Town seeks full disclosure of result of forensic audit of EDA

In a rare open meeting discussion of EDA financial anomalies on Monday evening, April 1 – we know, who’s the fool? – the Front Royal Town Council debated the best way to approach full discovery of the result of the six-month, quarter-million-dollar-plus forensic audit of the Town-County Economic Development Authority.

The public discussion was rare because it included legal advice from Town Attorney Doug Napier on how to proceed in the wake of the March 26 filing of a civil suit filed on behalf of the EDA. That lawsuit was filed in an attempt to recover a minimum of $17.6-million in funds allegedly misdirected under the guidance of former EDA Executive Director Jennifer McDonald.

“We know what we’ve seen in the media; we know what we’ve heard over the grapevine; but what I would suggest us doing is allowing the legal requirement to file a Freedom of Information Act request for the forensic audit, and see if we can get a copy of it. That might help clarify matters,” Napier told council of his recommended course of action seven days after the EDA civil suit was filed.

At issue for the Town is recovery of over $291,000 of debt service overpayments to the EDA over nearly a decade. Also referenced in the lawsuit are embezzlements related to the Afton Inn, Workforce Housing and ITFederal projects, all occurring within the town limits. In fact, ITFederal and its principal Truc “Curt” Tran are named as two of nine defendants in the EDA civil action. See related story: Sheriff, ITFed principal Tran, Donnie Poe named with McDonald in EDA civil suit

Councilman Jacob Meza wondered if the Town might be locked out of the full result of the audit launched to discover potential misappropriation of EDA, Town and County assets because it had not agreed to pay for a portion of the forensic audit. It is noteworthy that as part of the ongoing negotiation to compensate the Town for extension of central water-sewer utility into the Route 340/522 Corridor the county government agreed to take over the Town’s share of operational funding of the EDA.

Funding discovery of potential criminal activity by EDA personnel would certainly appear to be operational, rather than debt service funding which the Town still contributes to.

“I think we’re entitled to it,” Town Attorney Napier said of full disclosure of the contents of the forensic audit. Napier explained that as a quasi-governmental

organization created by local municipal governments to oversee economic development the EDA acted as “our fiscal agent”.

Several times during council discussion the town attorney referenced “a higher authority” asking the Town to back off any earlier filing of a civil action or FOIA regarding the audit of EDA finances. Asked later by Royal Examiner if that higher authority might be state or federal law enforcement, Napier responded with a silent smile. In announcing the empanelling of a special grand jury regarding the EDA, Warren County Commonwealth’s Attorney Brian Madden referenced the ongoing involvement of the Virginia State Police with his office exploring EDA financial activity.

Councilman Eugene Tewalt was the apparent catalyst pushing a Freedom of Information Act (FOIA) request by the Town forward now that the audit investigation of EDA finances in recent years has apparently been completed. Asked by Tewalt at the discussion’s outset to explain what he had asked of the town attorney, Napier replied that the councilman had requested the Town legal office’s preparation of a letter explaining why the full audit report was now being legally sought by council.

Napier pointed to May 1 of last year as the starting point for Town staff’s discovery of financial anomalies with the EDA, commenting, “We’ve been stonewalled so much,” regarding details of what was being discovered about unauthorized movement of EDA assets.

“We’ve repeatedly asked and been told over and over we’re going to get all the information – and we never get it,” Napier told council.

While there was no elaboration on where that stonewalling originated, a question about the next Town-County Liaison Committee meeting may have offered a clue. That date – mark it on your calendars, sports fans – is April 18.

Councilman Meza expressed frustration at an apparent lack of response or claim of ignorance of his call for a full joint meeting of the Town, County and EDA boards.

“It’s a massive mess – no doubt,” Mayor Hollis Tharpe said as the discussion wound down.

However, earlier the mayor indicated that the financial situation between the Town and EDA did not revolve around any of the apparent illegality referenced in the EDA lawsuit.

“What we’re looking for from council is to give council’s approval to Doug (Napier) to start taking the necessary steps to recover the town citizen’s tax money that we were inadvertently overcharged. It has nothing to do with embezzlement; nothing to do with charges; it’s nothing to do with anything other than at last count we had almost $300,000 in overcharges.

“And I think it’s time for Doug and the citizen’s to know that we’re going to do our due diligence. We may not get a penny and we may get it, we don’t know. But I think that Doug needs to start keeping record and moving forward with a strong possibility of getting money,” Mayor Tharpe, who is Jennifer McDonald’s cousin, said of moving the process forward.

Councilman Tewalt said he wanted a vote on a resolution to move a Town FOIA request forward put on an upcoming agenda so that the Town process would be laid out for citizens to see.

“Normally this is something that we would discuss in closed; but I felt it, along with council, that it’s time for the public to know that the town council does have an open eye; and the ears are not closed; and we’re due money that was inadvertently overcharged and we’re going to try and recover it,” the mayor said.

As we’ve said in previous coverage – better late than never. See related story: County breaks silence on EDA functions, oversight and alleged criminality,