intent of EDA and Earth Right though not written was to secure third-party grants and other sources of funding such that the EDA either did not have to make any capital outlays required by the School Solar Agreements or such that the EDA would be recoop all monies paid (grammar in context).”
As a consequence of what it claims was a legitimately enacted contract, Earth Right Energy asks the court for a judgment of $20 million in damages; court costs; “and any other relief deemed just and appropriate.”
And so the legal wheels continue to spin around EDA civil and criminal litigation now estimated to have generated between 700,000 and a million pages of related materials being accumulated by the Warren County Circuit Court Clerk’s Office.
Evidentiary issues delay Michelle Henry hearing to January 23
Commonwealth’s Attorney Bryan Layton and Michelle Henry co-counsel David Hensley and Ryan Nuzzo were granted a joint motion to continue a scheduled preliminary hearing to January 23, at 8:45 a.m.
Judge Bruce D. Albertson granted the continuance after Layton agreed with Hensley’s observation that complications in digitizing the voluminous amount of materials related to the EDA financial fraud investigation and Special Grand Jury documentation leading to criminal indictments related to that investigation had prevented Discovery Motion materials from yet being made available to the defense.
“We have nothing to review, none whatsoever,” Hensley told the court.
Layton told the court that progress had been made in the digitization process the Virginia Supreme Court has suggested to deal with an unusual amount of evidence and documentation related to the EDA criminal and civil cases. However, he observed that, “Unfortunately we are in an unusual situation with a great deal of Discovery material.”
Estimates of the involved material in previous hearing discussions has ranged from 700,000 to one million pages; an amount that has drawn the attention of the Virginia Supreme Court according to Warren County Circuit Court Clerk Janice Shanks.
“We are in rare waters,” Judge Albertson observed of the evidentiary situation.
He ruled that both sides, including legal staffs and the defendant, could have access to available Special Grand Jury transcripts related to the two felony embezzlement charges former EDA Administrative Assistant Henry faces. However the judge told the attorneys that while those Special Grand Jury materials could be reviewed, they could not be copied and must be kept confidential within the legal teams working the case.
In seeking a date for the continued hearing, Albertson noted he would be in Warren County January 22nd through 24th for a three-day trial on the EDA-related criminal charges against Donnie Poe. Henry’s hearing, during which a trial date may be set in her cases, was set prior to the start of Poe’s trial’s second day.
Henry was arrested on June 24 on two felony counts of embezzlement for the “unlawful use, disposal, conversion, embezzlement of property of the EDA”. Her arrest came exactly one month after her former boss Jennifer McDonald’s first arrest (May 24) on what has since climbed to 32 felony indictments against the former EDA executive director related to financial fraud allegations.
Dates attached to the Henry’s warrants are for actions occurring between October 1 and December 30, 2016 and September 1, 2014 to December 30, 2016. Henry was cited for involvement in dispersal of assets tied to the B&G Goods retail operation in the old Stokes Mart building that the EDA purchased in 2014, as well in a possible scheme related to the building’s purchase.
“MCDONALD is suspected of colluding with HENRY, LAMBERT, and possibly POE to acquire the Stokes Mart property under false pretense to facilitate several different embezzle schemes of which payments herein as repairs and maintenance for B&G or paid directly to LAMBERT are approximately $21,000,” CPA fraud investigator Cherry Bekaert wrote in its EDA financial investigation report.
Texts between Henry and McDonald that are part of the Cherry Bekaert report on its investigation of EDA financial affairs indicate discussion between the two of investment stakes in the B&G Goods business.
Due to judge transfers and recusals Henry spent a month in jail before Albertson, the chief presiding judge of Virginia’s 26th Judicial District took over the bulk of EDA cases. On July 23 Albertson granted Henry a $2500 secured bond on the two charges against her.
EDA hearings done for the day – Let’s go get McDonald again
Maybe that’s the reason the larger Warren County Circuit Courtroom “A” wasn’t available to move into to accommodate the full house in diminutive Courtroom “B” for the EDA criminal and County Supervisors Removal Petition hearings Monday morning – new indictments brewing from the EDA Special Grand Jury that often meets in the larger Courtroom A.
According to the Rappahannock-Shenandoah-Warren County Regional Jail website former EDA Executive Director Jennifer McDonald was arrested Monday afternoon on four new felony indictments related to the EDA financial scandal.
She was arrested by the Virginia State Police and booked at 1:25 p.m., an hour-and-25 minutes after the Removal Petition Show Cause Hearing adjourned at noon to close the day’s open court proceedings regarding the EDA. She was released just over an hour later at 2:26 p.m. on what appeared to be a $5,000 secured bond.
If our memory serves us that is McDonald’s third arrest, raising the number of financial felony charges she faces to 32. She was arrested on four initial counts on May 24, saw that number climb to 14 while incarcerated without bond as a flight risk. She was eventually granted bond by new presiding Judge Bruce D. Albertson on July 31. Albertson took over EDA cases as Judge Clifford L. Athey Jr. left for the Virginia State Appeals Court.
The 42-year-old McDonald was arrested on 14 new charges on August 23, the same day her husband Samuel North and business partner Donald Poe were arrested on related charges, Poe for the second time after first being charged on three counts in the EDA case on July 23. After spending the weekend in jail, all three were bonded out Monday, August 26.
On Monday, October 28, McDonald was out on a $50,000 secured bond on the 28 previous charges she has been arrested on. Noting the fluid nature of the Special Grand Jury investigation regarding his client, at an earlier hearing McDonald’s criminal attorney Peter Greenspun had asked for some arrangement to prevent repeated, prolonged incarcerations for every new charge levied against his client.
Perhaps that ability to post a smaller, secured bond to obtain immediate release is that arrangement.
The new charges are Fraud, Uttering; Larceny – Embezzlement – $200 plus; Money Laundering – Financial Transaction from known felony activity; and Fraud – Obtain money by false pretenses, $500 (or more).