McDonald bankruptcy hearing draws ‘5th’ pleas on details of alleged 2015 sexual harassment settlement agreement EDA counsel says doesn’t exist

(Editor/writer’s note: This will be the first installment of an exploration of Jennifer McDonald’s testimony at the first hearing on her bankruptcy filing in the wake of claims made against her in the EDA civil litigation. That litigation accuses the former EDA Executive Director and 23 co-defendants of conspiring to profit from alleged embezzlements and misdirection of over $21 million in EDA assets by McDonald over a period of years. Due to local interest in the EDA case and alleged misdirection of public funds we will explore that testimony in some detail.)

On Friday the 13th of November, creditors including the Front Royal-Warren County Economic Development Authority had a first meeting by conference call concerning the bankruptcy filing of former EDA Executive Director Jennifer McDonald. Information concerning McDonald’s bankruptcy claim of a $21-million-dollar debt due to the EDA’s civil litigation against her, versus her claimed assets ($2.48 million personal; $1.4 million MoveOn8 LLC; $76,000 Little Rugratz Daycare LLC property – about $4.6 million total) and current combined monthly income ($3400 versus monthly expenses of $3882.35) were taken under advisement without any rulings on the validity of her bankruptcy filing or requests for exceptions to it.
Among the exceptions being sought are the EDA’s to both McDonald and her real estate LLC MoveOn8’s bankruptcy claims. A first hearing on motions filed during or following the Friday the 13th teleconference meeting is scheduled for December 16 at 10 a.m. That will be an online ZOOM meeting.

EDA headquarters where Jennifer McDonald claims an executed copy of a $6.5 million sexual harassment Voluntary Settlement Agreement with the EDA was left in her office. Royal Examiner File Photos by Roger Bianchini

If motions for exceptions are granted by a bankruptcy judge, certain of McDonald’s assets could be removed from control of the bankruptcy court and remain at issue in the EDA’s now $21-million to $25-million civil actions alleging a McDonald-orchestrated conspiracy to misdirect or embezzle EDA assets to her own and associates’ personal benefit.

$6.5 million settlement claim

In addition to questions surrounding the movement of properties through MoveOn8 and her other, apparently now-defunct real estate LLC, DaBoyz, a prominent topic of discussion last week was McDonald’s claim of a still-owed $6.5 million debt to her by her former employer, the EDA. McDonald cited an out of court “Voluntary Settlement Agreement” regarding a sexual harassment claim related to her job dating to August 2015. Asked by U.S. Attorney Webb King if she had a copy of the August 28, 2015, agreement, McDonald replied “no” that it had been left in her EDA office at the time of her December 2018 termination when she was locked out of her office as it was deemed a potential crime scene. Does the EDA have a copy of the agreement she was then asked?

“They should,” she replied.

Above, then EDA/County Attorney Dan Whitten and EDA Board member and former chairman Greg Drescher on Dec. 20, 2018, as Jennifer McDonald’s office is locked down and remote access to her computer is locked out by WCPS’s IT person Tim Grant, at computer. Below, just under four months later on April 16, 2019, the FBI and VSP seized materials from the still locked down office.

Asked if she had been paid any portion of the settlement amount, McDonald took one of her many Fifth Amendment pleas, reserving her Constitutional right not to self-incriminate. A follow-up question on whether she had ever been written a check by the EDA for a portion of the settlement amount led to a lengthy pause and apparent discussion with her attorney and second consecutive plea of the “Fifth”.

As to compensation from the alleged Settlement Agreement, McDonald did say there was “a list” of ways she could be compensated, including the transfer of real estate and payment of her personal debts. Both methods play into the EDA’s civil litigation against McDonald alleging embezzlement and the misdirection of EDA assets to her personal benefit and that of 23 co-defendants, both human and corporate “people”.

“Did the Warren County IDA (IDA is the acronym for the EDA’s original and often legally referenced name, Industrial Development Authority) transfer any sort of personal property to you?” U.S. attorney King continued in the wake of her claimed “list” of ways she could be compensated for her claimed sexual harassment compensation agreement. “I assert my right pursuant to the Fifth Amendment of the United States Constitution,” she again replied.

“Under this agreement did the Warren IDA transfer any real property to you or any entity that you controlled?” came the next question. “I assert my right pursuant to the Fifth Amendment of the United States Constitution,” again came the answer.

“And you claim not to have a copy of this agreement?” U.S. Attorney King pressed McDonald. “I do not have a copy of the fully executed document,” she replied after a brief pause.

“Do you have a copy of the unexecuted document,” King pressed on, adding, “I’m going to note the delay in answering the question again,” inserting into the record another 10-second and counting pause.

That led to McDonald’s civil and past criminal case attorney Peter Greenspun to come on the phone line to say that while he did not represent McDonald in her bankruptcy filing, as her counsel in the civil and any potential criminal cases he was present with her consulting her on her answers in the bankruptcy hearing. “We’ll be back to you in just a short minute,” Greenspun informed the hearing.

Above, Royal Examiner file photo of McDonald on the job in fall of 2018 with board members Greg Drescher and William Biggs backs to camera in foreground, Bruce Drummond across the table and Gray Blanton chairing the EDA board meeting at right; below, McDonald attorney Peter Greenspun.

McDonald’s criminal charges at the state level were dropped due to prosecutorial speedy trial concerns so that they could be re-filed at a later date. The criminal investigation of McDonald and its million-plus pages of related documentation has been turned over to the U.S. Attorney’s Office of the Western District of Virginia. McDonald’s original civil attorneys from the Berlik Law Firm withdrew from her case after EDA representatives indicated a belief the Berlik firm had been paid, albeit unknowingly by them, with stolen EDA assets; and of introducing what was cited as a forged document by EDA officials into evidence in an early civil case hearing. Greenspun, then representing McDonald in the state criminal cases also took on her civil defense.

As Greenspun and his client’s “short minute” passed, someone came on the conference call line to ask if there was an EDA representative on the line to which current EDA Board member and EDA Executive Committee member Greg Harold replied. Harold was asked if he had seen a copy of the alleged Sexual Harassment Voluntary Settlement Agreement between the previous EDA board and McDonald.

“I have not seen an official copy of the agreement located in the office,” Harold replied. That led Sands-Anderson and EDA civil case lead attorney Cullen Seltzer to introduce himself to the proceeding, after which he addressed the elusive $6.5 million-dollar Voluntary Settlement Agreement.

‘Our … belief no such agreement exists’

“I can represent to the court that we’ve investigated the existence of this agreement. It is our understanding and belief that no such agreement exists,” Seltzer told the hearing. Seltzer then responded to a follow-up question from McDonald creditor Tom Sayre, who has a $20,000 defamation civil judgment against her, as to the thoroughness of the EDA counsel’s search for the alleged sexual harassment agreement documentation.

“Without getting into the particulars or the nature of the inquiry, we’ve made a number of inquiries appropriate to try and determine if any such agreement exists. And we’ve found that it does not,” Seltzer stated, adding that inquiries with “appropriate people who would know” had been made.

McDonald at EDA board meeting with the late Patty Wines chairing.

McDonald did respond to an earlier question as to who had negotiated the Voluntary Settlement Agreement with her, citing then-EDA Board Chair Patricia Wines (deceased) and then-Treasurer William “Billy” Biggs.

McDonald civil, criminal counsel Greenspun then re-entered the conference call fray. (To be continued)