Many have wondered when or even if prosecutors and state investigators guiding the Warren County Special Grand Jury’s look into criminality tied to the Economic Development Authority financial fraud investigation would expand its focus beyond a tightly knit circle surrounding former EDA Executive Director Jennifer McDonald.
On Tuesday, September 24, they got an answer, if not precisely the one many citizens critical of the political and economic status quo here were hoping for.
That answer was a total of 42 indictments, three each against 14 new players, including the entire elected Warren County Board of Supervisors, the top county administrative official and recently departed County and EDA attorney, as well as a mix of former and sitting EDA Board of Director members.
The disappointment for some was that those indictments were all misdemeanor charges related to an absence of due diligent oversight of EDA affairs, specifically over the last four months of 2018 regarding the continued administrative authority of Jennifer McDonald. (See linked story below)
The bookings at the Magistrate’s Office of the Rappahannock-Shenandoah-Warren County Regional Jail (RSW Jail) didn’t even generate the orange jail jumpsuit mug shots many social media denizens would have likely framed for posterity.
But while County officials rightfully face scrutiny for their failed due diligence, the Town of Front Royal governmental apparatus has thus far escaped unscathed, at least regarding criminal liability and even the level of public criticism aimed its way.
No Front Royal Town official has yet been indicted for criminal negligence regarding financial oversight of EDA operations; and to our knowledge there is no “recall them all” petition being circulated against the Town Council.
Three years ago, it was an overwhelming majority of Council that threw a defensive and protective shield around both McDonald and two of the more implausible projects she was instrumental in bringing forward.
In fact, those two projects, ITFederal and Workforce Housing, account for nearly $11 million, $10 million and $650,000 respectively, of the $21 million in EDA assets alleged to have been either misdirected by McDonald or moved under false pretenses during her executive oversight.
But some Town officials have claimed Front Royal has nothing to do with EDA operations since the County took over the Town’s portion of the EDA’s annual operational funding in 2012.
But as Royal Examiner has reported previously, that notion is questionable at best with much of the EDA’s work being done on behalf of the Town on projects inside the town limits. ITFederal, Workforce Housing, the Afton Inn and new police headquarters construction project come to mind.
If that wasn’t the case how do Town officials explain filing suit against the EDA to recover as much as $15 million in Town assets they contend were misdirected, lost or acquired under false pretenses? Do they think McDonald snuck into a secret town vault to pick the lock or hacked into Town bank accounts and sent their $15 million to a secret offshore location?
No, if experience tells us anything chances are that if McDonald had asked the Town Council for $15 million they would have just given it to her with a pat on the back.
In fact, that’s exactly what Council did in 2015 when McDonald came and asked for a $10 million “bridge” loan to help prop up the EDA’s case with First Bank & Trust to finance a $10 million loan to ITFederal through the EDA. Council was even kind enough to extend that initial one-month loan taken out of an investment account generating nearly $4,000 of monthly interest for two additional months without fee compensation for lost interest revenue beyond the first month.
It seems very possible that without that three-month Town handover of the desired ITFederal loan amount the bank loan for ITFederal would never have been achieved, reducing the EDA’s claimed losses by almost half.
But when Councilwoman Bébhinn Egger warned her colleagues that ITFederal did not appear to be what it was purported to be financially or from a business standpoint by McDonald, Congressman Robert Goodlatte and the company’s CEO Truc “Curt” Tran the reaction was not one of cautious due diligent verification.
Rather, the unanimous consensus of Egger’s colleagues was to either ignore or berate her, not to mention your then newly created online news source, for telling them things they didn’t want to hear – even if as it turned out, they were verifiably true at the time – as in no $140 million government contract basis upon which to create 600 high paying tech industry jobs as part of a $40 million ITFederal investment in this community.
The day after the County and EDA misfeasance and nonfeasance misdemeanor bookings the Town of Front Royal issued a pat-us-on-the-back press release in which Interim Mayor Matt Tederick lauded the town government’s role in launching the Virginia State Police investigation into EDA finances.
“Due to the watchful eyes of the Town Government, potential financial irregularities involving the EDA were discovered in the late spring and early summer of 2018. The Town Council swiftly turned their findings and suspicions over to the Virginia State Police, who in turn immediately commenced an investigation,” Tederick states, adding, “The citizens need to rest assured that the Front Royal Town Council will continue to pursue its lawsuit against the EDA and any others in order to hold those responsible for the Town’s losses accountable. The public’s continuing confidence in Town government is greatly appreciated and I might add, warranted.”
As far as ascertaining responsibility for any Town losses, both current and past councilmen and mayors over the past five years might begin by looking in the mirror.
As for “continued confidence”, as mentioned near the end of our story on a Council initiative to explore creation of its own EDA, if Tederick is referencing the work of town staff, as opposed to all but one of its elected officials (Egger) in recent years, he may be on to something.
After all, in June 2017 Town Police investigators began to develop suspicions that some reported criminal actions targeting the EDA offices and its then executive director had been staged from the inside.
And about a year later Town Finance Director B. J. Wilson did discover an eight-year history of over $291,000 in Town debt service overpayments to the EDA that finally set the process of EDA financial scrutiny in motion.
But that scrutiny was a long time coming, about 2-1/2 years after council was warned by one of its own that things appeared horribly amiss in some EDA projects. And the scrutiny of 2018 did not generate from any Town Council initiative targeting the EDA, but as noted above from staff discoveries while exploring Town finances that landed a “smoking gun” of precise evidence on Council’s lap.
It was Wilson, Town-contracted auditors and the Town Attorney who took the point in confronting McDonald, EDA Board Chairman Greg Drescher and EDA Attorney Dan Whitten over those debt service overpayments of nearly $300,000 on August 23, 2018. It was at that meeting during which the term “fraud” may have been first broached regarding EDA finances.
That mid-2018 meeting between Town and EDA officials led to Drescher’s resignation as EDA board chairman the following day. It was also likely a driving factor in the County’s hiring, on behalf of the EDA, an investigative public accounting firm, Cherry Bekaert, to begin a probe into irregularities within EDA finances.
It was also a meeting that, as Tederick observed, led to the launching of a State Police investigation. But by that point, not to forward staff’s information on EDA financial irregularities to law enforcement for scrutiny might have eventually been seen as indictable as a more serious felony charge of complicity in a cover up of financial fraud.
As for that State Police investigation, one might contend it was begun a year earlier by the Front Royal Town Police. But that investigation was allowed to be shut down in 2017 at the request of EDA Board Chairman Drescher to allow, first the EDA board, then its executive director to control the investigation of alleged crimes targeting the EDA and its chief executive through a hired private investigator.
It was a request and decision that allowed the alleged EDA financial subterfuge, whatever its source, to go unchecked for an additional year and a half.
Accountability – where?
But beyond an honest self appraisal of its past complicity in throwing a protective shield up against scrutiny of EDA projects and its executive director’s assertions about them, should town officials be vigilant about past EDA activities that may have targeted more of its assets versus those of the County? – Certainly.
But why not continue the joint reform process the interim mayor and council propelled forward, rather than just withdraw from it? After all, new EDA Executive Director Doug Parsons has promised full cooperation in determining an accurate appraisal of the Town’s losses within those EDA losses financial fraud investigators have reported being misdirected through EDA operations over a number of years.
And we would suggest the interim mayor and council not continue a course of self-delusional praise and finger-pointing that tries to minimize the Town Council’s own long-term lapsed due diligence regarding EDA affairs it was directly involved in facilitating.
And speaking of that involvement, the media asked former EDA/County Attorney Whitten why the $10 million ITFederal loan the Town was so instrumental in helping achieve was included in the EDA civil litigation for recovery even though it is current on its rather lax terms.
“Because it was acquired under false pretenses,” Whitten replied following an EDA board meeting three months ago.
Whitten’s response echoed the above-referenced, ignored and even vilified warnings three years earlier that something appeared amiss in the EDA’s representations about ITFederal.
So “warranted continued confidence” may be a stretch, at least as it applies to elected Town officials over the past three to five years.
Nonetheless it appears Town officials may avoid the embarrassment of criminal charges, not to mention a high degree of public anger, for their long pattern of failed due diligence regarding oversight in their dealings with the EDA.
The answer we believe is two pronged legally: first, a statue of limitations on misdemeanor offenses; and second what we would contend was an unnecessary relinquishment of the Town’s authority to appoint two of the seven EDA board members based on the EDA’s fair funding formula split on Town-County investment in EDA operations.
As for a potential third prong in the Town’s escaping the extreme level of public scrutiny and recall petitioning aimed the County’s way, a primary social media purveyor of that public anger has not threatened to sue the Town for millions of dollars, so a public shaming there may have less interest.
But back on the legal side, note that the three indictments filed on the 14 County and EDA officials on September 20 for which they were booked on September 24 and 25, all involved EDA transactions between September and December 2018. Those charges involve only $309,000 of the allegedly misdirected or embezzled $21.3 million being sought for recovery by the EDA in civil litigation.
What about liability for a lack of due diligent oversight during the movement of the other $20.99 million, particularly that $10 million ITFederal loan the EDA now claims was acquired under false pretenses?
There is likely to be none – because misfeasance, nonfeasance and even malfeasance in the conduct of public office are misdemeanor criminal offenses. And there is a one-year statute of limitations on misdemeanor offenses. Also in the September to December 2018 timeframe, the Front Royal Town Council did not have appointment authority of EDA board members.
That is because when the County assumed responsibility for the Town’s 34% portion of the EDA’s annual operating budget in 2012, the Town Council allowed its appointment authority of two of the seven EDA board members to be withdrawn.
Was it a necessary condition? – We would contend not.
Because that County assumption of full annual operational funding from the previous 66%-34% County-Town split was made as part of the long and ongoing negotiations on two fronts: double taxation of Town citizens on certain services provided countywide; and compensation to the Town for its extension of central water-sewer utilities into the North Commercial-Industrial Corridor outside the town limits without annexation.
So if the County is essentially saying either, “We are going to stop the double taxation of Town citizens for countywide services” or “We owe you more compensation for your lost commercial tax revenue due in large part to a Town-County North Corridor compensation arrangement struck down by a Circuit Court judge, and this is part of how we’ll do it,” why would the Town Council agree to withdraw or reduce its past oversight of EDA operations it remained deeply involved in?
Whatever the reason, in 2012 the Town Council did agree to relinquish its EDA board appointment authority, and thus direct supervisory authority over EDA operations. In fact, that relinquishment is referenced in motions filings surrounding the EDA’s claim of sovereign immunity in response to the Town’s $15 million civil action against it.
“That the Town of Front Royal voluntarily waived its right to control the EDA, contrary to the statutory mandate, does not create an actionable fiduciary duty to (the Town’s) benefit,” EDA attorneys wrote in reply to the Town’s opposition filing on the EDA claim of institutional sovereign immunity.
However those arguments play out at a November 8 motions hearing and whether that “voluntary” waiver of its EDA oversight right was a bad decision or not, it has paid off for Town officials in an unexpected way.
Because by allowing the County to assume full EDA board appointment authority, that 2012 Council may have saved its 2015 to 2018 successors from legal liability for the absence of Council’s own due diligence in its oversight of its EDA affairs. And while like the County and EDA officials who were indicted, that misdemeanor liability would have only extended back a year and involve an estimated $309,000, it was a long-term failing the Town itself alleges led to the misdirection of up to $15 million in Town assets.
Regardless, unlike County and EDA officials, in the absence of direct authority to limit the EDA executive director’s conduct of her office over those last four months of 2018, the Front Royal Town Council appears poised to skate home free of any legal liability for its own lapses of judgment regarding its business dealings with the EDA in recent years.
And without “smoking gun” evidence of payoffs to look the other way or shared profiteering from the alleged EDA financial fraud under legal and civil scrutiny, it would appear the worst offense those not indicted for illegally moving or receiving EDA assets can be charged with is failed due diligent oversight, and that within that one-year misdemeanor statute of limitations. And for the above cited reasons it would appear that such charges could only come on the County and EDA sides of the equation, as it did on September 24.
So more than any proactive due diligence by elected Town officials generating “continued confidence”, legally on the failed municipal oversight front you might say it just pays to be lucky timing wise; not to mention have a voluntary withdrawal of EDA board appointment authority in your pocket. I guess you could also say that County generated initiative to acquire additional control of EDA board appointments for its added operational financial contribution kind of backfired long term – because misery loves company, right?
Poe joins EDA civil defendants in motions to nullify civil liability verdicts; Tran counsel granted additional time to file their motion to overturn jury verdict
After expressing some initial reluctance to invest more in legal fees attempting to overturn a Warren County Civil Court jury’s ruling of approximately $1.3 million in base ($945,000) and punitive ($409,800) damages against him and his Earth Right Energy (ERE) company, Donald Poe joined the line of EDA civil case defendants seeking to have Judge Bruce D. Albertson overturn jury liability verdicts rendered in July. The Poe/ERE “Motion To Set Aside Jury Verdict Or In The Alternative To Award A New Trial” was received and filed in Warren County Circuit Court Clerk’s Office on Tuesday, September 6.
The rationale for that motion was along the lines of previous filings by counsel for April Petty, William Lambert, and a still pending one for Truc “Curt” Tran. The defendants’ contention is that the jury verdicts were based on evidence that did not meet a civil code standard to justify the finding of liability in each defendants’ case. Similar motions to strike plaintiff EDA evidence and their cases against the defendants were made by defense counsel and denied at the outset of several of those July trials. To those arguments forwarded by defense counsel on several occasions, Judge Albertson responded that it was “for the jury to decide” the relative weight of evidence to be presented.
In a related development, on August 25 over the objection of plaintiff EDA counsel, Judge Albertson granted Tran/ITFederal counsel’s request for additional time to complete its filing for overturning of the jury’s finding of compensatory liability of about $12 million-plus some interest against Tran and ITFederal. The judge set a new filing schedule of September 15 for defense filings, plaintiff responses by October 17, and defendant replies to plaintiff’s response by October 27. An initial defense motion to overturn filing date was set for 31 days from the July 28 jury verdict in that case. Running towards an August 28 deadline on that schedule, Tran counsel sought the additional time, as noted above, granted over the plaintiff’s objection.
As part of his order granting the filing extension for Tran/ITFederal, Judge Albertson ordered the defendants not to move substantial company or personal assets during the moves toward a final court ruling on the verdict: “Tran and IT Federal (on behalf of itself and on behalf of its wholly-owned subsidiary Lewisburg Way, LLC) shall not sell 943 Happy Creek Road before the court enters its final order, consistent with Code 55.1-400, which precludes fraudulent conveyances,” the judge began, adding, “Mr. Tran and IT Federal shall not dispose of, encumber, or waste any assets of IT Federal. In the same vein, IT Federal and Tran shall not gift, convey, assign, transfer or otherwise dispose of, encumber, or waste any personal assets to delay, hinder, or defraud the Warren EDA as a creditor.”
Motions to set aside the jury verdict of $125,000 of compensatory liability in April Petty’s case was filed with the court on July 28; and in William Lambert’s jury finding of $350,000 of compensatory liability, the motion to overturn was filed on August 18.
And the jury trial of Samuel North, cancelled in July following North’s filing of bankruptcy, has been rescheduled for October 25, beginning at 8:30 a.m. North is former EDA Executive Director Jennifer McDonald’s husband. The central figure in the EDA “financial scandal”, McDonald reached a no-fault settlement agreement in her civil liability case with the FR-WC EDA. She agreed to turn over $9 million in assets, largely real estate, to the EDA to settle their claims against her; while admitting no fault in her acquisition of those assets.
She still is facing criminal trial in federal court in the Western District of Virginia on multiple charges related to the investigation into EDA finances during her executive director’s tenure. Due to its complexity and the amount of involved evidence – cited at over a million pages of documentation – that trial originally scheduled for as many as five weeks this fall, has been pushed into May 2023.
See trial and verdict stories on the Royal Examiner website front page under the NEWS banner at sub-section “EDA IN FOCUS“.
FR-WC EDA finalizes $5.7-million sale of Baugh Drive warehouse to Shahi Foods
The Front Royal-Warren County Economic Development Authority (FR-WC EDA) is pleased to announce that Shahi Food, LLC is the new owner of 426 Baugh Drive in Stephens Industrial Park. The new property owners will relocate and expand their successful family-owned business to Warren County.
The FR-WC EDA originally purchased the property in 2018 and has since been exercising thorough due diligence and recruitment, which led to today’s announcement the contracted $5.7M sale of the property has been finalized. Shahi Food, LLC projects a $7M capital investment and a 5-year employment projection of 100 individuals and begins manufacturing operations at the Baugh Drive site in late 2022/early 2023.
Shahi is currently based in a nearby county and has been in business for over 30 years. They produce an ethnic ice cream bar called Shahi Kulfi in 6 flavors – chocolate, strawberry, cream, pistachio, mango, and coconut. They currently distribute to over 2000 retail outlets in 20 states and have a large market presence in New York, New Jersey, Texas, Ohio, and Virginia. Shahi is approved for retail sales in large grocery and warehouse stores in the US and has received approvals for European distribution of their products. Shahi Food, LLC’s parent company is Shadchem—an international food and consumer products group with a presence in over 16 countries.
“This announcement is the culmination of an intentional and active effort by the FR-WC EDA Board of Directors to bring companies to Warren County that provide quality jobs and values to our
community,” said EDA Chair Jeff Browne. “The sale not only brings jobs and investment to the area, but the proceeds allow the FR-WC EDA to pay down other debt obligations.”
“The County of Warren has had a long-standing partnership with the FR-WC EDA,” said County Administrator Dr. Edwin Daley. “We are incredibly excited about the recent announcement and look forward to having Shahi Food, LLC in the Warren County community for many years.”
About the Front Royal-Warren County Economic Development Authority
The Front Royal-Warren County Economic Development Authority (FR-WC EDA) aims to strengthen our community’s economic growth by fostering a friendly business environment and providing services to create and retain quality jobs in Warren County. The Authority also supports community tourism, recreation, and arts & cultural initiatives to offer a better quality of life for the County’s residents, workers, and visitors. Coordination with the Board of Supervisors, County staff, the Town of Front Royal, and State agencies are integral to promoting economic development and tourism throughout Warren County.
For more information, contact Jeffrey Browne, FR-WC EDA Board of Directors Chair, at 540-635-2182 or email@example.com.
Warren County EDA tackles multi-faceted August meeting Action Agenda
The Front Royal Warren County EDA held its monthly meeting on Friday, August 26, 2022, at 8 a.m. All five Board members, legal counsel, and the County Director of Economic Development were present.
The monthly meeting began with the election of officers, which was approved unanimously. The new officers are Chair Jeff Browne, Vice Chair Scott Jenkins, Treasurer James Wolfe, and Secretary Marjorie Martin.
As part of the Executive update, member Jim Wolfe suggested a future board retreat to discuss updating the Authority’s strategic plan. Jorie Martin provided an overview of an existing insurance policy for the FR-WC EDA office building at 400 Kendrick Lane. The Board approved restructuring the policy to provide appropriate coverage and cost savings on the space.
The Chair provided an update on the lease of Suite C at 400 Kendrick Lane. C-CAP will be occupying the suite for their operations starting September 1st.
Jeff Browne summarized a meeting he had with Chair of the Front Royal Economic Development Authority (FREDA), Rick Novak, who was in attendance for the meeting. One of the issues discussed that both Chairs agreed on is a joint EDA retreat to have an opportunity to meet each other in a less formal setting. Novak also provided information on the upcoming Festival of Leaves taking place in Downtown Front Royal on Saturday, October 15th.
Treasurer, Jim Wolfe, provided an update on monthly financial statements and the small business loan committee re-establishment.
The Warren County Director of Economic Development, Joe Petty, provided an update on current activities related to prospects, small business loans, annual audits, and marketing.
EDA’s legal counsel presented a by-law revision that would allow electronic meetings as permitted by the Virginia Code; and additional recommendations by the ad hoc committee consisting of Jorie Martin and Greg Harold. Upon review of the revisions, the Board unanimously adopted the revisions.
As part of new business, the Board approved rescheduling the September meeting, which will be held on Monday, September 26, 2022, at 8 a.m. at the Warren County Government Center Caucus Room.
The Board concluded the meeting with a closed session to discuss business opportunities, with no new business following the closed session.
EDA Board Chairman Jeff Browne reacts to July civil litigation results ordering total of over $13.35 million paid to the County Economic Development Authority
As noted in our lead story on the “Warren Economic Development Authority” (EDA) versus Truc “Curt” Tran and his ITFederal LLC company civil liability case result (See: Jury awards WC EDA $11.9 million-plus in civil compensatory claims against ITFederal and Truc ‘Curt’ Tran), involved players on the plaintiff’s side deferred to current EDA Board Chairman Jeff Browne for a reaction, not only to the Tran/ITFederal result, but a month in which four civil liability cases went the EDA’s way. After a day of reflection on this month’s civil liability trials, much of which he watched in the courtroom, often with other EDA board members, this is what Browne told Royal Examiner:
“As part of the Jennifer McDonald lawsuits, the EDA successfully sued six defendants this month in four civil jury trials and was awarded about $13 million in compensatory damages, $400,000 in punitive damages, and $75,000 in damages for statutory conspiracy. There will be additional civil trials in March 2023.
“The EDA’s main responsibility in these lawsuits is to recover assets that rightfully belong to the EDA and ultimately to the residents of Warren County. It’s a work in progress, but I’m pleased with the outcomes. Every defendant was found liable on multiple charges. Every defendant has to pay. A jury found that the EDA Board of Directors with oversight responsibility of Jennifer McDonald wasn’t negligent in retaining her as it took immediate steps after finding solid evidence of her misbehavior.
“But that isn’t the whole story. Members of the EDA Board were present on every day of every trial. We were impressed with the juries and Judge Albertson. Jury members listened attentively, took notes, and showed in their verdicts that they had a command of the facts in each case. Judge Albertson was fair to both sides of each case and did a good job of managing each trial. Prior members of the EDA Board, prior staff EDA members, a former county administrator, and former members of the Warren County Board of Supervisors all stepped up to testify and do their civic duty. We can be proud that our judicial system still works.
“The criminal process moves forward in other venues. In the meantime, some measure of justice is present in the jury verdicts in Warren County this month. For that, we are grateful.”
Coupled with the out-of-court “no-fault” settlement agreement with McDonald for an estimated $9 million in real estate assets, the courts have now ordered the return of $22 million to $23 million in assets to the EDA. At various points in the investigation into alleged embezzlement and misdirection of EDA assets between 2014 and 2018, the total involved amount has been cited from $21 million to $26 million. There have been significant legal fees involved, perhaps $6 million or more. But in the wake of this month’s results, it appears the EDA’s contracted civil counsel from the Sands Anderson law firm of Richmond are earning that money.
Asked for a reaction to the verdict, Tran and his attorney Gregory Melus declined comment. As noted in the above linked story on the verdict, Melus notified the court of his intention to file a motion to overturn the verdict as not supported by the evidence presented at trial, as have the other three involved civil case defense attorneys.
Jury awards WC EDA $11.9 million-plus in civil compensatory claims against ITFederal and Truc ‘Curt’ Tran
After five hours of deliberation beginning shortly after 9 a.m., at 3:30 p.m. Thursday afternoon, July 28, a Warren County Circuit Court civil case jury awarded the “Warren Economic Development Authority” (aka EDA, WC EDA, FR-WC EDA) a total of $11,919,313.38, plus some interest payments from defendants Truc “Curt” Tran and his ITFederal LLC company. The finding of liability against the defendants related to exchanges of money for Tran and ITFederals’ plan to develop a 30-acre parcel at the 148-acre Royal Phoenix Business Park portion of the former Avtex Superfund site in Front Royal. That seven-person civil case jury also dismissed all counterclaims by co-defendants Tran and ITFederal related to breach of contract and surrounding claims against the EDA.
However, the jury did not find the defendants liable on claims of Conspiracy and Fraud that could have led to significant punitive damages up to $350,000, or as high as triple the compensatory claim of $11.9 million if found guilty of statutory conspiracy indicating malice against the plaintiff. Tran was found liable on claims of Conversion, Unjust Enrichment, and Ultra Vires, the latter actions outside the authority of involved officials. ITFederal was found liable on claims Conversion, Unjust Enrichment, Ultra Vires, and Breach of Contract.
The breakdown of liability of the defendants was $1,499,986 against Tran, plus 3-1/4 years of interest on that amount accumulated since the March 2019 filing of the EDA civil actions against defendants alleged to have worked with former EDA Executive Director Jennifer McDonald between 2014 and 2018 to defraud the EDA out of an estimated $21-million. The $11.9-million claim of compensatory damages against Tran and ITFederal was the largest single portion of the EDA civil liability actions for recovery of lost assets. With approval of a bankruptcy court judge, McDonald settled EDA claims against her in an out-of-court “no-fault” settlement for what was cited as $9 million in real estate assets.
From testimony over four days of trial in the Tran/ITFederal liability case that $1.499-million finding against Tran related to EDA payments made to Tran under the pretense it was front money that would be reimbursed to the EDA by a $1.5 million Virginia Economic Development Partnership (VEDP) grant that was never acquired, or even applied for.
The finding of liability for $10,419,327.38 against ITFederal revolved around the $8,419,327.38 balance of a $10-million loan/promissory note the EDA gave the company to begin development of the ITFederal parcel behind the EDA offices in the old Avtex Administration building off Kendrick Lane. As noted in previous stories (see LINKS at end of story) on testimony and evidence presented during the trial, ITFederal was presented to the EDA Board of Directors in 2015-16 by then Sixth District Congressman Robert Goodlatte as not really needing the loan. Past EDA board members Greg Drescher and Ron Llewellyn testified that Goodlatte suggested the loan as a public relations move to illustrate Virginia’s positive work with the private sector to redevelop a former federal Superfund “brownfield” site.
Consequently, despite the written-in 30-year payback loan term, EDA officials believed it was actually being done as a short-term public relations effort, and would be paid back in a matter of months when what they believed was an existing $140-million ITFederal contract with the Nuclear Regulatory Commission (NRC) kicked in. A McDonald representation to her board that Tran would become an “anonymous donor” of $8-million to a proposed Criminal Justice Academy project then being worked on by the EDA, was seen as the start of that early repayment, the former EDA board members testified.
It appears this civil case jury, as three before it this month, have rejected a defense theory of the case asserting that the defendants were unwitting victims of McDonald’s alleged lies concerning the movement of EDA assets, just as the EDA was victimized. Plaintiff attorneys from the Sands Anderson law firm of Richmond, Va., countered those arguments by asking the jury to “follow the money” to see who benefited from the misinformation they allege McDonald was giving the EDA board, as well as EDA auditors.
During the previous morning session on Wednesday, the two sides presented their final witnesses: for the defense Mark Viola, proprietor of Viola Engineering, who did geo-technical work for Tran on the ITFederal site regarding construction delays related to underground discoveries of old utility piping and substances; and in plaintiff rebuttal to some of the previous day’s defense assertions, former County and EDA attorney Dan Whitten.
Late Wednesday, the court heard motions from both sides to strike the opposition claims against their clients. After listening to extensive arguments from both sides, Judge Albertson denied all motions to strike claims by either side, preferring as he has reviewing similar motions in earlier EDA civil liability cases this month, to allow the jury to make the decision on the substance of each sides’ claims against the other. After adjourning to dinner of pizza ordered to the courthouse for them around 7 p.m., the jury returned at 7:25 p.m. to say they preferred to go home and begin deliberations Thursday morning, which Judge Albertson agreed to.
As the three previous defense attorneys have following findings in the EDA’s favor this month, Tran/ITFederal counsel Gregory Melus notified the court he would file a motion to overturn the jury verdict. Those motions appear based on a defense contention evidence produced at trial was inadequate to justify conviction. A 30/30/10 day filing and response time schedule was set, though plaintiff counsel indicated if Melus needed additional time due to scheduling conflicts, that would not be a problem.
With motions to overturn on the table, counsel for both sides declined comment following Thursday’s verdict. Current EDA Board Chairman Jeff Browne, who observed much of the trial along with board members Jim Wolfe, Scott Jenkins, and Greg Harold, indicated that after speaking with counsel and some consideration he might have a response for the media shortly. See that EDA response in related story posted when available.
EDA civil liability defendant ‘Curt’ Tran on witness stand for over 4-1/2 hours as trial heads into final day
Tuesday, July 26, the third day of the “Warren Economic Development Authority” versus Truc “Curt” Tran and ITFederal LLC civil liability and counter-suit case was highlighted by the defendant’s 4-hours-and-37-minutes on the witness stand. That time started with a 2-hour-25-minute near monologue on direct examination, followed by 1-hour-58-minutes of sometimes contentious cross-examination by EDA co-counsel Lee Byrd and a fortuitously briefer 14 minutes of redirect examination by defense attorney Gregory Melus. On direct examination, Tran recounted his life story, beginning as an 11-to-12-year-old refugee to America in the wake of the Vietnam War and the fall of Saigon, leading into his work in data storage with the federal government and private sector, culminating with his efforts to develop a federally funded data center and import/export business in Front Royal and Warren County.
During that direct examination, Tran managed to recount a series of circumstances involving not only former EDA Executive Director Jennifer McDonald and a lack of supervisory EDA Board of Directors oversight of McDonald, but also shifting federal program guidelines, former President Barack Obama, and failed 2016 presidential candidate Hillary Clinton among reasons his projects here failed. The latter two involved a failure of the federal government during Obama’s presidential tenure to sign into law the Trans-Pacific Partnership (TPP), an international trade agreement that might have helped facilitate the import-export business Tran had hoped to create with his ITFederal company involving the cattle farm production of beef on acreage purchased off Happy Creek Road.
During a sometimes explosive cross-examination, Tran conditionally insinuated that several previous witnesses may have perjured themselves during testimony regarding circumstances of his agreements on the ITFederal project. Those witnesses in the defendant’s crosshairs of scrutiny included former EDA and County Attorney Dan Whitten, former EDA board member Ron Llewellyn, and Virginia Economic Development Partnership (VEDP) official Debbie Melvin.
In fact, Tran appeared to flirt with accusing former U.S. 6th District of Virginia Congressman Robert Goodlatte of, if not perjury, since he was not called as a witness for either side, but potential past lying were testimony from other witnesses, including Whitten, Llewellyn, and Greg Drescher, to be proven true regarding Goodlatte’s lobbying for Tran/ITFederal to receive the $10-million EDA loan for the Avtex site ITFederal project on a short-term basis as a positive public relations initiative for Virginia.
“I never say short-term, I didn’t say that – did he say that?” Tran wondered of multiple witnesses saying Goodlatte presented the $10-million dollar loan for the ITFederal project as a public relations effort to attract more business interest in Virginia rather than a loan Tran and his company actually needed to achieve their planned Avtex site federal data center development. With one defense witness remaining to be called Wednesday, one might wish Goodlatte was that witness to address that question, though he has not appeared on a prospective witness list.
Prior to sending the jury home at 7:02 p.m. Tuesday, Judge Bruce D. Albertson told that jury he anticipated deliberations to be handed over to them no later than early-to-mid-afternoon on Wednesday. Those deliberations involve an EDA base compensatory damage claim of over $ 11 million against Tran/ITFederal, as well as potential punitive damages up to $300,000 or more were the jury to find Tran and his company guilty of statutory conspiracy to defraud the EDA out of assets obtained under alleged fraudulent circumstances. Testimony indicated the defendants’ counterclaim at a base of approximately $4 million, with more at stake punitively as well.