UPDATE: McDonald family members, business associates added as defendants in EDA civil suit

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.

Sands-Anderson attorneys Cullen Seltzer, left, and Daniel Siegel, center, with new EDA Board Chairman Ed Daley to right, presented grounds for specific amendments to the EDA civil litigation Friday morning. Among the filed amendments are seven new defendants the EDA will seek recovery of allegedly misdirected EDA assets from.

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 …”

The EDA office complex on Kendrick Lane was the launching pad for an expanded civil litigation filing on Friday, Oct. 4. The EDA has asked that McDonald be held in contempt of civil court for moving an alleged property frozen by the court.

“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.

Tom Sayre and his defamation attorney Tim Bosson after winning a $20,000 judgment against Jennifer McDonald; McDonald’s civil attorney Lee Berlik is under civil scrutiny for receipt of $10,000 of allegedly stolen EDA assets he refuses to return.

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.

The EDA civil and criminal cases continue to build around the actions of its former executive director, Jennifer McDonald. Many wonder if the investigations aren’t missing some higher profile, peripheral figures from the local, state and even federal levels. McDonald is currently free on bond.