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.
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Clear Brook woman charged in South Royal Avenue traffic incident
A 44-year-old Frederick County woman has been charged regarding a Monday evening traffic incident on South Royal Avenue in Front Royal. According to the RSW Jail website, Susan Miller Harbaugh, from Clear Brook, Virginia, was booked on two charges, Driving While Intoxicated and Vandalism, Intentional Destruction of Property (monument).
Harbaugh was booked into the jail at 12:29 a.m. Tuesday morning, December 10, and released at 5:28 p.m. that afternoon.
According to Front Royal Police Sgt. Jason Winner, “On December 9, 2019, at approximately 9:50 p.m. FRPD officers were dispatched to the area of the 200 block of South Royal Avenue for a report of an accident. While responding to the area, officers were informed that a vehicle had left the scene of that accident and was traveling North on Royal Avenue.
“Officers located the vehicle that left the accident and conducted a traffic stop. It was determined during the accident investigation that the vehicle had struck a light pole on the side of the road.
That pole was knocked down into the roadway and was struck by another vehicle.”
Harbaugh was apprehended on North Royal Avenue.
Front Royal man arrested after reported shooting in the 200 block of Cloud Street
On November 27, 2019, at approximately 11:55 pm, the Front Royal Police Department responded to a report of a shooting in the 200 block of Cloud Street. When Officers arrived on scene, they encountered a male subject with non-life-threatening injuries, including a gunshot wound to his inner thigh.
Based on investigative findings, a suspect was identified as George Lee Good, 28, of Front Royal. Warrants were obtained on Good for 18.2-51 Maliciously Shoot or Wound; 18.2-53.1 Use of a Firearm in the commission of a felony; and 18.2-308.2 Possession of a firearm by a convicted felon. Other charges may be forthcoming regarding other involved individuals.
George Good was taken into custody without incident by Winchester Police Department during a DUI checkpoint. Good is currently at Northwestern Regional Adult Detention Center where he is being held without bond. This investigation is on-going and anyone with further information is asked to contact Detective D. L. Fogle at (540)636-2208 or via email email@example.com.
Warren County Sheriff’s Office seeking information after discovering a deceased male
On December 2, 2019, the Warren County Sheriff’s Office was called to the area of Digs Landing in the Rivermont area of Warren County for the discovery of a deceased individual. The remains are that of an unknown male with the following clothing description: green baseball style shirt with blue sleeves and a blue pocket and black denim shorts.
The deceased has not been identified at this time. Identification is pending findings from the Office of the Chief Medical Examiner. Further details in the matter are not being released at this time due to the ongoing investigation. The Warren County Sheriff’s Office was assisted at the scene by the Chief Medical Examiner’s Office and Warren County Fire and Rescue. The manner of death is considered suspicious and the investigation is ongoing. The Warren County Sheriff’s Office wants the citizens to know that this appears to be an isolated incident and there is no immediate threat to public safety.
Anyone with information is asked to contact Investigator Emily Young of the Warren County Sheriff’s Office at 540-635-4128 or at firstname.lastname@example.org. Citizens can also utilize the Warren County Sheriff’s Office website to submit a tip by going to www.warrencountysheriff.org. Anyone with information can remain anonymous.
Front Royal man arrested on two sex related felony charges
On November 25, 2019, Anthony Harry Sutton, 67, of Front Royal, Virginia, was charged and arrested with two felony charges: 18.2-67.2 Object Sexual Penetration and 18.2-67.1 Forcible Sodomy. These felony charges are in connection with an ongoing investigation regarding Mr. Sutton. Authorities were notified that a juvenile victim had reported to her mother allegations of inappropriate sexual contact by Mr. Sutton. Further details regarding this matter cannot be released at this time due to the pending nature of the investigation.
Mr. Sutton was taken to Rappahannock Shenandoah Warren Regional Jail where he is currently being held without bond. Further charges may be forthcoming as a result of this active investigation.
Anyone with any further information in reference to this case is asked to contact Front Royal Police Detective L.J. Waller at (540) 636-2208 or by email at email@example.com.
Removal Petition hearing on County Board continued to December
An as-yet undetermined date in December was set for the continuation of a hearing on the citizen-launched Removal Petition against the five sitting Warren County Supervisors. The hearing was on the Warren County Circuit Court docket Friday morning, November 22, at 8:45 a.m.
Judge Bruce D. Albertson heard motions and the reasoning for the continuance by video hook up from his home courtroom base in Harrisonburg. When a suggested date of December 6, when Albertson will be in court on EDA-related criminal hearings, did not work for one of the two defense attorneys, James Cornwell, the judge said he would like a specific December date agree upon within two working days.
As he had the previous day during hearings on EDA-related criminal charges, Commonwealth’s Attorney Bryan Layton notified the court of his intention to remove himself from EDA prosecutions with a newly-elected Commonwealth’s Attorney John Bell slated to take over at the turn of the year, prior to any EDA-related trials getting under way. And with Bell planning to recuse himself from EDA prosecutions to assure there is not even a perception of possible conflicts of interest that might impact future EDA legal proceedings, Layton suggested that despite his desire to continue with the EDA cases, that they, like yesterday’s criminal cases, be turned over to the office of Rockingham County Commonwealth’s Attorney Marsha Garst.
Rockingham Assistant Commonwealth’s Attorney Michael Parker appears poised to take on the bulk of cases Layton has been working, along with the EDA Special Grand Jury investigation. Layton again noted Parker needed time to get up to speed on the background of the various cases he is taking on.
Defense co-counsel Cornwell and Acting County Attorney Jason Ham had no objection, by remote phone hook up, to Layton’s call for the continuance of the Removal Petition hearing.
During Friday’s hearing it was reported that notice of certification of the required amount of signatures had been received from Warren County Voter Registrar Carol Tobin. That certification, which came despite the loss of 107 signatures that could not be verified as registered county voters, allows the Petition for Removal from office of the supervisors to proceed.
The filing required a minimum of 10% of the number of registered county voters who voted in the last election. That number is cited as 6,958, requiring a total of 696 countywide. Even with the 107 lost signatures, the petition contained 835 verified signatures.
The petition was filed October 18 as part of the grass roots public reaction to the Front Royal-Warren County Economic Development Authority financial scandal that has led to a number of dueling civil litigations surrounding the EDA’s attempt to recover $21.3 million dollars in allegedly misdirected or embezzled EDA assets. The EDA civil litigation alone has already cost the County and its taxpayers $1.31 million dollars in legal and investigative financial audit costs.
And with a $750,000 cap on attorney’s fees payable to the Sands Anderson law firm of Richmond removed by the supervisors on Tuesday, that number is anticipated to keep climbing over the coming year or more as the civil cases proceed and what is anticipated to eventually be in the neighborhood of a million pages of related documentation is submitted for those civil, and related criminal, cases.
The Removal Petition contends the County’s elected Supervisors were directly negligent and in dereliction of their official duties in allowing the alleged EDA financial embezzlements to develop under their indirect stewardship since at least 2014-15.
After the Front Royal Town Council voluntarily abdicated certain oversight functions several years ago when the County took over the Town’s operational funding of the EDA, the County Board alone now appoints EDA Board of Director members. It is those appointed members of the quasi-governmental EDA that have direct oversight authority of EDA staff, a defense motions filing in the Removal Petition case states.
The Removal Petition cites the board members’ three misdemeanor criminal indictments on misfeasance and nonfeasance charges filed September 20 as one primary legal basis of the recall. Those charges targeted the supervisors, along with current and former EDA board members, for an absence of due diligent oversight of the actions of former Warren County Economic Development Executive Director Jennifer McDonald in the final four months of 2018.
However, the fact those indictments were dismissed by Judge Albertson as non-criminal by Virginia Statutes, even dating to English Common Law under which they were filed, may complicate the petitioners’ argument.
Just two days before Friday’s hearing defense co-counsel Cornwell and Ham filed a Demurer with the court seeking dismissal of the petition. Grounds cited for dismissal include a lack of jurisdiction for the filing; a lack of legal authority for the supervisors to act directly to limit the activities of EDA staff; and “Legislative Immunity” precluding the Judicial Branch of State Government from a “quasi-criminal” investigation of a Legislative body such as the county supervisors regarding how they conduct their business.
It would appear that while the timing of the defense Demurrer filing might have precluded proceeding with arguments Friday, a December hearing date could see arguments on these crucial legal points of contention.
On October 28, Judge Albertson denied a petitioner’s motion to immediately remove the five sitting supervisors prior to any arguments on the legal dynamics of the Removal Petition.
Targeted by the Removal Petition are Daniel J. Murray of the North River District, Thomas H. Sayre of the Shenandoah District, Tony F. Carter of the Happy Creek District, Archie A. Fox of the Fork District, and Linda Glavis of the South River District. As of the turn of the year in the wake of Murray and Glavis’s retirements and Sayre’s defeat at the polls in November, only Carter and Fox will be impacted by the Removal action.
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Delays in EDA criminal cases due to transfer of prosecutorial authority
On Thursday, November 21, four Front Royal-Warren County Economic Development Authority criminal defendants saw preliminary hearings, and in one case trial dates over the objection of Donald Poe’s attorneys, continued to future dates. Those defendants were former EDA Executive Director Jennifer McDonald, her husband Samuel North, former EDA small business client B&G Goods principal William Lambert, and former EDA solar panel contractor Earth Right Energy principal Donald Poe.
A date of January 10, at 1 p.m. was set for motions hearings and possible trial date settings on joint defense-commonwealth motions in McDonald’s, North’s and Lambert’s cases. Only Poe co-counsel William Ashwell objected to the delays, noting his client was in a somewhat different position that the other defendants.
That position is trial dates on all four charges against Poe already set for December 6 (perjury to the grand jury) and three financial charges of obtaining or conspiring to obtain money by false pretenses set for a three-day trial January 22 to 24.
Ashwell told the court his client was “pretty anxious to clear his name” adding, “I think we need to get things going now.”
Noting the defendant’s objection, Judge Bruce D. Albertson included the Poe cases in the continuations granted Thursday to the 1 p.m. docket on January 10.
As explained by Commonwealth’s Attorney Bryan Layton, primary among the reasons for those continuations is the naming of a new prosecutor’s office to handle the EDA-related criminal prosecutions. Layton has been leading the Special Grand Jury empaneled to investigate potential criminality tied to the $21.3 million dollar EDA civil litigation since former Warren County Commonwealth’s Attorney Brian Madden left the office to assume a judicial appointment in Frederick County.
However, with a newly-elected Commonwealth’s Attorney, John Bell who was hand to observe Tuesday’s proceedings, poised to take office at the turn of the year Layton notified the court he was withdrawing as special prosecutor for the EDA grand jury investigation into EDA affairs.
And Bell told the court due to peripheral past legal representations or political affiliations, he would recuse himself from EDA prosecutions to “avoid any appearance of impropriety so the people of Warren County are assured there are no thumbs on the scales (of justice).”
Chief 26th Judicial District Circuit Court Judge Albertson, himself a replacement after all Warren County Circuit Court judges recused or left for higher court appointments prior to pending recusals, accepted Layton’s recommendation of the Rockingham County Commonwealth’s Attorney’s Office to take over the EDA criminal prosecutions.
Rockingham Assistant Commonwealth’s Attorney Michael J. Parker was present to represent the office of Rockingham Commonwealth’s Attorney Marsha Garst. Courtroom discussion indicated Parker would take the point for Rockingham’s work on the EDA cases.
Related to various motions hearings scheduled for Thursday afternoon’s 4 p.m. docket, Layton noted the “voluminous material” related to the EDA cases and asked the court for “an extra period of time to get Mr. Parker up to speed.”
That voluminous material was referred to as a “terabyte” of digitized information ordered by the Virginia Supreme Court to handle what has been referred to in previous hearings as 700,000 to one million pages of related documentation.
Despite his counsel’s objection and Poe not joining the other defendants in waiving their rights to speedy trials, Earth Right Energy principal Poe will join the other three defendants in court for hearings on January 10 on the 1 p.m. docket.
Judge Albertson continued Poe’s scheduled jury trial on his perjury charge from December 6, to the previously scheduled first day of an anticipated three-day trial on the EDA financial fraud charges, January 22, with the following dates available were that trial to go beyond one day.
Albertson also set a hearing for the aborted December 6 perjury trial date to set a new date for Poe’s now in limbo financial charges trial.
Albertson also granted North attorney Frank Reynold’s request for a Bill of Particulars on the three charges his client faces related to actions cited as occurring “on or about August 1, 2015” to be responded to by January 8, two days prior to the newly scheduled motions hearing date.
Reynolds, like Lambert attorney Phil Griffin, told the court he and his client did not want to have to navigate the perhaps digital planetary-sized “terabyte” of EDA financial fraud-related documentation for information on a limited, yet thus-far unspecified accusation against his client.
McDonald is facing 32 felony financial fraud indictments; her husband North three; Lambert three, and Poe four, including the perjury charge, related to information contained in the $500,000 County-EDA contracted Cherry Bekaert financial fraud investigation of EDA financial affairs during McDonald’s executive directorship of the EDA.