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Roles of McDonald, EDA Board & Goodlatte described at EDA hearing

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The EDA board and staff, seated in foreground, meet with Town and County officials, background, at Villa Ave. Community Center, circa late 2016 – Royal Examiner File Photos/Roger Bianchini

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:

Some McDonald assets frozen, jointly-owned exempted in EDA civil case

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.

Truc ‘Curt’ Tran on EDA-Royal Phoenix site on Dec. 20, 2018, the day Jennifer McDonald resigned as EDA executive director. Tran was checking progress on his one-story, 10,000 s.f. construction project.

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.

Former Sixth District U.S. Congressman Robert Goodlatte promised ‘prosperity coming your way’ when he introduced ITFederal and its CEO to the EDA as a major Avtex site commercial redevelopment opportunity in 2015.

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.

Maybe it’s not as bad as it seems – see above attorney’s explanation. So best case the bank agrees to stretch its payback term to match Tran’s and the EDA can continue to have the ITFed payments cover its loan costs. Worst case, the EDA defaults on the loan and the bank owns the Royal Phoenix Brownfield property put up as collateral – or is that a BEST case scenario? Hey, maybe these guys are smarter than they look …

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.

Testimony indicated there were minimal conditions imposed on how Tran spends that $10-million loan from the EDA. It appears he may spend about $2 million or so here if the ITFederal aspect of his project falls through, as it now seems it will. The EDA lawsuit is seeking recovery of the ITFederal loan.

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.

Judge Clifford Athey Jr. allowed McDonald access to some personal financial assets in order to be able to pay for her defense against criminal charges that now have her incarcerated without bond as a flight risk.

See Related Story:

EDA Attorney accuses former executive director of forging document

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Crime/Court

Suspect arrested and charged for fraudulent use of stolen debit card

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Jessica Nicole Shell. Photo courtesy of RSW Regional Jail.

On January 14, 2020, the Front Royal Police Department initiated an investigation into fraudulent use of a stolen debit card. The stolen card was used at BB&T, Target and 7-11. Jessica Nicole Shell was identified as the suspect and warrants were obtained for §18.2-192 Credit Card Theft and §18.2-178 Obtain Money by False Pretenses.

On February 10, 2020, Shell was arrested by the Hardy County Sheriff’s Office in West Virginia where she was detained until extradited on February 13, 2020. Ms. Shell was transported to Rappahannock Shenandoah Warren (RSW) Regional Jail and is currently being held without bond. The court date for these offenses are set for February 25, 2020, at 9:00am, in Warren County General District Court.

Anyone with further information in reference to this case is asked to contact Front Royal Police Detective L. Waller at 540-636-2208 or lwaller@frontroyalva.com.

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Front Royal man arrested and charged with larceny at Peebles Department Store

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James Lathon. Photo courtesy of Front Royal Police Department.

On Tuesday, February 11, 2020, James Lathon, 56, of Front Royal, was arrested and charged with §18.2-95 Grand Larceny, §18.2-96 Petit Larceny 3rd+ offense, and §18.2-103 Concealing or taking possession of merchandise. This is in connection with an ongoing investigation of several larcenies that were reported at the Peebles Department Store located at 425 South Street in Front Royal. The Regional Manager of Peebles made contact with the police department after his employees observed the same individual enter their store on 3-4 different days and walk out with unpaid merchandise.

Mr. Lathon was arrested and transported to Rappahannock Shenandoah Warren (RSW) Regional Jail and is being held without bond. Mr. Lathon was additionally charged with a violation of his probation. The court date for these offenses is set for February 25, 2020, at 10:00am, in Warren County General District Court.

Anyone with any further information in reference to this case is asked to contact Front Royal Police Detective M.R. Ramey at (540) 636-2208 or by email at mramey@frontroyalva.com.

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Juveniles charged in dumpster fire incident, officials warn of youth fire setting behaviors

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On Thursday, January 2, 2020, at 12:57 am, the Warren County Department of Fire and Rescue Services was dispatched to the area of 40 Crescent Street for a reported dumpster fire.

Units arrived on scene to find a garbage dumpster significantly involved in fire. Crews were able to quickly contain the fire, there were no reported injuries. The cause of the fire was investigated by the Warren County Fire Marshals Office which determined the fire to be caused by an intentional act.

A joint investigation conducted between the Fire Marshal’s Office and the Front Royal Police Department Criminal Investigations Division determined that the fire resulted from the actions of two juveniles. After consultation with the Warren County Commonwealths Attorney’s Office, petitions have been sought for these two juveniles in Warren County Juvenile and Domestic Relations Court.

Anyone with further information pertaining to the fire incident is encouraged to contact Fire Investigator Austin Cucciardo at acucciardo@warrencountyfire.com or (540) 636-3830, or contact Detective Dave Fogle at dfogle@frontroyalva.com or 540-636-2208.

This type of incident should serve as a reminder that youth fire-setting behaviors put our community at risk. If a child you care about has played with matches, lighters, fireworks, candles, etc. or has set a fire, or has shown a curiosity of fire that worries you, the Department of Fire and Rescue Services Youth Fire-setter Intervention Program may help. The Youth Fire-setter Intervention Program provides a simple risk assessment for youth to help understand their situation. It also provides fire safety education for the child and other family members. Everything is confidential and intended to help keep your family safe from fire. This is not a punitive program; rather a program to prevent a tragic incident from occurring. The goal is to help families learn about the dangers of fire setting and provide assistance and support to families with fire-setting concerns.

Anyone who feels they have a juvenile that can benefit from participation in this educational program is asked to contact the Department of Fire and Rescue Services Youth Fire Setter Intervention Program at 540-636-3830.

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Alford pleas, dropped charges end ‘bawdy house’ saga with no jail time

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After about 20 minutes of attorney and attorney-client discussion outside the Warren County General District Courtroom after the scheduled 2:30 p.m. starting time Wednesday afternoon of a motions hearing in the cases against Cynthia Atkinson Bailey and three family members accused of offering prostitution services out of a Front Royal massage parlor, a plea agreement was announced.

Bailey took an Alford plea to two misdemeanor charges, one of prostitution and of operation of a “bawdy (defined as gross, indecent or overly graphic) house” and had the remaining felony charges against her dropped by the Commonwealth. In an Alford plea a defendant pleads guilty without admitting guilt, only that the prosecution may have enough evidence to convict. Felony charges dropped included pandering or making money from prostitution; and cruelty to children, involving a teenage niece answering the phone and scheduling appointments for the Blue Valley Services business.

Noting that Bailey, 55, has no previous criminal record, Assistant Commonwealth’s Attorney Matt Beyrau informed Judge W. Dale Houff that Bailey would be sentenced to 30 days in jail and fined $500 on each guilty plea, with all jail time and $400 on each count suspended. Bailey will also be on unsupervised probation for 12 months.

A similar agreement was then announced for Bailey’s daughter Brandy Nicole Atkinson, who had a misdemeanor prostitution charge amended to disorderly conduct, also a misdemeanor. She received the same suspended sentence, fine agreement and 12 months of unsupervised probation as her mother.

From left, Cynthia Atkinson Bailey with children Brandy and Jesse Atkinson outside the WC Courthouse following an earlier hearing on their cases – Royal Examiner File Photos by Roger Bianchini

Bailey’s son Jesse Thomas Atkinson and Brandy Atkinson’s fiancé Joshua Allan Stamper had peripheral charges to the bawdy house operation dropped by the prosecution. It was noted that Stamper was incarcerated on unrelated charges at the time his trio of co-defendants were arrested on May 15, 2019. Defense counsel indicated Stamper, who appeared in court in orange and white striped jail clothes, was still serving a two-year sentence on that unrelated conviction.

Cynthia Bailey and Jesse Atkinson were represented by David Downes; Jonathan Silvester was counsel for Brandy Atkinson and Stamper. Had the plea agreement not been reached, defense attorneys were prepared to argue for exclusion of much of the prosecution’s evidence in the case.

Background
So, with a whimper, not a bang, ends the massage parlor/bawdy house saga that embroiled and led to the resignation of Front Royal Mayor Hollis Tharpe last May; and led to some testy press release exchanges between Bailey attorney Downes and the Winchester Special Prosecutor’s Office and Front Royal Police Chief.

Tharpe was indicted on a solicitation of prostitution charge on April 15, 2019, a month before Cynthia Bailey and her family members’ May 15 arrests. According to an FRPD press release issued on May 16, the arrests were the result of an ongoing investigation that began in late January of 2018.

Tharpe’s April 15, 2019 Grand Jury indictment, ironically signed by Tharpe’s eventual successor as Interim Mayor Matthew Tederick as grand jury foreman, references a May 31, 2018 incident in which Tharpe allegedly offered “money or its equivalent to another for the purpose of engaging in sexual acts … and thereafter did a substantial act in furtherance thereof against the peace and dignity of the Commonwealth …”

On March 25, 2019, Mayor Hollis Tharpe, center, listened with council colleagues Bill Sealock and Letasha Thompson as former Councilwoman Bebhinn Egger asked town officials to learn from their past mistakes regarding the EDA. Ironically, the following day the EDA civil litigation was filed. And six weeks later Tharpe would resign under a legal cloud.

Queried after his interim mayoral appointment, Tederick called his grand jury role in Tharpe’s situation a coincidence, noting he received the grand jury assignment before the Tharpe case was brought forward.

Cynthia Bailey was initially arrested one week after the referenced Tharpe massage parlor incident, on June 7, 2018 on a charge of prostitution. That charge was dropped by the Commonwealth on October 2, 2018.

Tharpe’s misdemeanor solicitation case was eventually dismissed at the request of Special Prosecutor Heather Hovermale during a July 15, 2019 hearing due to Bailey’s invocation of her Fifth Amendment right to not self-incriminate due to the related charges hanging over her head.

Prior to that Downes and Hovermale and eventually the Town Police Chief whose officers were involved in the investigation of the Blue Valley Services operation, had engaged in dueling press releases. Downes first expressed the opinion the prosecution against Bailey was retaliatory in nature because of law enforcement’s interest in the then mayor of Front Royal and Bailey’s uncooperative stance regarding that investigation. That led to official denials by the involved prosecutor’s office and law enforcement.

For his part, Tharpe admitted visiting the massage parlor operated by Bailey at 312 Biggs Drive. However, the 67-year-old Tharpe told this reporter he visited Biggs Drive for legitimate massages on his aging and aching body. Tharpe lost a November 2019 special election attempt to regain his mayoral seat in a two-way race with Councilman and former Mayor Eugene Tewalt.

Front Royal mayor poised for indictment on sexual solicitation charge

Massage parlor defense counsel cites ‘retaliation’ over targeting of Tharpe

Winchester prosecutor’s office responds to Downes press release

He’s back: Hollis Tharpe’s solicitation charge dropped – will run for mayor

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RSW inmate found dead day after checking in to serve DUI sentence

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On Friday morning, January 10, Rappahannock-Shenandoah-Warren County Jail (RSW Jail) announced the death of an inmate the previous day. William Rodger Wines, 54 of Front Royal, was found unresponsive during a routine security check at 12:39 a.m. Thursday morning. He was pronounced dead at Warren Memorial Hospital less than an hour later.

According to an RSW Press Release, Wines had reported to the jail the previous day, Wednesday January 8, to serve “a delayed confinement/non-consecutive sentence for Driving While Intoxicated, imposed by the Warren County General District Court.”

Wines arrest date on the DUI charge is listed as August 19, 2019 on the jail website. It appears his conviction dates to January 8, the day he reported to the jail. His “Inmate Status” is described as “weekender”.

William Rodger Wines – Photo RSW Jail website

Of the circumstance of the discovery the press release issued late Friday morning said, “On January 9, 2020, at approximately 12:39 a.m., while conducting security rounds, Mr. Wines was found unresponsive. RSW medical staff was immediately notified, responded to the scene and emergency medical treatment was administered. Warren County 911 Emergency Medical Services were called and responded to the scene. Mr. Wines was transported to the Warren Memorial Hospital where he was pronounced dead at 1:21 a.m.”

RSW staff contacted the Warren County Sheriff’s Office to conduct an investigation into Wines death – “Further information will be released later based on the ongoing investigation by the Warren County Sheriff’s Office,” the RSW press release concluded.

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McDonald has bad day in civil court – how bad remains to be seen

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Former Front Royal-Warren County Economic Development Director Jennifer McDonald remains free on bond.

On Friday afternoon, January 10, former Front Royal-Warren County Economic Development Director Jennifer McDonald was found guilty of civil contempt regarding the movement of a piece of property frozen by the court during earlier EDA civil litigation hearings; and had a default judgment regarding a failure to respond to civil court orders for information on her two real estate companies, go against her as well.

McDonald was fined $375 to cover County-EDA legal costs pursuing the civil contempt judgement, and ordered not to repeat what she and her sister Gail Addison into whose name the frozen real estate parcel was moved, testified was a simple mistake. Those two sanctions were all EDA attorneys were seeking in the way of punishment on the civil contempt ruling.

As for the default judgement for failing to heed court-requested documentation on her two real estate companies, DaBoyz and MoveOn8 named along with her as three of 14 defendants in the amended EDA civil litigation, a date of April 17 was set for attorneys to argue McDonald’s liability on that ruling.

Judge Bruce D. Albertson will hear, not only those civil case arguments on April 17, but further motions arguments from a number of EDA-related criminal case defendants who were in court on the 1 p.m. docket.

On Friday afternoon Judge Albertson also granted the Commonwealth’s request to nolle prossed (drop) all current EDA-related criminal charges against Earth Right Energy principal Donald F. Poe.

Prosecutor Michael Parker restated the reasons cited in his written submission of the previous day, regarding the amount of material recently received concerning the Poe prosecutions and gaps in that material and a lack of time available with Poe’s first criminal trial on a count of perjury slated to begin January 22.

Poe attorney William Ashwell did not object to the prosecution’s request.

“We could jump up and down and say we want (the charges) out altogether now … but functionally this is a great example of the State acting as gatekeeper (of legal processes),” Ashwell told the court.

The amount of material involved in the EDA civil and criminal litigation – cited as approaching a million pages – played into many of the motions arguments heard Friday. Like Special Prosecutor Parker of the Harrisonburg Commonwealth’s Attorney’s Office before him, EDA civil counsel Cullen Seltzer told the court that the amount of involved material and documentation was in issue in their respective cases.

Seltzer said the volume of material made it impractical and prohibitive cost-wise to reproduce traditionally in hard copy. He said a data base was being created with portions flagged to different defendants’ names to ease the online search process.

In arguing against the civil contempt charge against his client, McDonald attorney Peter Greenspun, pushed into dual criminal and civil case duties due to McDonald’s financial problems that led her initial civil case attorneys to withdraw, pointed out once the real estate movement mistake was discovered, the sisters’ corrected their mistake.

“When the attorney said, ‘wait, can we do this,’ she did everything to restore the situation without court intervention,” Greenspun told the court.

Greenspun argued that the involvement of local attorney David Crump in the transaction indicated it was, in fact, a mistake rather than an act of contempt of a court order installed by initial EDA Judge Clifford “Clay” Athey Jr.

“This was not done in a parking lot or a jail cell – her conduct was not contemptuous; it was a mistake that was corrected,” Greenspun told the court.

However, EDA co-counsel Lee Byrd pointed to Addison’s own testimony to argue that deceit was a motivation in the transfer. Addison said the move was made so she, a former real estate agent, could market the parcel in her name rather than her sister’s due to “the bad name” McDonald had developed as a result of the EDA litigation.

And while Greenspun pointed out the jailed McDonald was not present for any of the three-day hearing at the end of which Athey froze some McDonald real estate assets, EDA counsel pointed to the courthouse documentation on the court order freezing McDonald assets and scoffed at the idea the experienced real estate agent wouldn’t know how to find out which of her assets had been frozen by the court.

“Their only excuse is ‘I wasn’t aware’ – they can’t say the order didn’t exist,” Byrd told the court.

And it was the plaintiff argument that held sway with the judge.

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