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EDA in Focus

Sayre elicits public comment on alleged McDonald embezzlement scheme

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Ah, the good, old days when the scent of economic development, if not financial corruption to perhaps clogged nostrils, was in the air. Courtesy Social Media File Photo

A question posed by Warren County Board of Supervisors Vice-Chairman Tom Sayre to County and EDA Attorney Dan Whitten during Tuesday’s (June 18) supervisors meeting pointed to one interesting aspect of the Cherry Bekaert report on its accounting investigation into signs of fraud within EDA finances. That aspect is the possibility now jailed former EDA Executive Director Jennifer McDonald has used stolen EDA assets to fund her civil litigation battle with Sayre.

Sayre and McDonald are engaged in dueling defamation of character lawsuits launched by Sayre in September 2018 (for $25,000 in small claims court) and in response by McDonald in February 2019 (for $600,000 in not small claims court).

What do the Sayre-McDonald lawsuit and the Titanic have in common?

McDonald ups the ante in civil litigation with county supervisor

“Is that the last embezzlement found by Cherry Bekaert?” Sayre asked Whitten of a $10,000 wire transfer authorized by McDonald to her civil suit law firm on November 21, 2018, ostensibly to pay for Afton Inn legal work.

“To my knowledge it is,” Whitten replied.

McDonald resigned under increased scrutiny from the EDA board as a result of the Cherry Bekaert financial accounting fraud investigation a month later on December 20, 2018.

The possibility of McDonald’s use of embezzled money to pay for some aspect of her civil litigation attorneys fees was initially raised by Sands-Anderson attorney Cullen Seltzer on the EDA’s behalf during a May 22 motions hearing.

“Is she using stolen money to pay her attorneys,” Seltzer asked Judge Clifford L. Athey Jr. during discussion of McDonald’s civil counsel’s request to quash a plaintiff subpoena of his client’s financial records related to her legal representation.

In explaining the request to the court Seltzer noted that the former EDA chief executive is accused of “defrauding a significant amount of money from the EDA” and wondered if some of that money was being used to fund her legal costs.

May 29, July 17 set for further motions arguments in EDA civil case

And while on May 22 Athey upheld McDonald civil attorney Jay McDannell’s motion to quash that portion of plaintiff subpoenas of his client’s financial records, circumstances have since changed.

Tensions were apparent between McDonald, far left, and Sayre, far right, by October 2018 during a County meeting the month after Sayre’s defamation lawsuit was filed against the then-sitting EDA executive director. Royal Examiner File Photos/Roger Bianchini

Two days later on March 24 McDonald was arrested by the Virginia State Police on four felony charges related to the EDA’s civil litigation initially seeking return of $17.6 million in EDA assets, an amount now up to $21.1 million. McDonald is the central figure among nine defendants, including Truc “Curt” Tran, Donald Poe, Justin Appleton and the late Daniel McEathron, and four LLC’s tied to McDonald and/or those people.

And 19 days after that civil case hearing, on June 11, files ordered produced by Athey on May 22 from the financial fraud investigation at the base of the EDA civil litigation were discovered by media unsealed in the civil case court file.

And in the “Afton Inn Embezzlements” section of the Cherry Bekaert investigation there appears to be a direct answer to Seltzer’s May 22 question to the court about how McDonald was financing her civil attorneys.

“MCDONALD requested a wire draw down from FB&T (First Bank & Trust) for $10,000 with instructions sent via e-mail Rochelle Longnecker of FB&T representing the $10,000 wire request (from funds restricted to Town or County use) was for the Afton Inn Attorney. MCDONALD also attached an invoice with wiring instructions to send the payment to ‘Berlik Law, LLC’ ” McDannell, who successfully argued the quashing of the EDA subpoena of McDonald’s financial records regarding payments to her civil attorneys on May 22, works for Berlik Law, LLC.

But perhaps McDonald discussed the “Afton Inn Embezzlements” aspect of the EDA civil case against her with her Berlik Law attorneys – I guess you might argue such discussion made them “Afton Inn Attorneys”.

Since forged Afton Inn invoices were alleged by McDonald in the EDA civil litigation filed March 26, work has stopped on restoration of the Afton Inn.

Perhaps we’ll ask whichever Berlik Law attorney who shows up for this morning’s hearing on the McDonald-Sayre defamation lawsuit in Warren County Circuit Court exactly what legal work related to Afton Inn redevelopment on the still EDA-owned property they may have done last year.

Whatever it may have been, it appears to have been counterproductive. Work under the auspices of Afton Inn developer 2 East Main Street LLC – not a defendant or named liable party in the EDA civil case – is now stalled due to the project’s alleged use by McDonald to embezzle EDA funds, also to pay off personal credit card debts, resulting in a halt on EDA payments to the developer for already completed contractor work.

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EDA in Focus

EDA authorizes litigation to recover Workforce Housing parcel or its value

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Following an hour-and-a-half Closed Session Friday morning, November 15, the Front Royal-Warren County Economic Development Authority Board of Directors unanimously approved a motion to authorize litigation to sue Cornerstone, LP, LLC, its principals and affiliates to recover “EDA land improperly conveyed to Cornerstone without EDA authority or collect the full value of the conveyance and such other damages to the EDA”.

The land in question is the 3.5-acre Workforce Housing parcel sold to the Cornerstone group on November 28, 2018, at a price of $10 dollars.

After initially receiving the parcel as a $10 gift from the aunt and uncle of former EDA Executive Director Jennifer McDonald, local realtors Mr. and Mrs. Walter Campbell, the EDA Board agreed to purchase the property for $445,000 in April 2017 after missing a previously undisclosed developmental deadline that would have enabled the Campbells to pursue tax credit compensation for the gift of the land to a public purpose.

It is believed that Cornerstone, LP, LLC, is a branch of regional developer the Aikens Group. Aikens was cited by former EDA Executive Director McDonald as a behind-the-scenes, private sector player in the Workforce Housing financial riddle from its inception in late 2014.

The property in question lies at the end of Royal Lane, stretching to the right toward Remount Road. Royal Examiner File Photos by Roger Bianchini. Video by Mark Williams.

When contacted in April about the transaction Gray Blanton, who signed the Deed of Sale to Cornerstone for the EDA as board chairman in November 2018, told Royal Examiner he had only seen the final signature page of the four page document. Blanton seconded the motion made by Greg Harold to authorize the litigation.

Local real estate attorney Joe Silek Jr., who represented the EDA due to the recusal of then EDA Attorney Dan Whitten for a potential conflict of interest as EDA and County Attorneys, told us in April there was no price on the deed of sale when it was forwarded from the EDA to the Winchester law firm of McCarthy-Akers for completion.

Asked why the EDA would agree to take a $444,990 loss or even a $651,690 if disputed EDA developmental and peripheral purchase costs are included, Silek said, “I don’t think they did,” and referred us to attorney Doug McCarthy of the McCarthy-Akers law firm for further information.

As we first wrote in April, as of publication there has been no response to a phone-message inquiry about the transaction from the attorneys who represented the buyer in the now legally-disputed sale.

Of the transaction, the initial March 26 filing of the EDA civil suit says, “When interviewed on December 6, 2018, Defendant McDonald continued to maintain that the Aikens Group would refund the Warren EDA the full cost of the Royal Lane Property and any improvements, when she knew said property had been conveyed by the Warren EDA on November 28, 2018 to Cornerstone for consideration of $10.”

That transaction came as scrutiny of McDonald’s executive leadership of the EDA was intensifying as the Cherry Bekaert financial fraud investigation progressed. Following several hours of closed session discussion of the Cherry Bekaert findings and her job performance on December 14, 2018, McDonald had her contract, check-writing and administrative authority over EDA bank accounts stripped by the EDA board.

Facing a second closed session on the same topics a week later, McDonald submitted her resignation by email, and according to the EDA lawsuit attempted to cap her financial liability to the EDA at $2.7 million dollars.

Then EDA Board Chairman Greg Drescher and Executive Director Jennifer McDonald found themselves facing hard questions from two supervisors, Fox and Sayre, about how the Workforce Housing Project had evolved during a June 2017 joint EDA-County Board work session.

As previously reported, in initial defense motion filings McDonald’s now former civil case attorney Lee Berlik claimed his client was being vilified and scapegoated for past bad decisions of the EDA Board of Directors.

However, the EDA civil action alleges a lengthy pattern of gaps, conflicting or misinformation from McDonald to the EDA board regarding what is termed the “Royal Lane Property Embezzlements” among other allegations of financial fraud that have led, not only to civil liability claims against the former EDA chief executive, but also 32 felony financial fraud indictments from a Special Grand Jury empanelled to investigate potential illegalities tied to the EDA civil suit.

And now it seems the Aikens Group finds itself on the perimeter of that EDA civil litigation regarding what has been a twisting and often inexplicable, five-year saga surrounding the attempted transfer of the Campbells’ 3.5-acre Royal Lane parcel to a public use.

See if you can make any sense of this – on May 19, 2017, the EDA released this 383-page explanation of the Workforce Housing Project after Councilwoman Bébhinn Egger sought answers on the project’s shifting financial dynamics.

Also unanimously approved after the Closed Session, on a motion by Jorie Martin, seconded by Blanton, was authorization for Executive Director Doug Parsons to forward Adjusted Journal Entries developed by retired County Finance Director Carolyn Stimmel and Hottel & Willis’s Heather Tweedy to the Yount-Hyde-Barbour accounting firm for use in development of the EDA’s 2018 Audit Report; and on a motion by Harold, seconded by Tom Patteson, acceptance of the Commission Agreement for the sale of the EDA-owned McKay Springs property, subject to receiving the Agency Agreement within 14 days.

Open Session Business
The pending McKay Springs property transfer and a County Planning Commission Public Hearing two days earlier on Wednesday, November 13, were topics discussed During County Administrator Doug Stanley’s Report during the open portion of Friday’s meeting.

That open portion of the meeting was eventful as the full EDA Board received monthly reports and six-month Strategic Priorities Lists from the EDA’s Asset Management, Finance, Communications and Executive Committees; as well as the monthly report on County business; and Executive Director Parsons’ Strategic Priorities List.

Major topics included the status of the Afton Inn as far as the developer resuming work on site; the status of removal of the Earth Right Energy-installed solar panels on the EDA’s Kendrick Lane Office Complex to allow roof repairs to facilitate empty space rental marketing; and the status of resolving payment issues with the Town of Front Royal on the new Police Station across Kendrick Lane.

As part of the Asset Committee Report Jorie Martin told the board that there had been three replies on the solar panel RFP, with one of particular interest. That one was from a non-profit with the expertise to remove the panels, and then market them for resale at no cost to the EDA. Martin added that it was possible the EDA could even see some revenue from the arrangement.

The EDA is abandoning the idea pushed by McDonald to provide sustainable solar power to the EDA Office Complex, ostensibly as an incentive to help attract a high-end commercial client to the county, supposedly Amazon according to one former board member. Issues include a lack of individual unit metering equipment and the fact the Town has sole authority to charge for the provision of power inside the town limits.

Removal of the EDA Kendrick Ln. solar panels will not be as difficult or costly has first thought. It was discovered the panels are not bolted to the roof, and removal might even turn out to be profitable.

During discussion of the Kendrick Lane roof-solar panel situation it was noted that one positive was that the solar panels were not bolted to the roof in any way, and rather are just sitting on the roof on the panel row bases. Executive Director Parsons pointed out that it had been established that the roof damage did not come from the solar panel installation, but was a consequence of “faulty roof work ages back”.

Also during the Asset Committee Report Harold said the committee “was sad to report that the majority of current bad debt and aging receivables is owed by the Town of Front Royal for their municipal projects”. Primary among those projects is the $8 million to $11 million Town Police Station project financed through the EDA.

Interim Town Manager Matt Tederick was present and in response to a question told the EDA that “the Town is in receipt of the invoice that was most recently sent” regarding the police station and that it would be discussed at a coming council work session.

Tederick also said the Town had received an EDA FOIA request and that the Town Finance Director had scanned relevant material which should be forthcoming shortly. The Interim Town Manager said he had discussed with the Town Attorney setting up a conference call for 3 p.m. Monday to discuss Town-EDA issues.

The Town has filed civil litigation against the EDA to collect “as much as $15 million” in assets it believes were misdirected or lost by the Town during McDonald’s executive leadership of the EDA.
Talking to the press after the EDA went into Closed Session Tederick said he believed the referenced FRPD project invoice was for $8.7 million dollars, with assessed interest calculated at 3.5%, which he added, “differs from the agreed-upon terms the Town was originally offered by the EDA.”

How are we paying for this thing? – Someone may have been thinking at the Nov. 1, 2017 groundbreaking for FRPD headquarters, or not …

Tederick confirmed the Town’s perceived agreed-upon interest rate on the FRPD project involved New Market Tax Credit Program (NMTC) financing, which is believed to calculate at about 1% over the life of the bond payback.

“So it’s all coming to a head and we’re trying to figure out how to best move forward,” Tederick said. Asked if the Town and EDA were trying to make the financing dispute less adversarial, the Interim Mayor replied, “Make it less adversarial, of course. But we have to agree upon what we can agree upon. And what we can’t agree upon we have a judge to determine what the right numbers are.”

As Royal Examiner has previously reported, a council majority decided to gamble on a best case New Market Tax Credit scenario brought forward by McDonald during consideration of a bond issue on a number of Town or County Capital Improvement Projects. That NMTC Program would have offered a seven to nine-year interest free payback term over an estimated 20 or 30 year payback.

However, that gamble was made over the advice of then-Town Manager Joe Waltz, Town Finance Director B. J. Wilson and NMTC Regional Administrator People Inc. representative Brian Phipps.

Due to uncertainties with the NMTC Program’s future, as well as municipal competition for limited regional funds controlled by People Inc, Waltz, Wilson and Phipps all recommended to Council that a bank-offered, locked-in 2.65% interest rate over a 30-year payback term was the best bet because its favorable interest rate was locked in and the money was not subject to being lost in a municipal competition for funding.

People Inc. NMTC Program Administrator Brian Phipps tells Town Council that private-sector 2.65% interest locked in for 30 years sounds pretty good, without the gambling aspect of vying for the government funds involved. But a council majority decided to go the ‘casino’ option on a project that didn’t even qualify for the tax credit program.

It was also later established that the FRPD headquarters project didn’t qualify for the NMTC program because it was a capital improvement project that did not create jobs, a primary goal of that federal and state overseen program.

“Here comes the judge,” as comedian Flip Wilson used to say.

Watch the entire open session EDA Special Meeting, with the above-referenced discussions and reports, among others of high interest in the exclusive Royal Examiner video:

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EDA in Focus

Earth Right Energy countersues EDA for $20 million in damages

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According to a November 7 filing with the Warren County Circuit Court Clerk’s Office Earth Right Energy (ERE) has joined in countersuing the Front Royal-Warren County Economic Development Authority for damages it claims the company incurred as a result of cancellation of a contract it asserts was validly put in place during the tenure of former EDA Executive Director Jennifer McDonald.

As previously reported attorneys for EDA civil defendant ITFederal and its principal Truc “Curt” Tran filed $13.5 million countersuit against the EDA on October 9. The EDA is seeking recovery of as much as $12 million in EDA assets from Tran and ITFederal.

Along with Tran and his company, Earth Right Energy and its principal Donald Poe and Managing Partner Justin Appleton were among defendants named in both the original EDA civil litigation of March 26 and the Amended EDA civil complaint of October 4.

The EDA is seeking recovery of a total of $21.3 million from what has climbed to a total of 15 defendants alleged to have been involved in, or beneficiaries of fraudulent financial schemes surrounding the former EDA executive director. McDonald is now facing 32 criminal felony financial fraud indictments related to the EDA civil litigation and the County and EDA-contracted Cherry Bekaert public accounting investigation of EDA finances at the base of that litigation. Poe is scheduled for a three-day trial January 22 to 24 on three criminal felony charges – two “obtaining money by false pretenses” and one “perjury” – related to the EDA litigation.

Earth Right Energy principal Donald Poe outside the Warren County Courthouse following a recent hearing – Royal Examiner File Photos/Roger Bianchini

The Amended EDA complaint states that ERE, Poe, Appleton “and others, entered into multiple agreements with Defendant McDonald purporting to oblige the Warren EDA to pay for solar installation at Warren County Public Schools, even though Defendant Poe knew, that the Warren County Public Schools did not approve of any agreement to purchase and install solar power equipment from Defendant Earth Right Energy for any Warren County Public School properties.”

While that $27.3 million dollar solar contract for the schools was never acted upon the EDA civil suit cites payments authorized by McDonald to ERE “without permission or authorization by the Warren EDA” totaling $1,279,888. The EDA litigation notes an August 27, 2018 reimbursement payment made by ERE at McDonald’s request to the EDA of $334,851, reducing the total sought for recovery from ERE to “at least $945,037”.

However in its countersuit, ERE attorneys allege that the public schools solar contract was legitimately negotiated and confirmed at some levels in a mid-August 2018 phone conversation witnessed by “Earth Right’s representatives and Mrs. Michelle Henry”. Henry is also facing criminal charges and civil liability in the EDA case.

“Earth Right extended a formal offer in August in the form of an unexecuted written agreement memorializing the terms of the offer.

“In mid-August (2018), representatives from Earth Right, met in person with Jennifer McDonald, then the Executive Director of the EDA, to inquire as to (1) whether the EDA had approved and agreed to the terms in the Offer, and (2) whether the Warren County School Board was amenable to being a third-party beneficiary of the agreement and would endeavor to aid Earth Right and EDA in fulfilling the terms of therein.

“Jennifer McDonald, as Executive Director and in the presence of Earth Right’s representatives and Ms. Michelle Henry, telephoned Mr. Greg Drescher, then Chairman of both the EDA and the Warren County Public School Board (writer’s note: actually Drescher was superintendent of schools, not a member of the School Board).

Jennifer McDonald and Greg Drescher during signing of authorization of the purchase of the Workforce Housing property once believed to be a $10 ‘gift’ at a cost of $445,000. That expenditure has also come under question in the EDA civil litigation.

“Mr. Drescher confirmed to Jennifer McDonald during the above-mentioned telephone conversation that the EDA had approved the agreement and that the Warren County School Board would endeavor to take whatever reasonable steps the EDA and Earth Right needed to have solar installed on the Roofs of the schools subject to the agreement,” four consecutive paragraphs of the ERE counterclaim contend, adding that “on September 4, 2018, Jennifer McDonald … on behalf of the EDA, formally executed the agreement with Earth Right …”

Of the agreement the ERE Counterclaim states, “The intent of EDA and Earth Right though not written was to secure third-party grants and other sources of funding such that the EDA either did not have to make any capital outlays required by the School Solar Agreements or such that the EDA would be recoop all monies paid (grammar in context).”

As a consequence of what it claims was a legitimately enacted contract, Earth Right Energy asks the court for a judgment of $20 million in damages; court costs; “and any other relief deemed just and appropriate.”

And so the legal wheels continue to spin around EDA civil and criminal litigation now estimated to have generated between 700,000 and a million pages of related materials being accumulated by the Warren County Circuit Court Clerk’s Office.

Good thing there is such a thing as ‘digitization’ of paperwork in the 21st Century or court files would be spilling out of all the Courthouse windows.

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Crime/Court

Evidentiary issues delay Michelle Henry hearing to January 23

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Commonwealth’s Attorney Bryan Layton and Michelle Henry co-counsel David Hensley and Ryan Nuzzo were granted a joint motion to continue a scheduled preliminary hearing to January 23, at 8:45 a.m.

Judge Bruce D. Albertson granted the continuance after Layton agreed with Hensley’s observation that complications in digitizing the voluminous amount of materials related to the EDA financial fraud investigation and Special Grand Jury documentation leading to criminal indictments related to that investigation had prevented Discovery Motion materials from yet being made available to the defense.

“We have nothing to review, none whatsoever,” Hensley told the court.

Layton told the court that progress had been made in the digitization process the Virginia Supreme Court has suggested to deal with an unusual amount of evidence and documentation related to the EDA criminal and civil cases. However, he observed that, “Unfortunately we are in an unusual situation with a great deal of Discovery material.”

Estimates of the involved material in previous hearing discussions has ranged from 700,000 to one million pages; an amount that has drawn the attention of the Virginia Supreme Court according to Warren County Circuit Court Clerk Janice Shanks.

The Warren County Courthouse is a familiar sight for EDA-involved defendants, their attorneys, family, friends and the media. Royal Examiner File Photo/Roger Bianchini

“We are in rare waters,” Judge Albertson observed of the evidentiary situation.

He ruled that both sides, including legal staffs and the defendant, could have access to available Special Grand Jury transcripts related to the two felony embezzlement charges former EDA Administrative Assistant Henry faces. However the judge told the attorneys that while those Special Grand Jury materials could be reviewed, they could not be copied and must be kept confidential within the legal teams working the case.

In seeking a date for the continued hearing, Albertson noted he would be in Warren County January 22nd through 24th for a three-day trial on the EDA-related criminal charges against Donnie Poe. Henry’s hearing, during which a trial date may be set in her cases, was set prior to the start of Poe’s trial’s second day.

Henry was arrested on June 24 on two felony counts of embezzlement for the “unlawful use, disposal, conversion, embezzlement of property of the EDA”. Her arrest came exactly one month after her former boss Jennifer McDonald’s first arrest (May 24) on what has since climbed to 32 felony indictments against the former EDA executive director related to financial fraud allegations.

Dates attached to the Henry’s warrants are for actions occurring between October 1 and December 30, 2016 and September 1, 2014 to December 30, 2016. Henry was cited for involvement in dispersal of assets tied to the B&G Goods retail operation in the old Stokes Mart building that the EDA purchased in 2014, as well in a possible scheme related to the building’s purchase.

After nearly a month in jail, Michelle Henry was photographed at RSW Jail when she returned from an out-of-county jail for a July 19 hearing four days before she was finally released on a $2500 secured bond. Photo/RSW Jail website

“MCDONALD is suspected of colluding with HENRY, LAMBERT, and possibly POE to acquire the Stokes Mart property under false pretense to facilitate several different embezzle schemes of which payments herein as repairs and maintenance for B&G or paid directly to LAMBERT are approximately $21,000,” CPA fraud investigator Cherry Bekaert wrote in its EDA financial investigation report.

Texts between Henry and McDonald that are part of the Cherry Bekaert report on its investigation of EDA financial affairs indicate discussion between the two of investment stakes in the B&G Goods business.

Due to judge transfers and recusals Henry spent a month in jail before Albertson, the chief presiding judge of Virginia’s 26th Judicial District took over the bulk of EDA cases. On July 23 Albertson granted Henry a $2500 secured bond on the two charges against her.

Henry freed on $2,500 secured bond in EDA case; McDonald hearing July 31

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EDA hearings done for the day – Let’s go get McDonald again

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Maybe that’s the reason the larger Warren County Circuit Courtroom “A” wasn’t available to move into to accommodate the full house in diminutive Courtroom “B” for the EDA criminal and County Supervisors Removal Petition hearings Monday morning – new indictments brewing from the EDA Special Grand Jury that often meets in the larger Courtroom A.

According to the Rappahannock-Shenandoah-Warren County Regional Jail website former EDA Executive Director Jennifer McDonald was arrested Monday afternoon on four new felony indictments related to the EDA financial scandal.

She was arrested by the Virginia State Police and booked at 1:25 p.m., an hour-and-25 minutes after the Removal Petition Show Cause Hearing adjourned at noon to close the day’s open court proceedings regarding the EDA. She was released just over an hour later at 2:26 p.m. on what appeared to be a $5,000 secured bond.

Jennifer McDonald knows the routine at RSW Jail bookings. Monday she was arrested for a third time, on four additional charges related to the EDA financial scandal. Photo/RSW Jail website

If our memory serves us that is McDonald’s third arrest, raising the number of financial felony charges she faces to 32. She was arrested on four initial counts on May 24, saw that number climb to 14 while incarcerated without bond as a flight risk. She was eventually granted bond by new presiding Judge Bruce D. Albertson on July 31. Albertson took over EDA cases as Judge Clifford L. Athey Jr. left for the Virginia State Appeals Court.

The 42-year-old McDonald was arrested on 14 new charges on August 23, the same day her husband Samuel North and business partner Donald Poe were arrested on related charges, Poe for the second time after first being charged on three counts in the EDA case on July 23. After spending the weekend in jail, all three were bonded out Monday, August 26.

On Monday, October 28, McDonald was out on a $50,000 secured bond on the 28 previous charges she has been arrested on. Noting the fluid nature of the Special Grand Jury investigation regarding his client, at an earlier hearing McDonald’s criminal attorney Peter Greenspun had asked for some arrangement to prevent repeated, prolonged incarcerations for every new charge levied against his client.

Perhaps that ability to post a smaller, secured bond to obtain immediate release is that arrangement.

The new charges are Fraud, Uttering; Larceny – Embezzlement – $200 plus; Money Laundering – Financial Transaction from known felony activity; and Fraud – Obtain money by false pretenses, $500 (or more).

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County officials, EDA board members have good day in court – will it last?

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After hearing combined arguments from attorneys for 11 of 13 County municipal and Economic Development Authority defendants present on why ancient English Common Law did not create 21st Century legal grounds for criminal prosecution regarding unintentional dereliction of the oversight duty of their office, Judge Bruce D. Albertson ruled for those defendants.

Also on Monday Albertson denied a Removal Petition request that all five sitting County Supervisors be immediately removed from the conduct of their office prior to the resolution of a Show Cause Hearing on that Removal Petition filed October 18.

“For me as a judge to act now is potentially influencing the outcome of the election,” Judge Albertson observed in denying immediate removal.

However in a possible harbinger of things to come, the judge added that “there are other conceivable outcomes civil and criminally” as to a potential final resolution of this citizen-elected official dispute.

Some litigants, attorneys and reporters home away from home – the Warren County Courthouse – Royal Examiner File Photos/Roger Bianchini

On a motion by defense counsel for the supervisors that petition was sent to the County Registrar for verification that the required 10% of county voters in each voting district signing the petition, were in fact registered county voters. A return date of November 22 at 8:45 a.m. was set to get the result of that Registrar’s Report.

More on that initial Removal ruling later, but first to the court decision quashing the criminal charges against those county supervisors, the county administrator and past and present EDA board members.

After retiring to chambers to consider his ruling after an hour and seven minutes of legal arguments and counterarguments, 13 minutes later Judge Albertson returned to sustain the collective motions to quash the three misdemeanor indictments against all 11 defendants whose attorneys were present and participating in the arguments.

Upon that ruling, an observing co-counsel for Tom Sayre and Tony Carter, whose counsel was not present due to a scheduling conflict, both rose to ask that they or their client be included in the ruling, drawing some laughter from a packed courtroom.

“That makes sense,” Judge Albertson said, allowing the joining of the two in the judgment as had been discussed earlier were the ruling to go that way.

Tony Carter, here at Sept. 24 misdemeanor booking at RSW Jail, may be wondering if he has to pay his criminal attorney now that the charges against him have been collectively quashed in his attorney’s absence.

Albertson noted he was unable to find any evidence codifying misfeasance and nonfeasance as prosecutable misdemeanor offenses in the Commonwealth of Virginia, even under English Common Law at the base of U.S. law. He said the only related legal reference to the two charges he could find was in a 1967 civil case in England.

“What else is out there? It’s like finding a black hole by the gravity moving around it,” Albertson said, noting that the closest DCC Code that was found to bring the charges under was “solicitation”.

Solicitation of what, the court may have asked.

Acting Commonwealth’s Attorney Bryan Layton argued that while “as ill-defined as it may be, there is a legal precedent” for the charges, in arguing against the motions to quash the indictments.

Several attorneys jumped on that argument.

“ ‘As ill-defined as may’ be is repugnant to Virginia Law,” David Crump, who represented four defendants, replied to Layton’s assertion of precedent.

“ ‘As uncertain and vague as it is’ supersedes due process and fairness and is repugnant to the Virginia Constitution,” David Silek, representing former EDA Treasurer William “Billy” Biggs, added.

As Royal Examiner reported on September 8, of the three “feasance” failings of public office only malfeasance is codified as criminal by the Virginia Legislature, and that as a misdemeanor offense, though one that could lead to more serious charges.

The dividing line between malfeasance and misfeasance and nonfeasance is intent.

Malfeasance is defined as “intentional conduct that is wrongful or unlawful” while nonfeasance is defined “as a failure to act where there was a duty to act” and misfeasance is described as “conduct that is lawful but inappropriate”.

All the charges relate to the County and EDA Boards’ continued allowance of former EDA Executive Director Jennifer McDonald to operate without oversight, restrictions or direct supervisory control as a financial investigation of EDA affairs was closing in on her between September and late December 2018. McDonald resigned under mounting pressure from that Cherry Bekaert financial fraud investigation on December 20, 2018, admitting to liability for the return of $2.7 million in EDA assets. The EDA claims her liability is much higher.

While not taken between September and December 2018, this photo of Jennifer McDonald on the job as she continued to be while under increased legal and audit scrutiny in late 2018 is at the root of the Removal Petition against County Supervisors.

The misdemeanor indictments cited McDonald’s movement of around $309,000 to her own benefit during that four-month period at the end of 2018, setting the groundwork for the charges. While the EDA civil litigation is seeking return of a total of $21.3 million now, due to the one-year statute of limitations on misdemeanor charges, earlier transactions could not be included in the indictments.

Removal on hold

Helping fill Circuit Courtroom B Monday morning were a number of citizens involved in the Removal Petition filed against all five County supervisors on October 18. As noted above, they left disappointed.

Not only was their request for immediate removal of the Warren County Board of Supervisors denied, but the foundation of their petition, the criminal misdemeanor indictments against the supervisors regarding a lack of due diligent oversight of EDA operations the last four months of 2018 were quashed as not legally prosecutable by Virginia law, no matter how deep you dig back to its roots in English Common Law.

Following adjournment, Removal Petition attorney Tim Johnson said he did not believe the quashing of the criminal indictments was a major blow to the Removal initiative. While no longer under criminal indictment for a lack of supervisory oversight of EDA finances at the hands of an executive director under increased scrutiny, misfeasance and nonfeasance can be “grounds for impeachment of a high official” Johnson told the press outside the courtroom.

So involved supervisors still on the board in the wake of the November 5 Election can be held accountable for past failures, Johnson believes. As noted during the hearing two of those supervisors, Board Chairman Dan Murray and Linda Glavis are not seeking reelection. Tom Sayre is running for reelection against Walter Mabe in the Shenandoah District. And Archie Fox and Tony Carter are not up for reelection for another two years.

With the citizen petition filed with the Court, the Commonwealth’s Attorney’s Office has taken up the Removal case for the plaintiffs. Acting Commonwealth’s Attorney Bryan Layton called the citizen loss of faith in their County elected officials “an unusual circumstance in my experience”.

In arguing for the plaintiff’s request for the immediate suspension of the supervisors said he believed “the damage to the public trust is so severe” as to justify the immediate suspension of their powers to govern.

County Attorney Jason Ham and co-counsel Jim Cornwell countered that there was no basis in the facts of the citizen petition to justify such a radical suspension of the municipal government function.

Cornwell said in arguing four such cases he had never seen immediate removal authorized by the court. The only case he was familiar with where the judge did order removal, with a six page Opinion he noted, was a Norfolk City Treasurer who had been convicted on six embezzlement charges – “Here’s there’s none of that,” Cornwell argued. “There is some vague reference that ‘something may happen.’ There is no evidence, it is a feeling of some people … Why suspend on an opinion?” he asked the court.

At the request of the Commonwealth, Albertson retired to chambers to watch Royal Examiner videos of two county meetings, on October 1 and October 25, with counsel from both sides before rendering that decision. Arguing on behalf of the petitioners, Layton said he believed the videos illustrated the unusual and high level public “loss of faith in the Board of Supervisors” due to the EDA financial fraud situation.

Court adjourned at 11:20 a.m. and reconvened at 11:42 a.m. following the video viewing.

Judge Albertson observed of what had been viewed, as one video segment that “devolved into yelling” and another that had been “very respectful” in its conduct of public speakers expressing themselves.

County Attorney Ham summarized what he had seen as less than ten people expressing public dissatisfaction at the hiring of legal counsel for the supervisors at taxpayer expense. He argued against overturning the electoral will of the full voting population of the county for a vocal minority of its citizens.

Layton countered that while only 10 citizens may have spoken publicly, many more were there in support of those 10; and the citizens’ petition when verified would represent 10% of the voting population, not just 10 citizens.

However Judge Albertson denied the immediate removal request.

He called it a “drastic remedy” adding that the Removal Petition itself was a “drastic measure” itself and perhaps a “pressure valve” on public discontent.

And as noted above, he worried over a judicial action that could influence a looming legislative election just two week away and alluded to other possible legal directions this citizen-elected official dispute might take.

Criminal and non-criminal dereliction of public duty: Where might they apply in the EDA financial scandal?

Defense attorneys move to quash grand jury misdemeanor indictments

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EDA in Focus

EDA plows toward future amidst multiple, evolving litigations

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Ed Daley suggests the EDA move aggressively to determine exactly who is owed how much by whom related to various litigations. Walt Mabe, candidate for Board of Supervisors, Shenandoah District listens to the discussion.

The largely revamped, yet still embattled Front Royal-Warren County Economic Development Authority held its October monthly meeting Friday morning, October 25.

The EDA board went through monthly Executive, Finance, Assets, and Communications Committee reports before getting an Executive Director’s report from Doug Parsons.

Two Board officer appointments were made and approval of the Greehan, Taves & Pandak Law Firm as the independent EDA legal counsel was finalized.

Into the meeting Board Chairman Ed Daley suggested the EDA move aggressively to determine exactly who is owed how much by whom related to the various litigations the EDA is involved in related to the Cherry Bekaert financial fraud investigation conducted from September 2018 into 2019.

The EDA civil litigation is seeking recovery of what has risen to $21.3 million allegedly misdirected or embezzled during the tenure of former Executive Director Jennifer McDonald. The Town of Front Royal has also filed a lawsuit against the EDA claiming “up to $15 million dollar” in misdirected or otherwise lost assets.

The Town also withdrew from a joint Town-County-EDA effort to smooth out future EDA operations and participation in an EDA Reform Committee, though both the EDA and County government continue to retool EDA operations.

See the monthly meeting updates, discussions and votes in this Royal Examiner video:


New EDA chief responds to Town concerns – ‘It’s just not the case’

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King Cartoons

‘Tis the Season

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Upcoming Events

Nov
21
Thu
7:00 pm Drama Performance: “Loserville” @ Melton Memorial Gymnasium | R-MA
Drama Performance: “Loserville” @ Melton Memorial Gymnasium | R-MA
Nov 21 @ 7:00 pm – 9:00 pm
Drama Performance: "Loserville" @ Melton Memorial Gymnasium | R-MA
On Wednesday, November 20th, and Thursday, November 21st, Randolph-Macon Academy’s Performing Arts Department will present its 2019 fall production of Elliot Davis’ and James Bourne’s musical, Loserville. The musical, which will take place in Melton[...]
Nov
22
Fri
9:00 am Veteran Services Visit @ Able Forces Professional Services
Veteran Services Visit @ Able Forces Professional Services
Nov 22 @ 9:00 am – 12:00 pm
Veteran Services Visit @ Able Forces Professional Services
Able Forces will once again be hosting a visit by Andre Miller, Resource Specialist, Virginia Veteran and Family Support, Department of Veteran Services, Commonwealth of Virginia this Friday 22 November from 9AM to Noon. As[...]
Nov
23
Sat
10:30 am Children’s Class: Drawing A Self... @ Art in the Valley
Children’s Class: Drawing A Self... @ Art in the Valley
Nov 23 @ 10:30 am – 12:30 pm
Children's Class: Drawing A Self Portrait @ Art in the Valley
In this class students will learn how to draw facial features and the proportions used for placement of features on a face.  They will complete a self portrait using graphite. Classes are designed for the[...]
2:30 pm The Princess & the “P___” @ Samuels Public Library
The Princess & the “P___” @ Samuels Public Library
Nov 23 @ 2:30 pm – 4:00 pm
The Princess & the “P___” @ Samuels Public Library
Lyla sees no purpose to princes. They’re ugly, stupid—and obnoxious! Why can’t Hagabah see that, and why must the master insist that she keep the prince around three more days? The world would be a[...]
4:00 pm Grounding & Gratitude: A restora... @ Strokes of Creativity
Grounding & Gratitude: A restora... @ Strokes of Creativity
Nov 23 @ 4:00 pm – 5:30 pm
Grounding & Gratitude: A restorative yoga workshop @ Strokes of Creativity
Whether you have family visiting or the stress of a shortened work week, the week of Thanksgiving can be overwhelming. This gentle, all-levels, restorative yoga class is designed to help you calm anxiety and restore[...]
Nov
26
Tue
1:30 pm Botanical Drawing II: Drawing in... @ Art in the Valley
Botanical Drawing II: Drawing in... @ Art in the Valley
Nov 26 @ 1:30 pm – 4:00 pm
Botanical Drawing II: Drawing in Color @ Art in the Valley
Learn and practice the art of botanical drawing in colored pencil with local artist and instructor Elena Maza. This four week course will focus on continuing to build drawing skills as applied to botanicals: students[...]
Nov
27
Wed
1:30 pm Botanicals in Watercolor I @ Art in the Valley
Botanicals in Watercolor I @ Art in the Valley
Nov 27 @ 1:30 pm – 4:00 pm
Botanicals in Watercolor I @ Art in the Valley
This four week course with instructor, Elena Maza, will deal with the basic three-primary color palette, different pigments and how they interact, how to mix all colors from three primary colors, how to apply washes,[...]
Nov
29
Fri
10:00 am Studio Sale & Community Art Walk @ Art in the Valley
Studio Sale & Community Art Walk @ Art in the Valley
Nov 29 @ 10:00 am – 6:00 pm
Studio Sale & Community Art Walk @ Art in the Valley
Join us for our Holiday Studio Sale and Community Art Walk on Friday, Nov. 29, and Saturday, Nov. 30, from 10am to 6pm. Enjoy a free hot chocolate or a glass of wine (while supplies[...]
Nov
30
Sat
10:00 am Studio Sale & Community Art Walk @ Art in the Valley
Studio Sale & Community Art Walk @ Art in the Valley
Nov 30 @ 10:00 am – 6:00 pm
Studio Sale & Community Art Walk @ Art in the Valley
Join us for our Holiday Studio Sale and Community Art Walk on Friday, Nov. 29, and Saturday, Nov. 30, from 10am to 6pm. Enjoy a free hot chocolate or a glass of wine (while supplies[...]
2:00 pm Chess and More @ Samuels Public Library
Chess and More @ Samuels Public Library
Nov 30 @ 2:00 pm – 3:30 pm
Chess and More @ Samuels Public Library
Meet other kids and teens who enjoy the challenge of a good chess or other board game. For ages 6 and up. Registration begins October 30.