In the wake of a letter requesting pending September hearing dates in Jennifer McDonald’s $600,000 civil defamation lawsuit against Tom Sayre be removed from the Warren County Circuit Court docket it appears that legal action is heading toward non-suit status.
The docket-removal letter to Judge Bruce D. Albertson is signed by the former EDA executive director’s attorney Lee Berlik and Sayre attorney Margaret Ward. The Harrisonburg-based Albertson, appointed when no local judge was available to hear EDA-related cases due to recusal, pending recusal and/or promotion to higher court, has yet to rule on the docket removal request. But it would seem unlikely the jointly signed request would be denied.
Shenandoah District Supervisor Sayre’s attorney Peggy Ward verified she believed the plaintiff move to drop the suit related to her request to depose McDonald in order to help prepare her defense case. Berlik did not respond to a request for comment prior to publication.
The plaintiff-initiated request to remove the case from the court docket comes on the heels of two defense filings in the lawsuit, the above-cited request to depose McDonald regarding the case, and the defense’s consequent request McDonald’s lawsuit be stayed pending resolution of her criminal cases.
That defense request for a stay was based on information in a July 15 email from McDonald’s civil case attorney that she would invoke her Fifth Amendment right not to self-incriminate in response to any deposition by defense counsel.
McDonald has had 14 felony indictments filed against her related to the March 26 EDA civil suit seeking recovery of over $17 million in allegedly embezzled or misdirected EDA assets, an amount now amended to over $20 million. On December 20, 2018, McDonald resigned her EDA executive directorship under increased scrutiny of her actions in that capacity.
McDonald filed her high-dollar defamation suit against Sayre on February 19, just short of five months to the day – September 21, 2018 – after Sayre filed a slightly smaller $25,000 defamation suit against McDonald in General District Court. Completion of trial testimony in Sayre’s defamation case is scheduled for September 11, when it is anticipated both Sayre and McDonald will be called to testify.
Called by plaintiff attorneys in that trial on Friday, August 2, McDonald invoked her Fifth Amendment right regarding any questions related to EDA affairs.
Both defamation cases revolve around McDonald’s June 15, 2017 report of a landscape stone throwing vandalism at her Faith Way county home just east of the Front Royal Town limits.
“This civil lawsuit is …indisputably intertwined with the criminal case pending against Ms. McDonald,” Ward wrote in her August 12 request the McDonald suit against her client be stayed pending resolution of McDonald’s criminal cases. “Mr. Sayre asserts that the issues of defamation arise from actions that Ms. McDonald took to deflect attention away from investigations into her actions as Executive Director of the Warren County Economic Development Authority, which now form the basis for the pending criminal charges,” Ward added.
Sayre’s civil case defense attorney verified that her client’s stance is that it is likely that McDonald created the vandalism incident reported on June 15, 2017, to deflect attention from the financial actions she is now both civilly and criminally accused of performing in her role as EDA executive director.
In support of her request for a stay of McDonald’s defamation case against her client Ward wrote, “Ms. McDonald is the complainant in this case and has the burden to prove both the liability and alleged damages. She has announced, though, that she will not testify to support he claims. As a result, the Defendant is unable to obtain the facts necessary to determine whether the elements of the underlying claim of defamation have been proven and what defenses he can provide.”
And now it appears that with a signature from Judge Albertson, it will no longer be necessary for Mr. Sayre to develop that defense.
How this development may impact the conclusion of Sayre’s defamation case against McDonald on September 11 remains to be seen.
Sayre attorney in that case, Tim Bosson, estimated his client would testify for a half hour to 45 minutes under direct examination, with a similar timeframe anticipated for cross examination by McDonald attorney Lee Berlik.
And while McDonald invoked the Fifth Amendment in response to five of eight questions asked by Sayre’s counsel on August 2, one would anticipate that if called by her own attorney on September 11, it would not be to plead her Fifth Amendment right.
Judge denies EDA civil suit defendants’ motions for removal from case
In a written ruling signed January 24 and filed in the Warren County Circuit Court Clerk’s Office on January 27, Judge Bruce D. Albertson denied a host of EDA civil litigation defense motions for removal from the case as alleged co-conspirators with central defendant, former EDA Executive Director Jennifer McDonald.
Among defendant attorneys involved in the December 12 motions hearing were those representing April Petty, Jesse Poe, Donald Poe and his Earth Right Energy (ERE) solar panel installation company, and ITFederal and its principal Truc “Curt” Tran.
The basis of those defense counsel arguments for dismissal of their clients from the civil case primarily revolved around the plaintiff’s notion of an overarching conspiracy that somehow links the various defendants to central figure and former EDA Executive Director McDonald; and that there are legally definable contractual breaches making those defendants individually liable for funds that came their way through McDonald.
At the December motions hearing christened “Groundhog Day” by one media rep present (guilty as charged) for the bulk of four-and-a-half-hours of repetitive legal arguments put forth by each defense attorney on essentially identical claims for removal of their clients from the civil case, lead plaintiff attorney Cullen Seltzer’s counter was briefer.
That was because Seltzer’s reply was essentially a one-response-fits-all argument. That response was that there did not have to have to be direct knowledge among all defendants of each interlocking conspiracy McDonald is alleged to having been a party to, for that conspiracy to exist to the benefit of separate defendants in separate transactions. Seltzer scoffed at the idea of McDonald as “a rogue tornado” distributing EDA assets to various defendants without a general common knowledge that something illegal was transpiring to each defendant’s benefit.
“I deny each Demurrer and Plea in Bar for the reasons cited by the plaintiff,” Judge Albertson wrote in his brief, three paragraph ruling.
However, the judge also ruled that a plaintiff claim of “Breach of Fiduciary Duty” against all defendants, cited only McDonald and her former Administrative Assistant Michelle Henry for such action.
“Plaintiff alleges that this count applies to all defendants due to the conspiracy count. The manner in which this count is written, however, names only Ms. Henry and Ms. McDonald as parties that have breached this duty. I find that his count does not apply to the other defendants as written in the Amended Complaint,” the judge ruled.
The judge also continued a decision on Earth Right Energy’s “Plea in Bar and separate Motion for Sanctions” based on other arguments heard December 12. There was disagreement between ERE attorney Ryan Huttar and EDA counsel on the validity of contracts between the EDA and ERE in amounts over $10,000, which is most, if not all involved contracts.
EDA counsel noted that any EDA transaction or contract over $10,000 had to be approved by the EDA Board of Directors, which EDA counsel stated did not happen in the Earth Right Energy cases. However, Earth Right attorney Huttar contended the company’s contracts, including a $27-million one with the Warren County Public School system negotiated while Greg Drescher was both an EDA board member and superintendent of schools, were legally binding.
It appears a decision on those arguments will require additional factual information to be brought to the court.
Economic Development Authority Board of Directors Meeting – January 24, 2019
The Economic Development Authority held their monthly Board of Directors meeting on January 24, 2020.
One of the topics was the sale of the Stokes Market (most recent the Main Street Market) to William Huck, owner of C&C Frozen Treats on Main Street in Front Royal. Huck has been trying to remodel the property he owns adjacent to C&C but because of costs higher than anticipated and issues with zoning and permitting, he has been exploring other options to open his newest business known as My Lagniappe – it’s a Louisiana expression that means ‘An extra or unexpected gift or benefit, such as that given to customers when they purchase something.’ If you know Huck, you know he always offers his customers a little lagniappe.
The solar panels on the roof of the EDA office building was also a point of discussions. The EDA is advertising for any party interested in purchasing the solar electric system currently stationed on top of the EDA Building at 400 Kendrick Lane, Front Royal.
The RSW Jail has said they are not interested in the solar panels. The cost of installation and unknown purchase price makes the project not cost effective.
Discussion also included workforce housing, the 2018 audit, Afton Inn renovations and the big one, running out of money by March.
Watch the EDA Board at work in this exclusive Royal Examiner video:
Town given okay to amend its civil suit against EDA, with some explanation
Following a conference call with involved attorneys at their respective offices at 8:45 a.m., Friday morning, January 24, Judge Bruce D. Albertson granted the Town of Front Royal leave to amend its current $15 million civil filing against the Front Royal-Warren County Economic Development Authority. The Town has 30 days to file an amended suit and the EDA will have the option of filing a demur to dismiss the amended suit as not factually supported legally.
The Town initially filed its suit seeking the return of $3 million of its assets believed to have been misappropriated as part of the EDA financial scandal, on June 21, 2019. That filing was described by Town Attorney Doug Napier at the time as largely precautionary to prevent any statute of limitations deadlines from being passed on yet-to-be-determined fraudulent EDA transactions utilizing Town assets.
Just over three weeks later on July 12, the suit was amended to $15 million, as previously reported, still without any elaboration on the sources of that number.
Of the January 24 judicial okay to again amend its suit, Town Attorney Napier said any coming amendment would “have to be legally cognizable” – or accompanied by legally supportable documentation. Napier said the Town had a scheduled meeting with its contracted auditor, Mitchell and Company, next week. That meeting may shed light on which direction, and how far in either, the Town’s amended civil suit against the EDA will next go.
The EDA’s civil litigation against what has grown to a total of 14 human and business entity defendants currently stands at $21.3 million. And despite his being dropped from the list of EDA civil case defendants in the wake of his death last spring from a possibly self-inflicted gunshot wound, electronic computer and phone records of former Sheriff Daniel McEathron have recently been subpoenaed from his estate in the EDA civil suit.
The initial amendment to the original Town claim against the EDA coincided with the Town’s pulling back from participation in the “EDA Reform Committee” and three-way EDA-Town-County joint meeting efforts geared toward fixing what had gone wrong to allow the alleged misappropriations and embezzlements circling the former EDA executive director, Jennifer McDonald, to happen over a number of years.
At the helm of the EDA for a decade prior to her December 20, 2018 resignation, McDonald has been the central figure in both the civil and criminal cases brought as a result of the Cherry Bekaert investigation of EDA finances begun in September 2018. She currently faces 34 financial felony charges brought by the special grand jury empaneled to investigate potential criminality tied to EDA finances in recent years.
Stated justification for one publicly voiced Town financial dispute with the EDA, the 4% bond interest rate the Town has been asked to cover on construction of the new Front Royal Police Department headquarters, has pointed heavily at “promises” made by McDonald. Those promises revolved around anticipation the FRPD project would qualify for the New Market Tax Credit Program offered municipalities for economic growth capital improvement projects.
However, as a non-job creating project the FRPD construction did not qualify for what would have been a 1.5% interest rate over the 30-year life of the bond issue with funding through the NMTC Program. As that dispute festers on the edge of Town-EDA litigation, the Town has refused to pay what appears to be an undisputed $8.4-million in principal payments bill the EDA has submitted to the Town on the FRPD project.
Written references in a Memorandum of Agreement and Resolutions of support of the NMTC funding cite “anticipation” of the program’s funding and support of that funding being pursued.
Despite late 2017, early 2018 recommendations of then Town Manager Joe Waltz, Finance Director B. J. Wilson and People Inc. NMTC Program Administrator Bryan Phipps that a guaranteed bank-offered 2.65%, 30-year interest rate would be preferable to competing with multiple municipalities for limited NMTC funds, a council majority chose to hold out for the NMTC financing the FRPD project ultimately did not qualify for.
However, some Town officials have pointed to verbal promises made by McDonald that the funding was in place, as a basis for the Town claim it should not pay more than 1.5% interest rate tied to those promises.
A “legally cognizable” argument on one Town claim against the EDA?
Time will tell.
EDA sells 404 Fairgrounds Road property
The Front Royal/Warren County Economic Development Authority (EDA) has announced the sale of its 404 Fairground Road property to Excelsior Enterprises.
Warren County businessmen Jack Donohue and Dan Beller are the new owners and will immediately begin converting it into state-of-the-art rental office space, complete with a kitchenette, printer, conference room, WiFi, coffee, and other amenities. This renovated space will be available by spring for small businesses and entrepreneurs. All parties interested in renting office space at this location are encouraged to call 540-692-0697.
The additional acreage at the site will also be developed into a new facility for Timber Works, Mr. Donohue’s expanding Warren County company. For nearly a decade, they have been serving the Shenandoah Valley and Northern Virginia regions, offering tree trimming and removal, land clearing, stump grinding and forestry mulching. Timber Works prides itself on quality, safety, and customer service. The company is highly rated on Google and Yelp and has received the Angie’s List Super Service Award 3 years in a row. Their website is https://timberworksva.com and they can be found on all major social media platforms. Timberworks has five employees and plans to add another crew in 2020.
“We’re excited to sell this property to Excelsior Enterprises and look forward to seeing this property develop into new space for start-up and small business and expanded operations for Timber Works”, said Doug Parsons, Executive Director of the WCEDA. “We’re working hard to sell our properties and shore up our financial situation”, Parsons said. “On behalf of the EDA’s Board of Directors, we want to thank Mr. Donohue and Mr. Beller for their investment in this property and in Warren County.”
All proceeds of this sale will go toward paying down the EDA’s debt.
Supervisors ponder EDA financial needs as the ‘Ides of March’ approaches
The full Front Royal-Warren County Economic Development Board of Directors was present Tuesday night, January 14, in support of its officers’ presentation of its financial status to four of five Warren County Supervisors, Tony Carter absent. That status, as reported during the EDA’s January 10 Board meeting, is the likelihood of an inability to continue meeting monthly debt service payments and operational expenses at some point in March.
Might that date be the mid-month “Ides of March” that laid Caesar low in 44 B.C.? It would be fitting as online research indicated that March 15 “Ides” date was also notable as the ancient Roman calendar “deadline for settling debts”.
However, legal variables impacting EDA operations and debt service obligations cited by County Attorney Jason Ham indicated that EDA’s cannot declare bankruptcy and must remain operational until their bond issues and debts are resolved. Other information presented at the Tuesday Supervisors work session indicated that were the EDA to remain unfunded when it hits its financial wall in March, the debt service obligation would fall to its controlling municipality, in this case, primarily at least, Warren County. The total EDA debt on past loans and credit lines on projects for the Town and County was cited at $41 million.
Parsons later told Royal Examiner that the County has already been subsidizing the EDA’s debt service payment on the Baugh Drive warehouse property. And as reported Tuesday, Truc “Curt” Tran continues to cover $42,160 monthly on the EDA’s $10 million ITFederal bank loan.
So, it would appear the County will end up paying much of that EDA debt one way or the other. EDA Executive Director Doug Parsons later verified those net monthly expenses at $90,038.27 in unsubsidized debt service payments and approximately $40,000 in operational costs, for a total pending monthly EDA budget need of just over $130,000.
Of course, as EDA Board Vice Chairman Jeff Browne told the supervisors Tuesday evening, the above “Ides of March” EDA insolvency scenario will occur “if nothing changes” in the EDA’s financial situation.
Things that could push that financial wall back are the sale of a number of properties the EDA is currently marketing – some prospects have been cited – or the Town of Front Royal beginning to settle its unpaid and undisputed debt of nearly $8.8 million to the EDA for construction of the Front Royal Police Headquarters.
Several EDA board members, primarily Asset Committee Chairman Greg Harold, have publicly accused the Town government of acting in bad faith in withholding scheduled FRPD construction invoice payments from the EDA which oversaw and financed that project. The Town is disputing the interest rate on the FRPD project but not the amount due in principal.
In the audience Tuesday night were three Town officials, Mayor Eugene Tewalt, Councilman Gary Gillespie and Interim Town Manager Matt Tederick. Tewalt has publicly called for good faith negotiations on the Town-EDA financial situation rather than the increasingly hostile and expensive litigation the Town Council has turned to in recent months.
While the Town of Front Royal withdrew from EDA board appointment authority when the County assumed its share of Town operational funding several years ago as part of its North Corridor Agreement compensation arrangement with the Town, Front Royal continues to share in debt service payment obligations regarding its EDA projects.
However, in its current budget and projected in the FY 2021 budget summary presented to the town council on Monday, annual debt service payments of about $141,000 to the EDA have been re-budgeted to pay for Town legal and auditing fees regarding its civil litigation against the EDA.
Town officials have yet to provide any documentation on the Town’s civil claim of “up to $15 million” in alleged assets lost or misdirected as part of the EDA financial scandal under previous EDA executive and board leadership.
If the Town Council’s intent toward the EDA remains hostile and litigious, newly-elected Shenandoah District Supervisor and newly-appointed Board Chairman Walter Mabe gave a glimpse into his perspective when he said, “To turn our backs on our EDA is ludicrous.”
Following the first of its newly-scheduled second Tuesday work sessions, the Board of Supervisors took the looming EDA funding needs, as well as a request for reimbursement of $36,827 in legal fees to several past and two remaining (Blanton and Patteson) EDA board members regarding dismissed misdemeanor charges related to the special grand jury investigation into the EDA financial scandal.
Several board members said they were torn on how to approach the request. It was noted that EDA board members serve without compensation. And it was observed that a precedent was indicated when the board agreed to compensate its own members served on the same now-dismissed misdemeanor misfeasance and nonfeasance charges.
Several options were discussed, including covering a portion of the request or making the County’s contribution to those EDA legal fees a loan, that the EDA would pay back when able.
See these discussions and public comments about the EDA in the exclusive Royal Examiner video:
McDonald has bad day in civil court – how bad remains to be seen
Former Front Royal-Warren County Economic Development Director Jennifer McDonald remains free on bond.
On Friday afternoon, January 10, former Front Royal-Warren County Economic Development Director Jennifer McDonald was found guilty of civil contempt regarding the movement of a piece of property frozen by the court during earlier EDA civil litigation hearings; and had a default judgment regarding a failure to respond to civil court orders for information on her two real estate companies, go against her as well.
McDonald was fined $375 to cover County-EDA legal costs pursuing the civil contempt judgement, and ordered not to repeat what she and her sister Gail Addison into whose name the frozen real estate parcel was moved, testified was a simple mistake. Those two sanctions were all EDA attorneys were seeking in the way of punishment on the civil contempt ruling.
As for the default judgement for failing to heed court-requested documentation on her two real estate companies, DaBoyz and MoveOn8 named along with her as three of 14 defendants in the amended EDA civil litigation, a date of April 17 was set for attorneys to argue McDonald’s liability on that ruling.
Judge Bruce D. Albertson will hear, not only those civil case arguments on April 17, but further motions arguments from a number of EDA-related criminal case defendants who were in court on the 1 p.m. docket.
On Friday afternoon Judge Albertson also granted the Commonwealth’s request to nolle prossed (drop) all current EDA-related criminal charges against Earth Right Energy principal Donald F. Poe.
Prosecutor Michael Parker restated the reasons cited in his written submission of the previous day, regarding the amount of material recently received concerning the Poe prosecutions and gaps in that material and a lack of time available with Poe’s first criminal trial on a count of perjury slated to begin January 22.
Poe attorney William Ashwell did not object to the prosecution’s request.
“We could jump up and down and say we want (the charges) out altogether now … but functionally this is a great example of the State acting as gatekeeper (of legal processes),” Ashwell told the court.
The amount of material involved in the EDA civil and criminal litigation – cited as approaching a million pages – played into many of the motions arguments heard Friday. Like Special Prosecutor Parker of the Harrisonburg Commonwealth’s Attorney’s Office before him, EDA civil counsel Cullen Seltzer told the court that the amount of involved material and documentation was in issue in their respective cases.
Seltzer said the volume of material made it impractical and prohibitive cost-wise to reproduce traditionally in hard copy. He said a data base was being created with portions flagged to different defendants’ names to ease the online search process.
In arguing against the civil contempt charge against his client, McDonald attorney Peter Greenspun, pushed into dual criminal and civil case duties due to McDonald’s financial problems that led her initial civil case attorneys to withdraw, pointed out once the real estate movement mistake was discovered, the sisters’ corrected their mistake.
“When the attorney said, ‘wait, can we do this,’ she did everything to restore the situation without court intervention,” Greenspun told the court.
Greenspun argued that the involvement of local attorney David Crump in the transaction indicated it was, in fact, a mistake rather than an act of contempt of a court order installed by initial EDA Judge Clifford “Clay” Athey Jr.
“This was not done in a parking lot or a jail cell – her conduct was not contemptuous; it was a mistake that was corrected,” Greenspun told the court.
However, EDA co-counsel Lee Byrd pointed to Addison’s own testimony to argue that deceit was a motivation in the transfer. Addison said the move was made so she, a former real estate agent, could market the parcel in her name rather than her sister’s due to “the bad name” McDonald had developed as a result of the EDA litigation.
And while Greenspun pointed out the jailed McDonald was not present for any of the three-day hearing at the end of which Athey froze some McDonald real estate assets, EDA counsel pointed to the courthouse documentation on the court order freezing McDonald assets and scoffed at the idea the experienced real estate agent wouldn’t know how to find out which of her assets had been frozen by the court.
“Their only excuse is ‘I wasn’t aware’ – they can’t say the order didn’t exist,” Byrd told the court.
And it was the plaintiff argument that held sway with the judge.