The level of authority given former Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald to pursue client contact leads and a consequent lack of oversight from her board of directors was a primary issue in testimony and closing arguments on Friday, May 31.
In fact, some professional tension was palpable between McDonald defense counsel Jay McDannell and lead EDA attorney Cullen Seltzer as they summarized the cases they had presented over 2-1/2 days leading to closing arguments beginning at 12:45 p.m., Friday afternoon. The result of that third and final day of the EDA civil suit motions hearing was previously reported in Royal Examiner, below:
In beginning his rebuttal to the plaintiff attorney’s closing statement McDannell referenced what he termed “vitriolic attacks on my client”. They were attacks he said he had tried not to respond in kind to – “That ends today” he told the court.
And he wasn’t kidding – McDonald’s attorney called the plaintiff case “craven and stupid” adding, “They put the cart before the horse” in an attempt to cover what he called “a failed filing” of the EDA $17.6 million civil action against nine defendants alleged to have engaged with McDonald in a wide, if compartmentalized conspiracy to embezzle or misdirect millions of dollars in EDA assets.
“The largest claim is a breach of contract claim for a contract that has never been breached – and it is against someone else,” McDannell noted of the $10 million loan the EDA secured from United Bank for ITFederal LLC and its CEO Truc “Curt” Tran.
In fact, a significant portion of former EDA board member Ron Llewellyn’s testimony, which was by far the lengthiest of four current or former board members called to testify Friday, addressed the process and rationale in acquiring that loan.
A nine-year board member prior to his resignation effective March 23, Llewellyn told the court that the ITFederal project “was considerably different than any other project we ever worked on … We were all excited about the first Brownfield site project,” Llewellyn noted of the first commercial client drawn to a planned 147-acre business park on the former 467-acre Avtex federal Superfund site in the Town of Front Royal.
Llewellyn testified he had concerns about the project early on due to an inability to find any substantive information about the company and its alleged $140-million or so in annual federal government contracts online. However, he noted that the EDA’s executive director always assured him she had verified the validity of the information about ITFederal and its government contracts.
“Did you ask how she verified it?” McDannell pressed Llewellyn on cross examination.
“No, not precisely,” Llewellyn admitted.
“Maybe because it was brought to us by the congressman due diligence wasn’t done. I couldn’t find anything online but Jennifer always had an explanation, I thought was through the congressman,” Llewellyn said.
“So it got credibility from Congressman Goodlatte – what would you say the impact of that was?” McDonald’s attorney asked.
“More than it should have,” Llewellyn testified about three-and-a-half to four years down the road from then U.S. Congressman Robert Goodlatte’s championing of ITFederal in 2014-2015 as a $40-million investor who would bring 600-plus high-paying tech jobs to this community.
In fact, Llewellyn recalled a conversation with Goodlatte at the October 2015 ITFederal ribbon-cutting here launching the idea of a $10 million loan to Tran’s company. Llewellyn said he, McDonald, then-EDA Board members Patty Wines, who was board chair, and Jim Eastham who was in banking professionally, were in the group with whom Goodlatte first broached the ITFederal loan idea.
Llewellyn testified that McDonald reported back that when first offered the loan, Tran had balked. However, the EDA decided to continue pursuing the loan after Goodlatte explained he wanted to be able to promote the Avtex Brownfield site “to other prospects by saying, ‘We not only got you this nice piece of land but financing for your project too’.
“So Jennifer went back to Tran and explained that Goodlatte said it needed to be done anyway (whether he needed it or not), and he says, ‘Okay’,” Llewellyn said of the process he recalled achieving the ITFederal bank loan.
What Llewellyn didn’t explain, and wasn’t really asked to at this hearing level, was why the EDA board would agree to extend a 30-year payback on a $10-million loan to Tran that the EDA has a 7-year balloon payment due to First Bank & Trust of Abington on. For you non-bankers out there, on the surface, those conflicting schedules mean the EDA must pay the loan back to the bank in full after seven years, while Tran has another 23 years to pay the balance on the $10 million back to the EDA. Talk about economic development working for YOU!
However, EDA Attorney Dan Whitten explained to Royal Examiner that the EDA has the option of renegotiating the monthly amount of Tran’s payback; and will likely attempt to refinance its loan payment to First Bank & Trust after those seven years. So if things go well the EDA may be able to continue to have Tran’s payments cover the cost of a refinanced bank loan. Whitten said the discrepancy likely occurred because the EDA-Tran terms were signed in September 2015 when the Town bridge loan was made to the EDA, and the EDA-First Bank & Trust terms were signed three months later when the bank loan was realized in December 2015.
And on the bright side, as Town Councilman Eugene Tewalt likes local media to stress, the Town of Front Royal DID get its twice-extended to three-months $10-million “bridge loan” to the EDA and Tran back in full when the loan through First Bank & Trust of Abingdon was accomplished. However as we also recall, the Town did lose out on two months of interest totaling around $8,000 because the term of the “bridge loan” was supposed to be a month and the bridge loan arrangement only included one month’s payment equal to what the Town had been collecting in monthly interest on those $10-million dollars in an investment account.
But back to the civil litigation hearing’s closing arguments of May 31, 2019: citing EDA “board failings of oversight” McDannell told the court of his clients’ culpability, “Her actions are attributable to them – not that she did everything right, but did she misunderstand the authority her board had given her?” McDannell asked rhetorically with a clear indication of his thoughts on an answer.
However in the plaintiff’s closing statement delivered first, Seltzer pointed to the testimony of the four former and current EDA board members heard that day. They were asked in to testify about Defense Exhibit 8 offered the previous day to illustrate board approval of a McDonald purchase of up to $2.5 million for potential use as an industrial cattle farm operation by a Tran company, Front Royal Farms LLC. Testimony indicated the planned Tran operation would produce beef to be sold in the Far East, particularly to Vietnam, Tran’s native country.
Former EDA Treasurer William Biggs, current Vice-Chairman Bruce Drummond, current Front Royal Vice-Mayor William Sealock, and Llewellyn all testified that they had not previously seen the Closed Session, Confidential Resolution authorizing McDonald to spend up to $2.5 million on a property for the cattle ranch land purchase on Trans’ behalf. That was the defense exhibit EDA Attorney Dan Whitten described during his Thursday testimony as a “fabricated document” produced by McDonald.
All four past and present EDA board members said Friday that while it appeared their signatures were on the document, they had not previously seen that particular resolution. They also verified Whitten’s testimony of the previous day that such a resolution would not be signed in closed session or likely be marked “Confidential” as it was.
The quartet of EDA board members also expressed varying degrees of knowledge or a lack thereof about EDA board discussion of Tran’s prospective Front Royal Farms operation. However, all agreed whatever discussion had occurred was far from the authorization of millions of EDA dollars to be committed to the purchase of land for such an endeavor.
Previous hearing testimony indicated that those parcels referred to as “the Buck Mountain properties” were sold back to the original owner William Vaught Jr. a month or so after purchased by McDonald real estate company DaBoyz LLC at a $600,000 loss.
“Even after she left (the EDA) she continued to conceal against those board members we heard from today. She betrayed that trust in the most pernicious ways,” Seltzer told the court in summarizing his case for attachment of $3.17 million of McDonald or her real estate companies’ assets.
Of Defense Exhibit 8, the EDA attorney called it “unbelievable, bare-faced contempt”, not only of her former board members but of the court in its attempt to render a judgment on the freezing or releasing of McDonald assets related to the civil litigation.
“She has attempted to deceive the court – I’ve never seen anything like that in a courtroom,” Seltzer said of the introduction of an apparently fraudulent document in support of a defense motion not to enjoin defendant assets.
The Sands-Anderson attorney made it clear he was not implicating his legal adversary in that deception – “He has been used by his client to perpetuate shocking deceit,” Seltzer told the court.
However, McDannell disputed that assessment, noting his client’s agreement to withdraw the document and her voluntary assertion that two properties under her control were being held in a “constructive trust” for the EDA.
He also pointed out to the court that his client had not tried to convert her real estate assets into cash and flee prior to facing the civil and criminal charges now hanging over her head, those latter charges leaving her incarcerated as a flight risk.
As reported in our above-linked initial story of the court ruling, Judge Athey took a middle ground in attaching some McDonald cash and real estate assets and not others, on the latter front leaving those co-owned with other family members alone, and on the former leaving her funds to pay for her defense against the felony criminal charges she faces.
See Related Story:
Blue Ridge Narcotics & Gang Task Force investigation nets dealer arrest in Culpeper
CULPEPER, VA – The Blue Ridge Narcotics and Gang Task Force has concluded a three-month long investigation with the arrest of a Culpeper, VA resident. William E. Settle III, 36, was arrested by the Blue Ridge Narcotics and Gang Task Force following a search warrant executed at his residence. Through the course of the investigation, Blue Ridge Narcotics and Gang Task Force officers learned that Settle would routinely travel outside the Commonwealth to a fentanyl source of supply. Settle would then transport the fentanyl back to the Commonwealth for distribution and sale.
On July 26, members of the Blue Ridge Narcotics and Gang Task Force obtained a search warrant for Settle’s residence located along the 600 block of Highview Court in Culpeper, VA. During a search of the residence, 50 capsules of fentanyl with a street value of $1500.00, $1,750.00 in currency, and 2 firearms were seized. Settle was arrested and charged with one felony count of possession with intent to distribute schedule I/II drug, one felony count of possession of a schedule I/II drug, one felony count of possession of a firearm while possessing schedule I/II drug, one misdemeanor count resisting arrest, one misdemeanor count of obstruction of justice. Settle was also served with outstanding failure to appear warrants out of Culpeper. Additional charges are pending. Settle was transported to the Culpeper County Jail where he is being held without bond.
The Blue Ridge Narcotics and Gang Task Force is composed of law enforcement personnel from the Culpeper, Orange, Rappahannock Sheriff’s Departments, Culpeper, and Warrenton Police Departments and the Virginia State Police Bureau of Criminal Investigation, Culpeper Field Office.
New DNA technology being utilized in 23-year-old Strasburg murder-infant abduction case
On Monday, July 26, the Culpeper Field Office of the Virginia State Police issued a statement on new DNA technology being utilized to seek new leads in a 23-year-old murder/child abduction case that occurred in the Town of Strasburg. VSP noted the ongoing cooperation of the child’s father, Daniel E. Pompell, in its investigation. Anyone with possible information regarding the July 1998 murder of Sylena Jo Dalton and abduction of then 10-week-old Allyson Kathleen Dalton is urged to contact VSP Senior Special Agent Mike Jones at (540) 829-7400 or by email at email@example.com.
Below is the VSP release in its entirety:
“Tomorrow marks 23 years since on July 27, 1998, a 10-week-old baby girl disappeared and her mother was violently murdered at their apartment in the Town of Strasburg. The Virginia State Police (VSP) Bureau of Criminal Investigation’s (BCI) Culpeper Field Office is awaiting results from new, advanced DNA testing utilized as a part of the still ongoing criminal investigation.
“As technology has changed and advanced, so have our tactics in working to solve these tragic crimes,” said Capt. John A. Defilippi, VSP BCI Culpeper Field Office commander. “The DNA testing will provide additional information that will greatly aid us with advancing this case. But we are still encouraging anyone with information related to Allyson’s disappearance and Sylena’s death to still come forward with information.”
The infant, Allyson Kathleen Dalton, was last seen at approximately 7:45 a.m. on July 27, 1998, at her mother’s second-floor apartment in the 100 block of Charles Street in Strasburg. She was with her mother, Sylena Jo Dalton, at the time.
Later that same day, at 2:25 p.m., one of the mother’s coworkers found 20-year-old Sylena stabbed to death on a couch inside the residence. Allyson was unaccounted for and has not been seen since that morning. Investigators believe Sylena was killed between 9:15 a.m. and 10:30 a.m., that morning of July 27, 1998. Neighbors told police that no screams were heard nor was there any disturbance made that morning at the apartment. No murder weapon was found at the scene.
Allyson’s father, Daniel E. Pompell, told state police agents he stopped at the residence on the morning of the murder. Witnesses confirm seeing him outside the apartment with a bundle under his arm. State Police are appreciative of Mr. Pompell’s continued cooperation related to the ongoing investigation as state police persist in efforts to locate his daughter.
Anyone with information about the case is encouraged to contact VSP Senior Special Agent Mike Jones at (540) 829-7400 or by email at firstname.lastname@example.org.
(From a Virginia State Police release)
UPDATE: EDA and McDonald agree to $9-million debt exemption to her bankruptcy claim
On Tuesday, July 20, U.S. Western District Harrisonburg Division Bankruptcy Court Judge Rebecca B. Connelly issued a “Non-Dischargeable Consent Order Judgement” in Jennifer McDonald’s bankruptcy filing. The judge’s order decrees that “The Warren EDA is granted judgment against and is entitled to recover from Debtor, the sum of $9,000,000; and this judgment shall survive discharge of the Debtor in this Chapter 7 bankruptcy …”
The preface to Judge Connelly’s ruling notes that “In the interest of resolving this matter and avoiding litigation uncertainty, risks, and costs, but without the Debtor admitting the Warren EDA’s allegations, the Warren EDA and the Debtor have engaged in arm’s length negotiations and agree that the Warren EDA’s non-dischargeable claim is in the amount of $9,000,000 …”
The bottom line appears to be that the EDA and its former executive director have agreed that $9 million is the amount of the EDA’s civil court claim against McDonald, without her agreeing that she actually did anything wrong to justify the claim. So, that amount will be subject to collection in the civil action claim by the EDA outside the bankruptcy court process. The bankruptcy court order notes that any amount the EDA was to recover in the bankruptcy action would apply to achieving its $9-million civil claim in Warren County Circuit Court.
A reading of an “Exhibit A1 – the Stipulation” explaining detail of the “Non-Dischargeable Consent Order Judgement” further elaborates that McDonald as “The Debtor waives any right to contest the validity, enforceability, extent, and scope of the terms of the Stipulated Non-Dischargeable Judgment … and waives any right to seek relief from this Stipulation on any grounds” based on any applicable law.
Remaining at issue between the parties appears to be how the EDA will collect that $9-million dollar judgement the parties have agreed to. A number of McDonald-owned properties were frozen by the court early in the civil process, while properties co-owned with other family members were not. Since that order several relatives were named as co-defendants. The “Stipulation” also notes that the EDA-McDonald agreement order “shall not release or discharge any entity other than the Debtor from any liability owed to the Warren EDA” under its Amended Complaint in civil court against all co-defendants.
No ‘Summary Judgement’ against ITFederal
Also, on the EDA vs. McDonald et al. civil action side, on July 14, Harrisonburg-based presiding Circuit Court Judge Bruce D. Albertson dismissed an EDA motion for a “Summary Judgement” ruling against Truc “Curt” Tran’s ITFederal LLC. Plaintiff and defense attorneys made oral arguments on the EDA motion before Albertson on June 10. The bottom line here appears to be that the court has ruled there is not enough substantive information in the plaintiff’s original complaint to rule ITFederal immediately liable for the claim against it.
ITFederal’s $10-million EDA loan to achieve the development of its 30-acre parcel (valued at about $2 million but gifted to ITFederal by the EDA for one dollar) at the Royal Phoenix Business Park/former Avtex Superfund site, with as much as another $2 million in developmental expenses, was the largest single claim in the initial EDA financial scandal civil action.
The EDA alleges that the ITFed loan was achieved under false pretenses as part of the over-arching embezzlement-misappropriation of funds conspiracy allegedly orchestrated by McDonald as EDA executive director after former federal Sixth Congressional District Representative Robert Goodlatte brought Tran here with much ballyhoo for a fall 2016 ITFederal ribbon cutting at the Avtex site. And now the EDA claim against ITFederal, which remains current on its EDA loan payments of about $40,000 a month with an estimated $2 million spent on site, will, unlike the EDA claim against McDonald, continue as a contested part of the EDA’s civil action.
See related EDA meeting, 2018-19 audit story – “Financial Scandal Era Audits near completion as EDA ponders Budget Adjustments”
Legality of Meza council appointment will be re-argued orally third week of September
A date of September 22, at 10:30 a.m. has been set by Warren County Circuit Court Judge William W. Sharp to again hear oral arguments in support of plaintiff (Paul Aldrich) and defense (Jacob Meza, Town of Front Royal) filings on the court’s decision to re-hear a citizen challenge of Meza’s appointment/election to council on January 4th, four days after the term he did not run for reelection to, expired. Plaintiff counsel David Downes was seeking an August date further in front of the November 2nd Special Election to fill the final year of the council seat term vacated by Chris Holloway when he was elected mayor in November 2020, taking office January 1, 2021.
Meza is not running to continue into that final year of Holloway’s old council seat term. With the filing deadline passed, only Warren County Republican Committee Treasurer Amber Morris and Bruce Rappaport, a conservative independent who lost the Republican Committee endorsement to Morris, have filed to be on the ballot in the November Special Election.
Speaking of “elections”, how the term “elected” in Section 47 of the Front Royal Town Charter upon which the plaintiff case is based, is finally interpreted by the court could cast a larger shadow over the judge’s final ruling on the issue. In a letter to plaintiff attorney Downes and defense counsel Heather Bardot dated July 15, Judge Sharpe addresses his promise to resolve the case prior to the November 2, 2021, Special Election to fill the final year of the old Holloway council seat term.
“I intend to keep my word … the citizens of the Town of Front Royal deserve to have this matter resolved,” the judge wrote of that pre-Election Day resolution of the case promise, continuing, “As I have already noted, though the Complaint in this case challenges the validity of Mr. Meza’s office, if the Plaintiff’s position is right, then it is quite possible that the validity of the claims to office of other current council members and the mayor may also be in question.”
A potential impact on the mayor’s or other council members seats stems from initial May 25th hearing discussion on whether the relevant Section 47 wording could be interpreted as preventing elected town officials from running in General Elections for one year after their previous term had expired.
That Section 47 wording is: “No member of the council of the Town of Front Royal shall be appointed or elected to any office under the jurisdiction of the council while he is a member of the council, or for one year thereafter.” (underscore added)
However as previously observed during the May hearing, with an 84-year precedent in place of council members and mayors running for re-election since the 1937 passage of the Town Charter, the likelihood of such a judicial re-interpretation might seem remote. In fact, Downes noted that the plaintiff is not pursuing such an interpretation of the Charter wording, adding that what he termed “a methodical analysis” of relevant historical documents, which he cited as “the Virginia Constitution of 1776, the Virginia House of Delegates Rules of Procedure from 1912, Robert’s Rules of Order from 1915, the Town Charter of 1937” among others “shows that the framers of the charter were clearly addressing an election by councilmen and not a general election by the public.”
In addition to jurisdictional issues and legal standing of the plaintiff to challenge Meza’s “appointment” or “election” by his four Republican Committee colleagues to council on January 4, it continues to be the context of the words “appointed” and “elected” as it applies to council actions in Charter Section 47 around which the case revolves.
Much of the written arguments filed by the two sides in the wake of Judge Sharp’s decision to re-examine and re-hear those arguments, echo points made during the May 25 hearing. As reported in Royal Examiner’s story on that hearing, “Bardot pointed to the absurdity of the Section 47 wording” if it was interpreted to mean council could “appoint” someone who was already a council member to a council seat. So, she asserted that Charter Sections 6D and 9 applied to filling council seats, rather than Section 47.
In her Demurrer filing for dismissal, Bardot pointed to Section 6D wording on filling council vacancies: “The council may fill any vacancy that occurs within the membership of council for the unexpired term, provided that such vacancy is taken within 45 days of the office becoming vacant,” Section 6D states. No reference to a one-year hiatus per appointments is made here, Bardot noted.
Citing the inclusion of the words “appointed or elected” Judge Sharp’s initially ruled that Section 47 applied only to paid staff appointments, not council member appointments. Sharpe said it seemed clear that the Town Charter’s intent, dating to its 1937 adoption, was not to prevent council members from running for re-election for a year. So, the court sided with Bardot’s stance for the defense that Sections 6 and 9 of the Charter were the applicable sections on council appointments, rather than Section 47.
In the first round of oral arguments, as he likely will again on September 22, Downes countered that it was “dangerous to take one word out of context” in trying to decipher the intent of town fathers 84 year ago. The plaintiff counsel argued that the Section 47 wording referred to two distinct and different actions: 1/ appointment to a town staff position while being a council member, or within a year of having been a council member; and 2/ “election” as in acquiring a council majority consensus for reappointment to a council seat within a year of leaving council voluntarily, like Meza by not seeking reelection, or involuntarily, as in being voted out of office by the public.
Some have contended Meza did not run in 2020 because he may have believed he would have lost after a controversial year in office surrounding his employer Valley Health and his flip-flopping on recusals from discussion and votes in authorizing a $60-million County-Town EDA loan to help finance construction of a new hospital without a Maternity Unit.
Plaintiff Paul Aldrich and his counsel contend Meza’s appointment/election by four of his County Republican Committee colleagues (the vote was 4-1) was the very type of political cronyism Section 47 of the Town Charter was designed to prevent.
And so the two legal sides continue to circle and counter the other’s points of contention on jurisdiction, authority of the plaintiff’s challenge and how long-dead town fathers used the English language 84 years ago.
Stay tuned, as a final decision on these issues has been promised by the court before November 2, 2021, one might guess by the end of September or early October at the latest.
Non-fatal Hill Street stabbing report leads to charges against roommate of victim
In the early morning hours of Thursday, July 15, 2021, officers with the Front Royal Police Department responded to a residence in the 400 Block of Hill Street for a report of a stabbing. When officers arrived, they located a male victim, identified as Mario Frazier, who was bleeding from an apparent stab wound to his neck. Frazier provided a statement to officers identifying the offender as 61-year-old Front Royal resident, Anthony “Tony” Herbert. Frazier, who shares a residence with Herbert, stated there was an argument and physical altercation leading to the stabbing. The victim was transported to Warren Memorial Hospital, where he was treated for non-life-threatening puncture wounds.
Herbert was quickly located and apprehended by Front Royal Police officers without further incident. Herbert was transported to Rappahannock Shenandoah Warren (RSW) Regional Jail, where he was held without bond on a Malicious Wounding charge. He has a scheduled court date of September 21, 2021, at 10 a.m. in Warren County General District Court.
(From a July 15 FRPD Press Release)
FRPD traffic stop leads to chase, multiple charges against Virginia Avenue resident
On Tuesday evening, July 13, 2021, at approximately 7:50 p.m., a Front Royal Police Department officer observed a red Jeep Liberty speeding on John Marshall Highway. The officer initiated a traffic stop and the driver pulled over to the side of the road.
As the officer began exiting his marked patrol vehicle, the driver of the Jeep Liberty quickly pulled off, driving east on John Marshall Highway towards Linden. The officer pursued, and the driver made an abrupt U-turn near ESA Lane and began traveling back into town. Additional officers from the Front Royal Police Department and Warren County Sheriff’s Office followed the vehicle as the driver continued north onto Commerce Avenue and several other streets until coming to a sudden stop in the 200 block of Virginia Avenue. The driver then fled on foot, where he was apprehended after a short foot chase.
The driver was identified as a 51-year-old Front Royal resident, Otis Lee Allen. Allen was taken into custody and transported to Rappahannock Shenandoah Warren (RSW) Regional Jail without further incident. Allen was released on a $3,000 secured bond with a scheduled court date of August 3, 2021, at 10:00 a.m. in Warren County General District Court.
(From an FRPD release)