Sayre elicits public comment on alleged McDonald embezzlement scheme

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).

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“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.