A ‘Perfect Storm’ of silence raises questions about 1st Avtex client

Egger confronts McDonald over potential fraud related to foreign funding stream

An otherwise routine monthly report by Front Royal-Warren County Economic Development Director Jennifer McDonald, took an unexpected turn when Front Royal Councilwoman Bébhinn Egger asked about funding to ITFederal LLC through a federal immigration and economic investment program that grants EB-5 visas to family members of wealthy foreigners.

Raising the issue of financing of the first company the EDA has contracted to build at the former Avtex Superfund site, Egger asked if the Immigrant Investor Program and EB-5 visas issued through the United States Citizenship and Immigration Services (USCIS) could be a danger sign of potential financial fraud.

EDA Executive Director Jennifer McDonald, at podium, and Councilwoman Bébhinn Egger squared off on exactly what ITFederal LLC is; and what it is planning here, during the October 24 Town Council Meeting.

“There have been some things in the media about certain politicians using EB-5 companies as a front, where the companies don’t actually produce anything,” Egger pressed of the ITFederal connection to a federally-controlled foreign funding stream.

Egger pointed to a “politician” she identified only as “high profile” under investigation for touting an EB-5 company to manufacture cars through the EB-5 visa program, “And they haven’t produced a single car,” Egger said. “So, I guess if there’s any way you could give Council some concrete evidence that ITFederal is not a money laundering system for this EB-5 visa program – maybe money laundering is the wrong term – but you know what I mean: there is a front so that they invest in a company and get their visa.”

McDonald explained that EB-5 visas were not acquired directly by the involved company, rather, “What happens is If someone from China, wants to educate their child in the United States, they put $500,000 to a million dollars in this investment fund; their child gets a two-year visa to be educated in the United States. That’s where that money comes from,” McDonald explained, adding, “No one’s trying to get a visa; someone is trying to get educated. That’s the only thing these visas are for; they are two-year education visas, not for someone to get a visa to come over here and live. The EB-5 funding program has been around for years. They have to create jobs – American jobs have to be created with the EB-5 financing,” McDonald explained of the impetus for the program.

The EB-5 discussion began as Egger asked McDonald about a website for the “American Commonwealth Regional Center”. McDonald explained, “That is part of the regional financing that is part of the EB-5 financing – the Regional Center is the one that finances the projects.”

That website states that “America Commonwealth Regional Center, LLC (ACRC) is an approved EB-5 regional center (located in Tyson’s Corner) under the USCIS’s Immigrant Investor Program … ACRC objectives include the promotion of economic growth, improved regional productivity, job creation, and increased domestic capital investment … ACRC is approved by the USCIS to promote economic growth, and offer capital investment opportunities …”

One of two building designs being considered for ITFederal building one at Royal Phoenix. This one is titled “Training Academy”.

Egger had built up a head of steam before dropping potential “money laundering system” into the equation. The query came near the end of a series of questions about the IT solutions company poised to make what McDonald has said will be a $40-million investment at a portion of the former federal Superfund site now known as the Royal Phoenix Business Park. That investment on 30 acres at the site is projected to bring 400 to 600 jobs to the planned business park situated on 147 acres. Royal Phoenix is part of the former 467-acre Avtex synthetic fibers manufacturing plant and federal Superfund site, off Kendrick Lane in the Town of Front Royal.

‘Perfect Storm’ of silence

Egger said she was simply trying “to clear the air” about questions that have arisen in a vacuum of information over the past year. Egger and her Council colleagues have a vested interest in seeing commercial redevelopment occur at the former Synthetics Fibers manufacturing site that for decades after its 1940 opening was the largest private-sector employer (and polluter) inside the Town limits.

“I know you said we can’t talk about their contracts, but it seems to have created this perfect storm that they do work that we can’t see or talk about; and with one hand they are doing this and with their other hand they are doing this. So, it creates an atmosphere of confusion,” Egger observed.

Contracts

At the outset of her questions to McDonald, Egger asked about the contract base upon which ITFederal’s business is based, and the value of those contracts. “I can’t give you a total,” McDonald replied, leading Egger to ask if the information was available to be retrieved.

“They have contracts with ‘the Nuclear Defense Department’; these contracts we’ll never see because they probably have stuff in there we can’t see,” McDonald said of classified aspects of the company’s work.

An alternate ITFederal building design under consideration for the Royal Phoenix site.

Of course Egger did not ask to see details of ITFederal’s work on Nuclear Defense computers, just their contractual value to the company. So, McDonald added, “I do know the first contract they had was a $140-million contract with the Defense Department. They have received several contracts since then. They have been working on those out of a satellite office while, one, waiting for the EPA approval, and now to see if VDOT is going to come through with that funding. So, they have been working on these contracts while we’ve been waiting on that. So, that’s who their contracts are with, the Nuclear Defense Department.”

Queried later after online searches turned up no such US Defense agency, McDonald corrected the ITFederal contracting agency’s name to the “Defense Special Weapons Agency”. A quick online check revealed DSWA as a subsidiary of the Department of Defense (DoD). To summarize from the Federal Register, the DSWA was established in 1971 as DoD’s “center for nuclear and advanced weapons effects expertise and performs essential missions in the areas of nuclear weapons stockpile support, nuclear effects research and operational support and nuclear threat reduction to include arms control verification technology development. The functions of DSWA were absorbed into the Defense Threat Reduction Agency (DTRA) by DoD Directive 5105.62 of September 30, 1998.

Shhh …

Okay, we get it – if we, the public or Councilwoman Egger saw details of the information within the DSWA computer system that ITFederal may work on, “they’d” have to kill, or at least disappear, us. But that’s NOT what’s being asked. What IS being asked is the monetary value of the federal contracting base upon which ITFederal’s promised $40-million investment here will be built.

Of course, if the history of this decade, century and millennium has taught us anything, it is how aggressive government officials and agencies can be in the protection of national security, from threats both real and imagined. The vagaries around ITFederal’s business model and contractual value may simply be an indication that private contractors on the federal payroll have fallen into the same pattern of a perhaps overbroad veil of secrecy.

However, when that secrecy surrounds a company that the EDA and the Town of Front Royal have pinned their hopes on – and invested, if temporarily, $10-million in – to launch an economic renaissance at the long-dormant former Avtex site, it would appear that silence is not always golden.

Egger observed that with a large amount of money having changed hands, initially through the Town and EDA, with no result for over a year, people had questions they wanted answered – “These are things I’ve heard,” the Councilwoman told McDonald of her questions about ITFederal, its CEO and peripheral investments he has recently made in this community.

“And as I told you this morning, people seem to talk without having the knowledge of what they are talking about,” McDonald said of the line of questioning Egger was pursuing.

Asked later about the year-plus delay between the ceremonial groundbreaking of October 26, 2015 and the now projected Spring 2017 start of construction at the former federal Superfund site, McDonald pointed out, “It’s a little over a year delay in a very complicated 27-year process – it doesn’t look so long if you look at it that way.”

Everyone will be happy to see economic redevelopment begin at the Royal Phoenix Business Park portion of the former Avtex Superfund site. A preliminary drawing indicates the initial ITFederal building will go just west of (below) the EDA Headquarters in the old Ad-ministration Building at center left. The photo is looking east toward south-central Front Royal.

Perhaps contributing to the sense of delay is the fact the ITFederal announcement came about three months before the company and the EDA actually reached an agreement on the 30-acre land purchase at Royal Phoenix. Late last year as delays in post-ceremonial work at the site drug on, McDonald admitted to this reporter that the June 2015 announcement of the ITFederal deal was somewhat premature, but pushed forward by US 6^th District Congressman Bob Goodlatte. McDonald credited Goodlatte with bringing ITFederal to the EDA as a potential economic development opportunity. And in the flush of excitement at was potentially the first commercial investor in the Royal Phoenix site after the above-mentioned 27-year cleanup, remediation and marketing process, conceding to a slightly premature announcement may not be that hard to understand.

The sale agreement between the EDA and ITFederal was announced as a done deal in September 2015. The subsequent delay of over a year was due to the length of time it took Superfund site overseer the EPA to approve removal of the 30-acre ITFederal parcel from a $2,060,000 lien on the property, so it could be given to ITFederal for one dollar as an up-front economic incentive to begin positive movement at the site.

(Part 2 of our coverage of the exchange between Bébhinn Egger and Jennifer McDonald will include the rationale for the Town’s $10-million “bridge loan” to ITFederal in September 2015; confusion over websites with the ITFederal name attached; a peripheral land purchase made by ITFederal CEO Curt Tran on a 70+ acre parcel off Happy Creek Road, as well as the business plan for that property that includes on-site cattle ranching and “a wide range of trade and agricultural training programs.”.)