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

It was somewhat of a mixed message handed down by Judge Clifford L. Athey Jr. following nearly three days of a motions hearing on the Front Royal-Warren County Economic Development Authority civil litigation. That litigation seeks recovery of a minimum total of $17.6 million from nine defendants – kind of like the federal Mueller indictments from the Russia probe, a mix of human and corporate entities.

Sheriff, ITFed principal Tran, Donnie Poe named with McDonald in EDA civil suit

At primary issue was a plaintiff request to freeze $3.56 million dollars in assets of former EDA Executive Director Jennifer McDonald. EDA lead attorney Cullen Seltzer noted that in the wake of information from the previous day that requested levy had been reduced to $3.17 million dollars. Seltzer apparently was referencing McDonald defense attorney Jay McDannell’s assertion from his client that two real estate parcels in possession of McDonald real estate companies were being held in “a constructive trust” on behalf of the EDA.

That assertion goes to the heart of the defense presented on McDonald’s behalf during the motions hearing, which may be a clue to her defense at trial. That defense, addressed by McDannell during his closing argument Friday afternoon, is that his client may have misinterpreted exactly how much authority to initiate real estate transactions on the EDA’s behalf her board had granted her.

Testimony from several current and former EDA board members Friday indicated that the amount of trust and confidence they had placed in their executive director often led to initiatives being undertaken and reported and/or approved later as necessary.

However, several of those EDA board members also testified they had never authorized the executive director to unilaterally transfer the large amounts of money involved in some of the real estate transactions in question.

Simple misunderstanding with a laissez-faire board of directors or something more nefarious?  Stay tuned as the case moves toward a July 17 hearing.

The EDA Board of Directors, chaired by the late Patty Wines, and its executive director to Wines’ right, listen to County Administrator Doug Stanley’s monthly update on County business, circa April 2017.

As for the court’s motions ruling of Friday, May 31, as he hinted he would during the hearing, after closing arguments Athey granted the plaintiff request for a freezing of real estate or bank accounts under sole control of McDonald or her two real estate companies, while leaving those she owns jointly with her husband or parents unattached as potential collateral against damages being sought.

That same principal was used by Athey in attaching levies on a number of automobiles – those jointly owned with relatives were not attached, while those in her name alone were.

In addressing the bank account issue the judge said he thought it important to leave McDonald, who as of May 24 is charged with four felony criminal counts related to the civil litigation, access to personal resources with which to present a defense against the charges against her.

In approaching his ruling on specific McDonald, DaBoyz and MoveOn8 LLC assets, the judge went through the specific EDA projects cited in the plaintiff response to the defense demurrers and motions. Athey noted that such hearings place the court in a difficult position because it faces what is essentially a mini-trial before discovery and all relevant evidence is before it.

Motions hearing testimony indicted the EDA Workforce Housing fiasco continued to unfold from late 2014 to November 2018 when the EDA sold the 3.5-acre parcel at the end of Royal Lane for $10, taking a $445,000 to $560,000 loss along the way for what was initially described as ‘a gift’ …

After ruling the plaintiff had met the initial burden proving the basic validity of its complaint with the adjustments made in response to the initial defense motions for added specificity, Judge Athey moved through each EDA project cited to have been involved in embezzlement or misdirection of its assets:

• Workforce Housing – plaintiff likely to succeed in presenting its case.
• Afton Inn – not enough evidence yet presented by plaintiff, not included in determining judgment.
• Skyline Criminal Justice Training Academy – likely to succeed, included.
• ITFederal $10 million loan – not likely to succeed, not included.
• Earth Right Energy contracts – cannot find evidence likely to succeed at this juncture, not included.
• Unlawful Town, County funds to McDonald-owned/controlled real estate – likely to succeed, included.
• As to the specific involved real estate, the judge did not include in the plaintiff attachment McDonald and her husband’s Faith Way Drive home, her mother’s home or a day care property.
• Properties attached against movement included 1321 Happy Creek Road and 2951 Rileyville Road in Page County.

Athey noted that he would not likely preside at the next hearing in the case on July 17 due to his September 1 departure for a seat on the Virginia Appeals Court. To accommodate the judge who takes over the case, Athey ordered a transcript of this week’s motion hearing put in the court file.

See other detail of Friday’s hearing in an upcoming Royal Examiner story, including closing arguments and the testimony of current and former EDA board members William Biggs, Ron Llewellyn, Bruce Drummond and William Sealock, called to question Defense Exhibit 8 referenced in yesterday’s motions hearing story.

EDA Attorney accuses former executive director of forging document

All did testify that they had not signed the “Confidential” Closed Session Resolution document in question, despite McDonald attorney McDannell’s attempt to head that testimony off by withdrawing the disputed document from evidence. Noting the exhibit had already been introduced and commented on by a previous witness, Athey denied McDannell’s request to withdraw the document.