Correction: Royal Examiner would like to acknowledge a typo in the second paragraph under the subheader “Family and Friends” in the October 4 story “McDonald family members, business associates added as defendants in EDA civil suit”. A “caps” hit for the dollar sign did not take and the number “4” was printed in its place. The correct amount in the amended EDA civil complaint said to have been paid to North at closing on the Robin Hood Lane property was $1,713.89, not “41,713.89”.
Royal Examiner apologizes for this mistake.
Following approval of amending its civil complaint following a two-and-a-half-hour closed session Friday morning, attorneys for the Front Royal-Warren County Economic Development Authority late Friday afternoon entered amendments adding seven defendants to its civil suit seeking recovery of as much as $21 million in allegedly misdirected and embezzled EDA assets.
Included in those new civil case defendants are former EDA Executive Director Jennifer McDonald’s former Administrative Assistant Michelle “Missy” Henry, husband Samuel “Sammy” North, mother Linda Hassenplug, as well as Hassenplug’s former Little RugRatz Daycare LLC, and former B&G Goods principal William Lambert.
Henry North and Lambert’s additions may not come as a surprise as all three have been served with several criminal felony indictments related to the EDA financial fraud investigation.
“Payments to family members” has also been cited in the Cherry Bekaert financial fraud investigation report upon which the EDA civil suit and EDA Special Grand Jury investigation are built.
Two new names of McDonald business and financial associates, Jesse F. Poe and April D. Petty were also added to the civil case defendants list.
The amended complaint cites Poe as “an associate in the financial affairs of Jennifer R. McDonald and Michelle Henry”.
Petty is listed as “an associate in the financial affairs of Jennifer R. McDonald”.
In an “Overview” section of the amended civil complaint it is alleges “unlawful payment of Warren EDA Funds Disguised as Easement Payments to pay for” Samuel North, Jessie Poe and William Lambert’s homes.
Family and Friends
Henry is cited for “Breach of Fiduciary Duties and/or Negligence” during her time as McDonald’s administrative assistant.
The amended complaint cites a McDonald “payment of $110,000 from the EDA to Service Title company which in turn paid that amount to, in part, purchase a home at 1309 Robin Hood Land in Front Royal, Virginia for Defendant North and to also pay $1,713.89 to Defendant North at the closing of the purchase of 1309 Robin Hood Lane.
“In addition, Campbell Realty company, owned by Defendant McDonald’s aunt and uncle, received $2,725 in commission from the purchase of 1309 Robin Hood Lane. Defendant McDonald was the broker for Campbell Realty in the transaction,” the complaint continues, adding, “The EDA did not approve of using Warren EDA funds to buy Defendant North a house …”
“Using $280,000 from the Warren EDA, by a check delivered by Defendant McDonald, Defendant Jesse Poe purchased a home at 118 Jutland Court in Stephens City, Virginia,” the amended complaint continues. It alleges that payment came from a forged invoice “purporting to be from the Shenandoah Wetlands Credits, LLC for $285,000.
The complaint adds that Poe received $2,475.60 at closing and that Century 21 got a sales commission of $16,300 and that McDonald was again, the agent in the sale.
And Lambert is cited as being the beneficiary of a McDonald forgery involving an EDA easement purchase from the New Hope Bible Church. That purchase was for $65,000 according to the complaint.
“Defendant McDonald forged documents, however, indicating the purchase price was in fact $345,000. Using these documents as a cover, Defendant McDonald diverted $345,000 from the Warren EDA for the purchase of 400 Craig Drive in Stevens City, Virginia.”
Again the recipient of the purchase received a closing settlement, this time $4,763.49 in cash. And it is further noted that the Century 21 real estate company owned by McDonald’s aunt and uncle was again involved, receiving a $16,000 commission in the transaction in which McDonald and her uncle were the agents.
The amended complaint adds that at the time, “Defendant Lambert was engaged to marry Defendant McDonald’s sister” and formerly resided at McDonald’s mother’s Stuart Drive home in Front Royal.
Information on April Petty inclusion eluded this reporter in the 104 pages of documentation put into the Circuit Court Clerk’s computer system around 4:30 p.m. Friday. So this story will be updated as additional information is received or found.
Legal dust up
“Unlawful Payment of Warren EDA Funds” are cited to McDonald’s mother’s RugRatz Daycare and to McDonald’s civil attorney “Berlik Law, LLC”.
The listing of a $10,000 payment to Berlik Law for legal services under the Afton Inn redevelopment project led to a tense moment in day two of the recent Tom Sayre defamation case against McDonald. During a sometimes contentious cross examination of Sayre by Lee Berlik, Sayre suddenly turned the cross examination table, asking Berlik several times, “Are you going to give the money back, Mr. Berlik?”
Berlik did not respond and the judge admonished the battling legal pair to get back on track of the case at hand. Sayre was awarded $20,000 of the $25,000 he was seeking in damages in that civil action. McDonald has dropped her $600,000 defamation case against Sayre.
The amended complaint may seek an answer to the question Sayre asked Berlik in court on September 11. Berlik has told the media he never worked for the Afton Inn.
However the amended complaint states, “The Berlik Law Firm has refused to return the unauthorized payment from the Warren EDA and has taken the position that the money may have been permissibly paid to that firm which it was not. It has further asserted that because the money has been spent on services rendered, albeit not services rendered for the Warren EDA, the Berlik Law Firm is entitled to enjoy benefits of the stolen money.”
Admission to what?
As the original complaint did, the amended complaint notes that on December 20, 2018, the day she resigned under pressure from her board of directors in the wake of findings of the contracted investigative public accounting firm Cherry Bekaert, McDonald admitted in an email to being liable for the return of $2.7 million of EDA assets. The complaint calls that admission as a “gross” undervaluing of “the extent of her theft and unlawful distributions”.
And the amended complaint alleges that “Defendant McDonald’s pattern of forging documents to defraud and steal, and to cover up her misconduct and fraud, has continued unabated even during the pendency of this litigation.”
Civil Contempt request
In a later amended motion put into the court clerk’s office computer system after 5 p.m. Friday afternoon, the plaintiff asks that McDonald be held in contempt of civil court orders. The motion contends that McDonald moved a piece of real estate against court order.
The court froze the movement of some McDonald assets for potential recovery of allegedly misdirected EDA assets through real estate transactions on May 31. A transcript of that third day of civil case hearings in included in the contempt request motion.
According to an included exhibit that piece of real estate at 68 Pine Hills Road was conveyed to McDonald’s sister Gail Addison by Deed of Gift on August 16, 2019. David Crump who represented McDonald in her misdemeanor false police report criminal case last October – she was acquitted – is listed as the preparer of the deed.
Perhaps ironically, McDonald’s mother Linda Hassenplug is listed as the Notary Public who signed the deed. McDonald’s husband’s signature is also on the signature page along with McDonald’s.
Stay tuned for further developments.
County Overseen EDA Takes Care of Business at Last Meeting of 2023
The Front Royal-Warren County Economic Development Authority (FR-WC EDA) held its monthly meeting on Friday, December 8, 2023, at 8 a.m. All seven Board members and legal counsel were present.
The regular meeting began with Committee and Board Reports. Board Vice-Chair J.D. Walter and Treasurer Jim Wolfe announced that the Board will be having a Strategic Planning Meeting on Friday, January 12, 2024. The Asset Committee Chair, Jorie Martin, provided an update on the ongoing maintenance at the 400 Kendrick Lane building. Warren County Director of Economic Development Joe Petty discussed the FY-2025 budget schedule and an overview of the previous Open-Door Business Session in November. The Board then approved online banking access for the Chair, Treasurer, and a designated County staff member.
During the new business portion of the agenda, Equus Capital Partners provided an update on their due diligence as part of a contract to purchase property within Stephens Industrial Park. In addition to typical findings from geotechnical work and preliminary engineering, they are working with the gas company on dedicating a defined width of the gas line easement, which dates back to 1949.
After the Equus presentation, a status update on the TransPortation Opportunity Fund (TPOF) was given. The Board then approved the 2024 Regular Meeting Schedule, the second term option in the current lease agreement with CCAP, and extended the Baldwin Grazing lease an additional year.
The Board concluded the meeting with a closed session to discuss the potential disposition of real property to business prospects and legal consultation on active litigation. Following the closed session, the Board authorized Joe Petty to dispose of two vehicles owned by the EDA; approved extending the contract on Stephens Industrial Park, Parcel 2, until December 31, 2024; and approved a resolution authorizing legal counsel to draft a lease for the Avtex Parking lot.
As noted above, the FR-WC EDA will be having its Strategic Planning meeting on Friday, January 12, 2024 (8 a.m.), and their next regular monthly Board meeting will be held on Friday, January 26, 2024, also at 8 a.m. at the Warren County Government Center.
(From a release by the Warren County-overseen FR-WC EDA)
McDonald Defense Counsel Renews Motions, Including for a New Trial, as Feb. 12 Sentencing Date Looms
Federal officials in Harrisonburg have verified that defense counsel for former Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald has filed renewed motions seeking a new trial for their client, as well as the overturning of several of the 34 guilty verdicts a federal jury of six men and six women in Harrisonburg delivered on November 1. Verdicts being sought to be overturned include several counts of bank fraud and one of aggravated identity theft. The latter of those charges involves the use of ITFederal principal Truc “Curt” Tran’s name in promoting one of the real estate transactions McDonald was convicted of using to misdirect money to her personal benefit or that of others under the guise of conducting FR-WC EDA related business. Attempts to reach defense counsel about their filing were unsuccessful as of publication.
The defense has submitted its motions, similar to ones denied by Judge Elizabeth K. Dillon at trial, as the sentencing of McDonald, set for 10 a.m., Monday, February 12, 2024, looms over their client, who remains free on bond. The defense motions reiterate points made by federal Public Defenders Office attorneys Andrea Harris and Abigail Thibeault at trial and in closing arguments delivered October 31. The three defense witnesses called on that final day of the trial appeared to be presented in an attempt to discredit some of the 67 witnesses called by the prosecution in the trial that began on August 21 and ended on November 30, following several delays of a week to several weeks due to a need to suspend or reschedule the trial because of medically verified illnesses or issues of involved parties, on several occasions defendant McDonald.
The new motions, like those rejected at trial, focus on the defense’s central contention that McDonald and the FR-WC EDA had entered into a secret agreement behind closed doors to pay McDonald $5 million or more in exchange for her not filing a sexual harassment or assault lawsuit against local government officials over actions she alleges during her tenure as FR-EDA executive director. The lone signature on a defense exhibit submitted in support of this scenario belonged to former FR-WC EDA Board Chair Patty Wines, who was by then several years deceased. The prosecution asserted the signature was a forgery. Other EDA officials called by the prosecution, including board member Ron Llewellyn, also unhappily called as one of the defense witnesses on October 31, denied any knowledge of the existence of such a document. It was noted during trial testimony that such a document could not have been approved without a full vote of the EDA Board of Directors.
The defense motion for a new trial centers on the asserted exclusion of evidence related to the alleged sexual harassment secret agreement. Arguments about the exclusion of a transcript of grand jury testimony given by someone with alleged knowledge of the secret agreement or the absence of that person being called as a witness at trial appear to be at the center of the mistrial/new trial motion. There is also an objection to a related jury instruction given by Judge Dillon, noting that the prosecution didn’t have to produce every piece of evidence or potential witness related to the case at trial.
According to the federal 10th Western District of Virginia website, thus far a hearing date on the new defense motions has not been set for the Harrisonburg federal courtroom.
McDonald was accused of diverting as much as $ 6.5 million of EDA assets to her direct personal benefit out of an estimated $26 million alleged to have been moved under false pretenses during a four-year period (2014-2018) of her executive leadership of the FR-WC EDA. Part of that larger total, a $10-million loan with additional developmental expenses estimated at as much as $2 million, was approved in support of Tran’s ITFederal company’s development plan earmarked for 30 acres of the 148-acre Royal Phoenix Business Park property in Front Royal at the former Avtex federal Superfund site. EDA officials and civil cases attorneys assert that a $10-million loan and subsequent addition of developmental expenses were achieved under false pretenses as to Tran’s ability to achieve his submitted developmental plan. However, at the time some of these McDonald-involved real estate transactions were occurring, between 2016 and 2018, information was being circulated that Tran was planning to invest in other business opportunities at other locations in the county. Tran has said such investments were discussed but never finalized and never signed on to by him.
Town Announces Withdrawal of its Civil Litigation Against the FR-WC EDA
At 2:12 p.m., Wednesday, November 15, the Front Royal Town Council Clerk’s office issued a press release announcing the dropping of the Town’s civil litigation against the Front Royal-Warren County Economic Development Authority (EDA, FR-WC EDA). The release portrays the withdrawn litigation as a good faith effort to reduce EDA “financial scandal”-related legal expenses ultimately falling on the shoulders of town and county taxpaying citizens. The fifth paragraph of the six-paragraph release, opening with a reference to former EDA Executive Director Jennifer McDonald, recently convicted on 34 criminal counts related to the EDA “financial scandal” in the 10th Western District of Virginia federal court, reads:
“The legal proceedings flowing from McDonald’s misdeeds have been ongoing for several years. The local community, as both town residents and county taxpayers, has already shouldered substantial legal costs. In order to prevent further financial strain on the citizens and in recognition of the actual amounts remaining in dispute between the Town of Front Royal and the EDA, the Town of Front Royal has decided to non-suit its lawsuit against the EDA. This move is intended to save public funds and reflects our commitment to the community’s welfare. We hope this gesture will be met with a similar commitment from the EDA.”
It might be noted that after the Town filed its civil litigation against and withdrew from future involvement with the jointly created EDA, the now unilaterally County-overseen EDA filed a countersuit, citing financial obligations of the Town related to the EDA “financial scandal” and projects, including funding the construction of a new town police station, done on behalf of the Town during that time-frame.
One familiar with the dueling litigations and a portion of the Town’s justification framed around the fact that town officials no longer appointed EDA board members (a voluntarily given up authority*), thus had no EDA oversight responsibilities, might wonder if a reassessment of the strength or weakness of Town’s legal position in the now-abandoned litigation might have also factored into the decision to abandon the civil suit.
But whatever the driving factor, let’s celebrate what seems a positive move toward improved County-Town relations.
* FOOTNOTE: The Town-County compromise on withdrawing the Town’s responsibility for EDA operational funding may be recalled as part of the effort to end the double-taxation of town citizens for joint Town-County operations, since town citizens are also county citizens and ended up paying taxes twice for jointly overseen operations. The EDA funding agreement was part of a move that put operational funding of jointly beneficial operations totally on the County side. As we recall, other departments where similar agreements were reached to stop town citizens from being double taxed included Fire & Rescue, Parks & Recreation, and Samuels Public Library.
McDonald Found Guilty on All 34 Criminal Counts in EDA ‘Financial Scandal’ Prosecution
Just after 1 p.m. on Wednesday, November 1, slightly over four hours after beginning deliberations on the 34 criminal counts against former Front Royal-Warren County Economic Development Authority Executive Director Jennifer Rae McDonald regarding allegedly embezzled or misdirected EDA assets, the six-man, six-woman 10th Western District of Virginia federal jury returned guilty verdicts on all 34 counts. McDonald and her two federal court-appointed attorneys sat quietly at the defense table as each charge, and each verdict was read into the court record consecutively by a court clerk.
Over the objection of lead prosecutor Sean Welsh, Judge Elizabeth K. Dillon allowed McDonald to remain free on bond under the existing guidelines under which she has been free since the 34 federal criminal indictments were handed down by a federal grand jury on August 25, 2021. As has been reported, federal prosecutors inherited the case from two state prosecutors offices, Warren County (recusal due to staff work familiarity with some defendants) and Rockingham County (complexity, time involvement). After her arrests at the state level in mid-2019, McDonald was also free on bond or home arrest for the bulk of the time since she was initially charged at the state level.
Judge Dillon cautioned McDonald, as she said she would any defendant, against violating the terms of her bond, including showing up for her sentencing hearing at an as-yet undetermined point of time, or risk facing additional criminal charges carrying as much as 10 years imprisonment and $250,000 in fines. The judge noted a common 90-day time-frame between conviction and sentencing. She gave the defense 30 days to file any post-conviction motions.
In challenging the continuation of McDonald’s bond, prosecutor Welsh pointed to conflicting stories told by two of the defense witnesses the previous day as an indicator the defendant was continuing a pattern of deception to the court to justify her actions in moving EDA assets she now stands convicted of moving fraudulently. Those witnesses were former prosecution witness and former EDA Board of Directors member Ron Llewellyn, and former post-EDA financial scandal-era McDonald employer Justin Simmons. They told conflicting stories about an incident the defense asserts happened this October 22, involving McDonald and Simmons encountering Llewellyn at a church parking lot, leading to an unpleasant verbal exchange. Llewellyn denied the encounter occurred, citing that he was out of town that day at a football game in Salem. The prosecutor asserted certain evidence about a law enforcement search of McDonald’s home property when she wasn’t there and descriptions of her state of mind from a live-stream viewing of it on her phone indicated the church parking lot incident could not have occurred that day.
Defense counsel Andrea Harris countered that the incident time-frames were not mutually exclusive of both possibly having occurred. She said there was no evidence her client posed a threat to her community or to herself, and asserted that her track record of compliance with bond conditions and court appearances with all the charges facing her, indicated she was not a flight risk.
In the wake of defense counsel Harris recounting McDonald’s track record of appearing for scheduled hearing and trial dates, other than when she was being treated medically, as noted above Judge Dillon extended McDonald’s bond conditions pending sentencing.
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 charges including bank fraud (10 counts), wire fraud (7), aggravated identity theft (1), and money laundering (16). While total EDA “financial scandal” losses have been estimated at $26-million, including $12 million in the ITFederal loan and related EDA investment, evidence presented at trial indicated McDonald moved over $5 million, perhaps as much as $6.5 million, to her personal benefit. She was initially arrested and charged criminally at the state level in mid-2019.
After a Spooky Courthouse Halloween McDonald Criminal Trial Goes to the Jury
After over four hours of closing arguments (prosecution 2:33; defense 1:32; prosecution rebuttal:21-minutes) in the wake of presentation of the defense case in less than an hour with the calling of just three witnesses, the 34-count federal criminal case against former Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald went to the jury at 5:45 p.m. Tuesday afternoon, October 31.
But that wasn’t until after court was delayed for nearly a half hour by an alarm and recorded message: “Fire Emergency reported in the building. Please evacuate the building by the nearest exit. Do not use the elevators,” that went off repetitively for nearly a half hour after beginning at 4:45 p.m. To our knowledge, Fire and Rescue first responders found no fire in the building this Halloween day. But it was a pretty spooky interlude on the final day of the off-again, on-again trial that began on August 21 and saw two delays, the second one of a month, due to various involved party health issues.
Perhaps the most interesting legal development of the day was defense counsel Abigail Thibeault’s closing argument focus on what the prosecution had dismissed as one of the more unbelievable defendant explanations of her movement of EDA money to her own use. That was the defense-alleged secret “Voluntary Settlement Agreement” between the EDA Board of Directors and McDonald to assure her silence and non-suit over what she claimed were sexual harassment and sexual assaults by County officials, including former County Administrator Doug Stanley, among other high-profile local officials. The price of that silence was an alleged $6.5 million the defense contends was agreed to be secretly paid to McDonald, thus explaining some of the movements of EDA assets to her own use that the prosecution presented as evidence of fraud and criminal misdirection of EDA money.
“This is about sexual assault … This story is much bigger” than what the prosecution had presented to them, Thibeault told the jury of the notion that an economically and sexually privileged, male-dominated county elite had set McDonald up to take a fall for challenging their dominance.
Lead prosecutor Sean Welsh countered Thibeault’s assertions in rebuttal, telling the jury the Voluntary Settlement Agreement theory was countered by multiple pieces of evidence the prosecution had presented to them. He pointed to other prosecution witness-testified false allegations McDonald is alleged to have made to explain some of her financial transfers to achieve real estate and other transactions. Among those were Larry Tuttle’s alleged financing of several McDonald/Da Boyz LLC real estate deals he testified he had no financial assets to accomplish. Why lie about such things if there was a simple explanation, such as the EDA Board of Directors authorizing the transfer of assets to McDonald? Welsh asked the jury.
After the 10th Western District of Virginia federal courthouse building was evacuated and cleared of any fire and the prosecution’s closing rebuttal was completed, a final round of procedural instructions from Judge Elizabeth K. Dillon was given to the jury. The jury was then sent out to select a foreman and determine whether they wanted to begin deliberations immediately or return the following day. After 10 minutes, the court was informed the jury had decided to return on Wednesday to begin the final chapter of this trial. Questioned about a preferred starting time by the judge, they opted for a 9 a.m. start Wednesday morning.
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 charges including bank fraud, wire fraud, aggravated identity theft, and money laundering. Those charges are related to the alleged misdirection of an estimated $ 26 million in municipal and EDA assets to personal use and enrichment of McDonald and alleged co-conspirators.
Judge Denies ‘Renewed’ McDonald Defense Mistrial Motion – Defense Case to Open Tuesday, October 31
Following a closed evidentiary hearing Thursday afternoon, October 27, Judge Elizabeth K. Dillon denied a “renewed” defense motion for a mistrial due to repeated delays in the federal criminal prosecution of former Front Royal-Warren County Economic Development Authority Executive Director Jennifer Rae McDonald. The defense initially called for a mistrial on September 26. While taking that motion under advisement, Judge Dillon expressed a preference for the alternative of “briefly suspending the trial” to accommodate apparent health issues with the defendant and resuming it as an alternative to a mistrial. The trial is now scheduled to resume at 8 a.m. Tuesday morning, October 31, with the anticipated opening of the defense case. November 1 has also been set aside to accommodate the defense presentation, any motions, closing arguments, and jury instructions before the case is handed over to the jury for deliberations.
The scheduled start of what is expected to be a brief defense presentation, perhaps taking less than a full day with three or less witnesses being called, was again delayed on Friday, October 27. The scheduled 10th Western District of Virginia federal court starting time of 8:30 a.m. was adjusted late Thursday to a 3 p.m. Friday start. And shortly after that late Friday start and the beginning of the remote connection of several witnesses to be called during the hearing, Judge Dillon asked if either counsel wanted to request that the hearing be closed to the public.
“Yes, your honor,” was the reply from the court-appointed defense team of Andrea Harris and Abigail Thibeault. It might be noted that defendant McDonald was again not present at the defense table, as she had not been after lunch break the previous day. A clue as to that absence and the defense request for a closed hearing may have been heard during the beginning of the remote witness connection process. One of those witnesses was referred to as “doctor” and a comment concerning “the name of the patient you’ll be discussing” was made. According to the PACER court website, a total of five people testified during the closed hearing of October 27, all of them cited as doctors: “1. Dr. Miklos Szentirmai – via Zoom 2. Dr. David Saenz – via Zoom 3. Dr. John Craig Henry – via Zoom 4. Dr. Anne Bagley 5. Dr. Melanie Matson – via Zoom …”
As noted in yesterday’s story on the closing of the prosecution case and delay in opening the defense case, defense counsel told the court that their client had a cardiac pacemaker installed recently in the wake of health issues leading to a recurring elevated heart rate and blood pressure that led to a delay of a month, Sept. 26 to Oct. 26, in the trial.
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 Jennifer McDonald on charges including bank fraud, wire fraud, money laundering, and aggravated identity theft. Those charges are related to the alleged misdirection of an estimated $ 26 million in municipal and EDA assets to personal use and enrichment of McDonald and alleged co-conspirators. The latter are yet to be indicted criminally at the federal level, likely due to speedy trial issues. A number of alleged co-conspirators were charged criminally at the state level, with charges then dropped by Warren County prosecutors to prevent defense motions for dismissal due to looming speedy trial statute violations. The case has been defined as “complex” due to the amount of evidentiary material involved, cited at well over a million pages of doc