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EDA in Focus

Town ups lost assets claim resulting from ‘sophisticated’ fraud scheme



The EDA action or lack thereof, continues at the Warren County Courthouse. Royal Examiner File Photos/Roger Bianchini

In addressing the Town of Front Royal’s amendment to its lawsuit upping its estimate of lost assets due to financial fraud in the workings of the local Economic Development Authority from $3 million to $15 million, Town Attorney Doug Napier commented on what he perceived as a somewhat surprising degree of sophistication in how alleged embezzlement and misdirection of EDA, and consequently Town, assets was accomplished.

In its July 12 filing to amend the amount being sought for recovery from the EDA, the Town legal department notes that the “Financial Study” it had unsuccessfully been seeking a copy of from Warren County and the EDA over several months of FOIA requests had been “voluntarily” sent to it by County-contracted investigative accounting firm Cherry Bekaert. Information from that 2900-page report on signs of fraud within the EDA in hand, Town staff amended its original complaint upward by $12 million.

Asked about the additional loss estimate Napier told Royal Examiner, “During our review of the Cherry Bekaert financial study of the EDA, including the interviews of the EDA Board of Director and staff members some new facts and circumstances were brought to light which caused me to think that the Town’s consequential damages in particular, and even direct damages, might be larger than the Town had originally thought. So I thought the Town would be well served by getting out in front of this.”

Speaking of peripheral losses – what’s up with the Afton Inn in the wake of the project being cited by Cherry Bekaert as a conduit for McDonald embezzlements? That $2.5 million redevelopment Albatross is hard for town staff to ignore across the street from Town Hall.

Asked to elaborate, Napier added, “There are some indirect losses – we can’t blame it all, or say she took it all herself. But there are consequential damages or peripheral losses, a sort of ripple effect. And we wanted to be careful and aim higher, rather than lower in estimating our total losses.”

“She” is former EDA Executive Director Jennifer McDonald, jailed since May 24 on financial fraud charges. Related to some of the Cherry Bekaert information Napier observed, “In ways it is really complicated – her ability to figure out how to alter the books, forge documents – if what is in the report is what happened, if the (EDA) board is telling the truth about not signing those documents, it is really sophisticated. It makes you wonder if she had an advisor or she’s just really smart, or both. I really don’t know – but it took somebody who really knew what they were doing, to pull off.”

In the Town’s initial June 21st filing of a nine-page civil action against the EDA there was scathing criticism of a lack of oversight of McDonald through 2018, even after the May 2018 Town staff discovery of years of debt service overpayments to the EDA totaling over $291,000; and an apparently volatile August 23 confrontation between town officials and auditors with McDonald in the presence of then-EDA Board Chairman Greg Drescher and EDA Attorney Dan Whitten.

Somebody in town government was paying attention prior to mid 2018 – Councilwoman Bébhinn Egger faces off with Jennifer McDonald in October 2016. Unfortunately, none of Egger’s colleagues were paying attention.

“It was Town employees and agents who, on August 23, 2018, caused McDonald to admit, in person and while in the presence of the EDA/County Attorney and in the presence of the Chairman of the Board of Directors of the EDA, that McDonald had personally submitted false, and thereby knowingly and fraudulently, billing invoices to the Town for payment … Notwithstanding the events of August 23, 2018, the EDA Board of Directors, inexplicably, allowed McDonald to retain her position as Executive Director of the EDA with all of her rights, privileges and duties as before, with no known restrictions as such,” paragraphs 18-B and 18-D on page seven of the nine page complaint states.

As Royal Examiner reported at the time “inexplicably” was the operative word in the Town suit’s description of EDA board and staff behavior over the following four months preceding McDonald’s resignation under mounting evidence from the EDA and County’s own investigation by contracted accounting firm Cherry Bekaert.

“The EDA Board of Directors inexplicably did not immediately fire or otherwise discipline McDonald … inexplicably did not restrict McDonald’s access to the EDA offices or her duties … inexplicably did not immediately call law enforcement to investigate McDonald or her activities … not withstanding that the Town’s auditor on that date rightfully and appropriately personally called out McDonald for committing fraud upon the Town in the presence of McDonald … the EDA’s Chairman of its Board of Directors and in the presence of the EDA’s attorney,” paragraph 18-D of the initial Town complaint reads.

Better late than never – EDA board members and legal staff oversee the lockdown of Jennifer McDonald’s computer, work cell phone and office following announcement of her Dec. 20, 2018 resignation. Town officials wonder why such action didn’t come at least four months earlier.

But if the EDA and County Boards remained “inexplicably” oblivious to possible financial misdeeds by McDonald post-August 23, the Town did not.

“It was the Town …who almost immediately after August 23, 2018 contacted the Virginia State Police (VSP) and requested a complete law enforcement investigation of the EDA and McDonald, which the Virginia State Police immediately began, and continue to investigate to this date,” the Town complaint of June 21, 2019 reads.

The June 21st Town Complaint was served on two of those involved in that August 23, 2018 meeting: Whitten at his County Office as EDA attorney and McDonald at the Fairfax Adult Detention Center to which she was transferred from RSW Jail on June 11. The third recipient was new EDA Executive Director Doug Parsons, served at his Kendrick Lane EDA office. Parsons told Royal Examiner on July 17 that he hopes an accurate assessment of any money owed to either municipality by the EDA can be agreed upon and that the EDA will eventually be able to make right on its legally-verified debt to both the Town and County.

McDonald was arrested by VSP on May 24, after the first four of what now stands at 12 felony embezzlement and fraudulent movement of EDA assets indictments were handed down by the Warren County Special Grand Jury empanelled on April 1, 2019.

That empanelment followed a March 26 request to do so by Warren County Commonwealth Attorney Brian Madden. Madden’s request came the same day the EDA’s $17.6 million civil suit was filed. That suit is now amended up to $21.1 million the EDA is seeking recovery of from McDonald, her two real estate companies and five other surviving defendants: ITFederal and its CEO Truc “Curt” Tran; Earth Right Energy LLC and its principals Donald Poe and Justin Appleton.

A ninth defendant, former Warren County Sheriff Daniel McEathron, died on May 28 from what VSP described as “an unattended death with a firearm nearby”. McEathron was named in the suit due to his involvement in McDonald’s two real estate businesses and financial questions surrounding development of the criminal justice police training academy the EDA was involved in.
Recent motions filing in that EDA civil action will be the subject of coming Royal Examiner stories. In fact, a motions hearing on the EDA civil suit scheduled for today (Wednesday, July 17) was continued to an as-yet-undetermined date due to the judicial shuffling occurring in the wake of Judge William W. Sharpe’s July 12 recusal from all EDA matters.

McDonald criminal plea hearing postponed

At the time of the special grand jury empanelment request Madden said, “Since August of last year we have been working with the Virginia State Police as they investigated suspicious financial activities. Yesterday’s lawsuit filed by the EDA’s attorneys raises issues that are not presently being addressed by the VSP.

Local authorities, VSP and the FBI worked together during April 16 search of EDA headquarters and Jennifer McDonald’s office, the latter unused and apparently sealed since her Dec. 20, 2018 resignation.

“In reviewing the bill of complaint most of the allegations arise from an outside investigation conducted at the EDA’s request. To date this office has not been able to review any report generated by the outside investigation,” Madden observed.

Madden requests, Athey empanels special grand jury in EDA case

In the wake of Judge Athey’s May 22 order that EDA civil counsel produce the evidence upon which its now $21.1-million civil action is based, that is no longer true – even for the Town of Front Royal which had initially been blocked by EDA and County officials in its efforts to acquire information on the EDA fraud investigation.

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EDA in Focus

EDA closes on 506 East Main Street property sale – ultimate use to be determined



As the accompanying photos show, on Monday, April 6, a county crew cleaned out the last vestiges of previous tenants, in this case of second-floor rental storage units that remained unclaimed, in preparation for the April 7th closing on the Front Royal-Warren County Economic Development Authority’s sale of 506 East Main Street. The property previously housed Stokes Mart, later B&G Goods and most recently the Main Street Market.

And if the two recent commercial retail incarnations have been troubled, EDA Executive Director Doug Parsons sees light at the end of the tunnel in what he hopes is part one of a two-phased sale of the adjacent 506 and 514 East Main Street properties.

Above, a final cleanup before closing the deal on EDA’s sale of 506 East Main Street commercial property; below, another angle toward residential properties across East Main St. Royal Examiner Photos/Mark Williams

Shortly before 4 p.m. Tuesday afternoon, Parsons confirmed the closing on the 506 East Main property earlier that day. The sale is to James Weber, trading as East Main Commercial LLC. Parsons said that Weber owns two Victorian-style, residential rental buildings across East Main Street from his new parcel, as well as other unspecified properties.

Responding to a question, Parsons said Weber plans “significant general renovations” to improve the commercial space which had roof repair and HVAC issues during the Main Street Market leasing of the property. However, Parsons added that East Main Commercial has no firm plan in place as to the building’s future usage. The EDA director said the new owner may be looking at a leasing option for another person or commercial entity to operate out of the renovated building.

At the regular monthly meeting of the EDA Board of Directors on March 27, a resolution was approved on the “backup” sale to an, at the time, unnamed buyer at a price of $190,000. Also approved by the EDA board that day, was the return of C&C Frozen Treats owner William Huck’s $5,000 deposit on the property in the wake of that prospective sale apparently falling through the financing cracks.

“I’d like to thank Mr. Weber for his investment in Front Royal and East Main Street – we thought the property belonged in the private sector, and now it is. And we look forward to his planned improvements,” Parsons said by phone Wednesday afternoon.

Above, EDA Executive Director Doug Parsons observes pre-closing cleanout of upstairs storage bins; below, a file shot of 506 E. Main St. Royal Examiner Photos/Mark Williams, Roger Bianchini

Parsons also expressed gratitude to Warren County General Services Director Brandi Rosser and her department for Monday’s final clearing of the property. Parsons noted that the EDA attempted to contact all storage unit renters with varying degrees of success. Unable to contact some, and not hearing from others, local charities were given a chance to peruse unclaimed contents prior to Monday’s removal of what was left.

If Parsons and his board believed the old Stokes Mart building belonged in the private sector, that holds double for the adjoining 514 East Main Street property that houses a three-apartment residential rental building that, as Parsons has previously observed, EDA’s are not typically involved in as rental or marketing properties – “It is not a property we should own,” he reiterated Wednesday.

The EDA executive director said discussion “is going well” with a prospective buyer of the apartment building, and he hopes that a move toward closing on that property could come within the next several weeks.

One down, one to go – the market and adjacent apartment building. Royal Examiner File Photos/Roger Bianchini

As to the above-reference “troubled” recent retail incarnations, B&G Goods principal William Lambert is one of 15 EDA civil litigation defendants and has also been indicted criminally related to the EDA civil litigation. The Main Street Market lease ended early amidst physical structural repair issues as the EDA traversed the troubled waters of its newly evolving legal and financial landscape.

Shots inside the 506 East Main market building during Monday’s cleanout. Royal Examiner Photos/Mark Williams

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EDA in Focus

COVID-19 meeting restrictions lead to 2nd EDA grand jury extension



Contacted by phone, Rockingham County Assistant Commonwealth’s Attorney Michael Parker confirmed that Judge Clark Ritchie had extended the term of the Warren County Special Grand Jury impaneled to explore potential criminality tied to the Front Royal-Warren County Economic Development Authority (EDA) civil litigation.

That extension is for six months and came as the grand jury’s first extension was coming to an end Tuesday, March 31. The EDA special grand jury was empaneled shortly after the EDA civil litigation was filed on March 26, 2019. Its first six-month term was extended another six months in October 2019.

Parker said the newest six-month extension comes from an “abundance of caution” both legally and medically.

The COVID-19 pandemic response has stopped many activities we once took for granted, including some court proceedings. Royal Examiner File Photos/Roger Bianchini

Due to restrictions on public gatherings ordered by Governor Ralph Northam as part of the Commonwealth of Virginia’s emergency management response to the COVID-19 Coronavirus pandemic, what have been described as non-essential court functions have joined other enterprises deemed “non-essential” in the private sector in being put on hold at least through much of April. Consequently, it was decided it was unsafe for the grand jury to continue meeting in this pandemic emergency response environment.

In this fluid medical and legal environment, it is uncertain when the EDA Special Grand Jury will be able to meet again. However, Parker said he believes once those meetings begin, it will not take anywhere near six months for the grand jury to complete its business.

“Our goal is to conclude as soon as possible,” Parker said.

The entire current Warren County Commonwealth’s Attorney’s Office has recused from all EDA legal matters due to past or ongoing professional or personal relationships with involved parties. Jennifer McDonald during her local Rotary presidency, circa 2016-17.

Following the recusal from EDA legal matters of Warren County Commonwealth’s Attorney John Bell and his entire staff in the wake of his November 2019 election, Parker was appointed to handle criminal indictments stemming from alleged EDA financial improprieties discovered by a forensic audit commissioned by Warren County on behalf of the EDA in September 2018.

The EDA civil litigation is now seeking recovery of $21.3 million from 15 defendants, including former EDA Executive Director Jennifer McDonald and two real estate companies she is alleged to have used to misdirect EDA assets to her own benefit.

In a series of filings by the EDA grand jury, McDonald now faces a total of 34 financial felony charges. Also indicted criminally on fewer charges has been a tight circle around McDonald, including her husband Samuel North, her former EDA Administrative Assistant Michelle “Missy” Henry, and former EDA small business loan recipient and B&G Goods proprietor William Lambert. At the time of his business relationship with the EDA Lambert is purported to have been in a relationship with a McDonald sister.

Criminal charges against another McDonald associate, Donald Poe, were dropped by Parker due to an approaching January perjury trial date he was not prepared for with his late 2019 appointment and the mountain of paperwork filed in relation to the EDA civil and criminal cases – estimated at or around a million pages of documentation.

Donald Poe following a 2019 court hearing – indicted, charges dropped, what does the future hold?

However, as he noted at the time, Parker can refile the criminal indictments against Poe if he feels the evidence so warrants. Poe’s perjury charges related to his testimony to the EDA Special Grand Jury regarding his business ties to McDonald.

The next EDA criminal case hearing dates are scheduled for April 17. Parker said he should have more information on how things will be proceeding forward within the coming week.

A federal grand jury has also been impaneled in Harrisonburg related to the EDA financial allegations and civil litigation. On April 16, 2019, agents from the FBI and Virginia State Police searched and seized documents and materials from the EDA’s Kendrick Lane offices, including the executive director’s office that had been cordoned off and locked down since McDonald’s December 20, 2018 resignation under increasing scrutiny by the investigative auditing firm Cherry Bekaert and her EDA Board of Directors. However, the federal grand jury has yet to issue any indictments from its investigation.

Above, FBI, State, and local authorities gathered to search and seize possible evidence at EDA headquarters in April 2019; including from Jennifer McDonald’s former office, below, which is pictured being locked down, including from remote access to her computer, following her Dec. 20, 2018 resignation.

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EDA in Focus

EDA passes series of motions following 3-hour, virtual closed session



County Emergency vehicle in a nearly empty WCGC parking lot during the recent Emergency Management team meeting. Royal Examiner File Photos/Roger Bianchini

One day after the Warren County-Front Royal COVID-19 Coronavirus Emergency Management team held its first briefing available to the public live only by remote video link-up, the Town-County Economic Development Authority followed suit at its monthly meeting of Friday, March 27.

However, the EDA took additional steps on the pandemic response social distancing frontier and the enabling of live remote participation and viewing. Only EDA Executive Director Doug Parsons and Administrative Assistant Gretchen Henderson were at the EDA Kendrick Lane office where board meetings are normally held. The six EDA Board of Directors members, as well as media, public and county board representatives were all linked in remotely by home or office audio-video computer hook up.

Or as the meeting notice colorfully stated, “Due to the state and local state of emergency declarations, this meeting will be conducted virtually, as will all EDA board meetings until further notice during the emergency. The EDA sincerely welcomes public access to this unprecedented event. The EDA will be using the web conferencing platform Zoom”.
Access was also available by telephone link-up.

A tally of those connected virtually included two members of the public (Linda Allen, James Wolfe), one county board member (Oates), two media (Royal Examiner, NVD), three attorneys (Pandak, Seltzer, Seigel), the six EDA board members and two EDA staff – may be only a couple supervisors short of normal 8 a.m. in-house attendance.

After virtual meeting moderator and EDA Board Vice-Chairman Jeff Browne helped participants through their connections, the board adjourned to closed session to discuss four primary topics:

1 – legal advice on the “disposition of … 2 East Main Street/Afton Inn”;

2 – a prospective business or industry client at the 426 Baugh Drive warehouse;

3 – legal consultation on the Town of Front Royal’s civil litigation against the EDA and the EDA’s civil litigation against its former Executive Director Jennifer McDonald et al; and

4 – auditor contracts with Yount, Hyde & Barbour P.C. and RFO auditor services regarding small business loan debt collection.

Afton Inn ownership isn’t the only thing the FR Town Council and EDA Board of Directors aren’t seeing eye to eye on these days.


As noted above, three attorneys were involved in the meeting’s virtual hook up, the EDA’s contracted attorney Sharon Pandak and Sands Anderson attorneys Cullen Seltzer and Dan Siegel, the latter two who have been involved from the March 26, 2019 filing in the EDA’s now $21.3 million civil actions against McDonald and 14 co-defendants alleging embezzlement, fraud, and misdirection of EDA assets. Hired as independent EDA counsel in the wake of Dan Whitten’s resignation as County and EDA attorney, Pandak has been the EDA’s legal adviser in response to the Town’s now-amended $20-million-plus litigation against the EDA.

With that full plate of closed session business, the estimate of an hour behind virtual closed doors coming shortly after 8 a.m. fell about two hours short.

And while there were no announcements or motions regarding the two civil litigations or the now apparently disputed by the Town of Front Royal status of Afton Inn ownership, a series of resolutions and motions were approved by 6-0 votes prior to the meeting’s 11:10 a.m. adjournment.

However, as to the status of the Afton Inn, in the written monthly Asset Committee Report it is noted that “There is no public report on the Afton Inn status other than the Town of Front Royal has listed the Inn in their revised complaint in the Town of Front Royal vs. FR-WC EDA. This simply provides a new dynamic that we have to deal with in our continuing efforts to re-position this property. We continue to discuss the dynamics of this with 2 East Main (LLC, the proposed redeveloper of the property under contract with the EDA as current owner).”

The 2 E. Main St. LLC plans for Afton redevelopment have been halted by the EDA financial scandal and its monetary consequences, including the Town’s reluctance to pay an $8.4-million principal debt to the EDA on the construction of its new police headquarters.


Virtual Business
As for the series of approved motions and resolutions, they included:

1 – a resolution to return the $5,000 deposit of William Huck after the failure to close a contract with the EDA on the old Stokes Mart building at 506 East Main Street;

2 – a resolution to approve a contract on a backup offer to sell the 506 East Main building to an alternate buyer at a price of $190,000;

3 – a resolution to amend EDA bylaws to facilitate the electronic meetings during the COVID-19 Coronavirus state of emergency declarations;

4 – an amendment extending the deadline on the removal of the solar panels from the EDA Kendrick Lane Office Complex from the original April 30 date. The new deadline will be 30 days after the Governor of Virginia lifts the COVID-19 state of Emergency.

That contract with Sunshine Properties LLC will pay the EDA $40,500 for the two-building solar panel array originally installed during McDonald’s executive directorship in an arrangement with Earth Right Energy. McDonald, ERE and ERE principal Donnie Poe were all named as defendants in the EDA’s March 2019 civil litigation. Consequently, the plan for the provision of solar power to the EDA office complex went south with the filing of that litigation and other technical complications;

It appears the EDA will recoup over $40,000 of its solar panel installation costs upon the pending sale of those panels.


5 – a motion authorizing the reacquisition of the 3.5-acre Royal Lane parcel from the Cornerstone LLC branch of the Aikens Group at cost of $26,776.54. The difference in the EDA’s sale price of ten dollars to Cornerstone LLC reflects pre-construction work and planning services done by the Aikens Group for work it will not now be able to achieve after resolving the situation on the somewhat inexplicable late November 2018 EDA transfer of a property it paid $440,000 for. That price was agreed upon by the McDonald-led EDA board Chaired by Patty Wines after an initial $10 gift by McDonald’s relatives was negated by a missed tax rebate deadline.

Serving as EDA attorney on that sale in the wake of then EDA-attorney Dan Whitten’s recusal, Joe Silek Jr. said the deed of sale was sent to Cornerstone attorneys without a price on it. Then EDA Board Chairman Gray Blanton, who signed the deed of sale, said he only saw the signature page. At the time the sale situation became public in early 2019, the Winchester-based Cornerstone attorneys’ group never responded to three messages left seeking information on how the $10 purchase price was established.

While the Royal Lane parcel was intended for the development of a workforce housing apartment complex under EDA direction, Parsons told Royal Examiner after the Friday’s meeting adjournment that the EDA will likely seek to sell the parcel to the private sector for residential development, which as he has previously noted, is not a normal undertaking for EDA’s.

The $10, $445,000, $10, $26,776 ‘magical mystery tour’ of the Royal Ln. workforce housing parcel continues as property returns to EDA hands – for a while.


6 – a motion to amend the loan agreement with First Bank on a $3.59 million note covering several older projects to illustrate the County’s support of the EDA on the issue as it grapples with the aftermath of the financial scandal the above-referenced civil litigations revolve around;

7 – a motion on a monthly payment agreement on a rural business enterprise loan with Ontiveros;

And 8 – Due to the governor’s COVID-19 emergency declaration closing “non-essential” businesses, the EDA will offer rent/loan payment forbearance “to all clients in good standing”. The plan is to temporarily waive April payments and then offer quarter payments on a monthly basis until there is some resolution to the emergency declaration allowing businesses to reopen.

And so it goes on the Front Royal, Warren County Economic Development front as the retooled EDA Board of Directors, staff and County officials try to navigate the turbulent waters, increasingly stirred to a boiling point by the Town of Front Royal’s hostile litigious stance, amidst the COVID-19 pandemic emergency declarations wreaking havoc with small businesses across the town, county, commonwealth, and nation.

And ‘The Doors’ Jim Morrison thought ‘Strange Days’ were here in the late 1960’s. Jim, you wouldn’t believe the end of the second decade of the 21st century – we’re sure a lot of small business owners don’t. They are, indeed, ‘Riders on the Storm’ …

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EDA in Focus

Town amends civil suit against EDA, McDonald to over $20 million



In a nice touch of calendar irony, the Town upped the ante on its civil claim against the EDA on Friday the 13th – Royal Examiner File Photos by Roger Bianchini

On Friday, March 13, legal counsel for the Town of Front Royal filed its amended civil complaint against the Town and County Economic Development Authority and the EDA’s former executive director and her two real estate companies, Da Boyz and MoveOn8.

It remains to be seen which way the traditional Friday the 13th bad luck will eventually fall legally in what has now grown from a $2-million precautionary civil litigation to what nearly 600 legal paragraphs contained in the 83-page amended complaint explains is now “not less than” a $20.22 million claim for damages by the Town of Front Royal.

With 39 additional pages of supporting documentation surrounding the 2014 Town transfer of ownership of the Afton Inn to the EDA for marketing for redevelopment – the Town also wants the Afton shell back free and clear – and its 10-page “Prayer for Relief” summary claim of the alleged financial damage suffered by the Town during the EDA Executive Directorship of Jennifer McDonald, it was a total of 132 pages of occasionally dizzying legalese dropped on the Warren County Courthouse and the EDA’s counsel and board of directors today.

The Afton Inn and Town Hall – nice bookends?

The Town is seeking a civil jury trial to determine the validity of its claims.

The Town’s counsel – the amended complaint is co-signed by Town Attorney Doug Napier and Anthony and David Damiani of the contracted Damiani & Damiani Alexandria law firm – cites negligence by the EDA Board of Directors in its lack of oversight of then EDA Executive Director Jennifer McDonald; accuses the EDA Board of “unlawfully vesting in McDonald all of the power and authority granted to the EDA” by state code thereby causing “the Town to suffer economic harm and damages exceeding $20 million and damage to its reputation.”


The EDA executive director and four of her then board members in mid-2018

Afton Inn claims
On the Afton Inn front, the Town alleges a violation of the 2014 Memorandum of Agreement (MOA) between the Town and EDA on the ownership transfer for marketing and development purposes.

“Pursuant to the Memorandum Agreement, any lease, agreement to sell, or agreement concerning the future use of the Afton Inn Property was expressly subject to the Town’s review and written authorization.

“The EDA breached the Memorandum Agreement by failing to submit the Afton Inn Development Agreement to the Town for review and written authorization and accordingly, the Afton Inn Development Agreement has no legal force or effect or validity as it pertains to the Town,” paragraphs 462-463 read, leading to the plaintiff’s conclusion regarding that development agreement between the EDA and 2 East Main Street LLC that, “Any funds spent or debts incurred as a result of the Afton Inn Development Agreement are the sole debts of the EDA, and the Town has no legal or moral obligation to satisfy those debts,” the plaintiff states, adding that were there to be any Town liability ruled, “then the Defendants are jointly and severally liable to the Town for breach of contract in the number of funds expended, which is $357,044.”


Now inexorably intertwined – the Afton Inn and Warren County Courthouse

Following the assertion of an invalid development agreement, the amended complaint continues that “in the alternative” to a breach of contract ruling, “the Town is a third-party beneficiary of the Afton Inn Development Agreement, and is entitled to specific performance of that agreement. If the EDA is unable to perform with respect to the Afton Inn Development Agreement, then the Town is entitled to have the title of the Afton Inn transferred to the Town.”

As previously reported by the Royal Examiner, due in large part to the EDA’s current financial situation and approaching insolvency fueled in part by the Town’s refusal to pay what has been called “an undisputed $8.4-million principal debt” to the EDA on construction of the new Town Police headquarters, the Afton Inn redevelopment project has been stalled since last spring when the EDA civil litigation against McDonald et al was filed.

The town council and staff have been behind closed session doors recently with 2 East Main Street LLC representatives. And Interim Town Manager Matt Tederick referred to 2 East Main Street LLC as the owner of the Afton Inn during a Community Development Block Grant (CDBG) Committee meeting of March 3.

The times they are a-changin’ – citizen Tederick and the former EDA executive director at a 2017 town council meeting

EDA-McDonald allegations
The Town amended complaint’s references to McDonald often assume her guilt on the 34 financial felony fraud and embezzlement indictments she has been served with since the EDA filed its $21.3 million civil litigation against her and what has climbed to 13 co-defendants since March 26, 2019.

“At all times relevant hereto, McDonald was acting within the course and scope of her employment as Executive Director of the EDA and her malfeasance was committed while conducting the business of the EDA.

“The EDA is vicariously liable to the Town for the fraud, deceit, conversion, and embezzlement of McDonald under the theory of respondeat superior,” the amended complaint states.

What doesn’t make sense? then EDA Board Chairman Greg Drescher may have been thinking at a June 2017 BOS work session discussion of the EDA’s Workforce Housing gift, not-a-gift project.

The Town’s amended complaint also accuses the EDA of “Unconstitutional Taxation” in justifying its “not less than $20,226,153” claim.

“Article I, Section 6 of the Virginia Constitution states in relevant part “that all men … cannot be taxed … without their own consent or that of their representatives duly elected ….” the complaint reads on page 80, leading to page 81 observation that, “The EDA’s actions resulted in an unauthorized tax on the citizens of the Town and County. Therefore such tax is unconstitutional and invalid and has caused the Town and the Towns’ taxpayers damages in excess of $20 million.”

In the succeeding and final allegation of the amended complaint the EDA is accused of “Unlawful Eminent Domain”.

“The Defendants, by their actions aforesaid, have condemned and exercised the power of eminent domain over the property of the Town and the Town’s taxpayers.

“The Defendants do not have the power of condemnation and eminent domain.

“The Defendants actions, in condemning the property of the Town and the Town’s taxpayers, is unlawful and unconstitutional, and has caused the Town and the Town’s taxpayers damages in excess of $20 million.”

Those “actions aforesaid” appear to reference the preceding 79 pages description of specific actions cited in the EDA’s civil litigation against multiple defendants, and the criminal allegations primarily against McDonald.

Connector road to where? It seemed like a good idea at the time – who first promised those 600, high-paying tech jobs at Royal Phoenix?

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EDA in Focus

Citizen concerns spur DHR briefing to Town staff on Afton Inn obligations



As noted at the end of our related story on the EDA’s February 28 Board of Director’s meeting, following a closed session Friday morning the EDA authorized filing an FOIA request to the Town of Front Royal. That FOIA inquiry seeks all communications between the Town and the Virginia Department of Historic Resources (DHR) regarding the $700,000 Community Development Block Grant (CDBG) and the Afton Inn.

The Afton Inn, formerly Montview Hotel, prior to its porch structure falling victim to that new-fangled horseless carriage transportation thing, circa 1920-ish. Now the Afton appears in the crosshairs of State DHR scrutiny of CDBG funding. Courtesy Photo/Warren Heritage Society.Royal Examiner Photos/Roger Bianchini

That grant involves federal Housing and Urban Development (HUD) funding administered through the State for improvements to Front Royal’s Historic Downtown Business District. It also requires a $700,000 match from the Town and is running up toward a mid-September deadline for downtown façade and other grant enabled improvements to have gotten underway.

Royal Examiner believes a February 21 letter from the Review and Compliance Division of the Virginia Department of Historic Resources to Interim Front Royal Planning Director and Zoning Administrator Chris Brock is at the root of that FOIA request.

The letter, signed by DHR Architectural Historian Laura Lavernia, points out that the Afton Inn building is tied to the Town’s acquisition of the CDBG, which was awarded through the Virginia Department of Housing and Community Development and is bound by conditions of a “Programmatic Agreement executed between DHR and the Town for the Front Royal Downtown Revitalization Project.”

According to Lavernia, the Town would have to provide substantial justification to DHR for authorization of demolition.

“At a minimum, the rationale for this sudden change in scope warrants a substantive explanation and some discussion with our office before drastic measures are taken that cannot be undone,” she informed Brock.

‘At a minimum, the rationale for this sudden change in scope warrants a substantive explanation and some discussion with our office before drastic measures are taken that cannot be undone,’ DHR’s Review and Compliance Division wrote the Town on Feb. 21, concerning any potential plan to demolish the Afton Inn. But is Mother Nature taking care of that?

Lavernia’s letter opens by tracking the Afton Inn’s history, historical registries and a troubling observation about the Town’s intent toward the structure.

“The Virginia Department of Historic Resources (DHR) understands that the Town is considering the demolition of the Afton Inn located at 2 East Main Street … listed in the National Register of Historic Places (NRHP), the Virginia Landmarks Register, and contributing resources to the NRHP-listed Front Royal Historic District … Formerly called the Mountview Inn, the building appears to have been constructed sometime in 1868 – 1870 … in the Italianate style … Its successful rehabilitation will be a source of pride for years to come – and for future generations to appreciate,” the letter from DHR Architectural Historian Laura Lavernia states.

Contacted Wednesday, February 26, Interim Planning Director Brock acknowledged receipt of the letter but said it was not in response to any request for information on demolition from him.

“I don’t know what it’s in reference to, newspaper articles or what – I can’t speculate,” Brock told Royal Examiner. Brock said he forwarded the letter to Interim Town Manager Matt Tederick.

When contacted, Tederick concurred with Brock’s assessment, stating that to his knowledge no one at Town Hall had initiated a request to demolish the building, which he noted is still owned by the EDA. The Town transferred ownership to the EDA under a Memorandum of Agreement (MOA) in 2014 to facilitate the property’s marketing and redevelopment.

As for the impetus for the February 21 communication from DHR, Interim Town Manager Tederick suggested the possibility that media reports of past public meeting remarks by Mayor Gene Tewalt or EDA Board member and Asset Committee Chairman Greg Harold indicating the potential of demolition as a possible outcome of the languishing Afton Inn renovation project, as a possible cause.

“My impression is no one wants to tear it down. Everyone wants something to be done, Tederick said of the property.

However, as previously reported by Royal Examiner Harold revisited his discontent with the mid-December reversal of the Town staff’s initial prioritization of winterization of the 151-year-old building at the head of Front Royal’s Historic Downtown Business District during a perhaps ironically timed February 21 EDA Asset Committee meeting.

As recounted in detail in our related story on the Town’s absence and presence at the February 28 EDA Board meeting, Harold pointed to early November through early December emails from Town Attorney Doug Napier indicating winterization of the Afton Inn was a “priority” of the Town and that from a public safety perspective the Town had an obligation to see that the physical stabilization of the Afton Inn was accomplished.

However, as Tederick told the Joint Town-County Tourism Advisory Board about the future of tourism promotion in this community on Wednesday, “the devil is in the detail”.

‘The devil is in the detail,’ Interim Town Manager Tederick told the Joint Town-County Tourism Advisory Board about the future and funding of tourism in this community. That seems true on multiple fronts.

And the detail of financial responsibility for maintenance and repair, or demolition, of the Afton Inn appears to be a detail the Town Council, its administrative staff and attorneys aren’t ready to accept.

It was the interim town manager who informed the EDA on December 13, that any indication the Town would fund Afton Inn winterization costs was a “mistake”.

And while the Memorandum of Agreement referenced in our related EDA meeting story does state that the Town is responsible for covering maintenance and repair costs of the Afton building sought by the EDA as owner, it adds that “the Town shall not require the EDA to perform any repairs, maintenance or demolition of any part of the Afton Inn building UNLESS the Town AGREES to bear the cost of such repairs, maintenance and/or demolition.” (EMPHASIS added)

With the DHR letter’s impetus a mystery, Royal Examiner set out to get the answer from its writer. Two days after leaving several phone messages for Lavernia at various DHR numbers we got a call from DHR Media Relations official Randy Jones. After explaining our query on what led Lavernia to send the letter to Interim Town Planning Director Brock, he set out to get an answer.

A short time late he called back with that answer.

The impetus was three-pronged, Jones explained. It began with what Jones described as “several citizens reaching out to DHR” with concerns about the Afton Inn’s status and the Town’s role in assuring that status was maintained as the EDA negotiates to resurrect the stalled renovation project. Asked about names or numbers of the citizens who contact DHR, Jones would provide no additional detail.

Next door neighbors – maybe current Town officials don’t think any downtown building should be taller than Town Hall either. The Afton’s modern saga began in 2006-7 when the council sued its Board of Zoning Appeals for authorizing then-owner Frank Barros’s elaborate renovation plan that would have made the Afton 10-feet taller than the courthouse across the street, which is against town code.

However, he said that Lavernia wanted the Town’s interim planning director and interim town manager to understand all the financial and legal implications of the Afton Inn’s inclusion in the East Main Street Community Development Block Grant for the revitalization of Front Royal’s Historic Downtown Business District. From the content of Lavernia’s letter, it would seem the Virginia Department of Historic Resources considers the Afton Inn an important part of that revitalization project.

One might ask, and we’re sure someone’s lawyer eventually will, could the Afton’s inclusion in the CDBG project mandate that Town funding of maintenance or repair work must be made available to the owner if deemed necessary to assure the structure’s survival?

So, is Tederick right – did media reports of past EDA or public criticism of Town actions regarding its relationship to the EDA and Afton Inn redevelopment fuel citizen concerns about the status of the Afton Inn, leading to Lavernia’s February 21 letter to Town Hall?

Harold’s pointed public comments aimed the Town’s way citing “The Town’s Charade of Partnership” with the EDA and numerous “acts of bad faith” seemingly designed to cripple the EDA’s ability to effectively continue to function, including in resurrecting 2 East Main Street LLC Afton renovation project, began on December 13, as noted above, the day Tederick informed the EDA that any impression given that the Town was prepared to fund winterization costs of the Afton was a “mistake”.

Perhaps ironically, Harold publicly refocused on the Afton Inn aspect of Town-EDA relations on February 21, the date of Lavernia’s cautionary DHR letter to a Town staff increasingly populated by interim administrators under the direction of a town council under increasing public scrutiny as to exactly what its vision of the future of the Town of Front Royal, its financial and governmental apparatus is.

We see you; do you hear us? – a number of town citizens, including Scott Jenkins here on Feb. 10, have asked council recently. At issue is as a radical reorganization and austerity plan tied to an FY 2021 budget proposal that began being implemented five months before the end of FY 2020 and six days before that 2021 budget proposal was publicly presented to council. Has saving the Afton Inn for redevelopment fallen victim to the council’s desire to reduce taxes and slash the Town’s annual operational budget?

Now it may be up to the Front Royal Town Council’s six members, and the mayor, to more clearly explain that vision and the decision not to fund the approximate $15,000 cost of a stabilizing winterization of the Afton Inn.

Citizens are left to wonder, is the council’s vision for $1.4 million dollars of renovated downtown business facades and Village Commons improvements, with a renovated Afton Inn pointing the way to that revitalized historic downtown business district?

Or is it perhaps a vision of bricks in the dust, surrounding a parking lot where the Afton Inn once stood, tied to a tax and revenue reduction in the face of $29 million in planned capital improvements? – Improvements apparently not tied to historic downtown revitalization or the restoration of the Afton Inn.

Yea, let’s fix it up and put it on the Historic Downtown Front Royal Trolley route. – BUT the devil is in the detail …

Now it appears that not only do Town citizens want those questions answered, but so does the Virginia Department of Historic Resources.

See related story

Town notifies EDA of Afton Inn issues – opts out of discussing responsibility

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EDA in Focus

Town notifies EDA of Afton Inn issues – opts out of discussing responsibility



While there was no representative of the Front Royal Town government at Friday morning’s Front Royal-Warren County Economic Development Authority Board of Directors meeting despite the presence of a “Town Manager Update-Matt Tederick” on the agenda, the subject of town government interaction with the EDA did not take long to enter the February 28 meeting discussion.

“I thought you might want to know about this as soon as possible,” EDA Executive Director Doug Parsons told his board soon after the 8 a.m. convening of the meeting by Board Chairman Ed Daley.

EDA Board Chairman Ed Daley, left center, had a succinct reply to Executive Director Doug Parsons, white shirt upper left, recounting of the Town legal staff’s Thursday email on Facebook reports on the status of a windblown Afton Inn – ‘Have legal staff remind them they are responsible to pay for maintenance’ was the gist of that reply. Royal Examiner Photos/Roger Bianchini – Royal Examiner Video Mark Williams

“This” was a Thursday, February 27 email from Town Attorney Doug Napier to Afton Inn redeveloper 2 East Main Street LLC attorney Kelly Bundy, copied to Parsons, noting that Town Councilwoman Letasha Thompson had informed him “that she saw a few minutes ago on Facebook that the roof of the Afton Inn building next door to Town Hall and across Main Street from the Warren County Courthouse is flapping in the wind.”

Parsons continued to quote from the email, “The wind today is extremely gusty at times and strong, as you know pieces of wood soffit have already fallen onto the public sidewalk. The Town is worried that part of the roof, which appears to be metal, might be blown off onto the public streets.”

Parsons pointed out the town attorney continued to write “in parenthesis” that, “(The Afton Inn is at the intersection of the two busiest streets in Front Royal),” continuing that the situation had the potential of “highly dangerous results,” at which point the town attorney pivoted to the legal sphere.

“Because of the outstanding lease/contract to purchase status between 2 East Main and the EDA, the Town does not want to get in the middle of and opine a legal opinion as to who has the predominant obligation to repair and maintain the building; but the Town does want to draw this to your immediate attention.”

Daley responded that Parsons should work with EDA counsel Sharon Pandak, who was present for the meeting, “To respond to Mr. Napier and remind him of the Town’s responsibility.”

What roof? Well, it’s there – we’re just too low to see it, flapping in the wind or not flapping in the wind.

Legal obligations
That the Town has the legal responsibility to pay for maintenance and repair of the Afton Inn in the wake of its 2014 transfer of ownership to the EDA for marketing and redevelopment purposes has been a hot-button topic of discussion lately. That is due to the Town’s mid-December pivot from seeming agreement expressed in writing by Napier that it was the Town’s financial responsibility, as well as its province as a matter of public safety, to fund physically stabilizing winterization of the Afton Inn as a “priority”.

In fact, the town attorney included a copy of June 23, 2014, Afton Memorandum of Agreement (MOA) between the Town and EDA as part of his November-December 2019 correspondence with the EDA on the winterization project. That MOA reads in part, “The Town agrees that during ownership of the Afton Inn property by the EDA, the Town shall not require the EDA to perform any repairs, maintenance or demolition of any part of the Afton Inn building unless the Town agrees to bear the costs of such repairs, maintenance and/or demolition.”

In a December 6, 2019 email to EDA Executive Director Doug Parsons and EDA Asset Committee Chairman Greg Harold, Napier wrote, “Under the terms of the MOA … the EDA is responsible for repairs to the Afton Inn, at the expense of the Town. Regardless of any contract, the Town has an overriding duty as a municipal government, to the public to prevent injury and loss of life or limb. The Afton Inn is literally falling to pieces as I write this. It is not a defense in the public’s eye whether or not the Town can assert ‘sovereign immunity’ if a person’s vehicle, or far worse, a person’s body, is injured by something falling or collapsing from the building – the public will demand to know why the Town did not take immediate steps to secure the building, and rightfully so.”

On Dec. 13, EDA Asset Committee Chairman Greg Harold displayed November-December communications from the town attorney indicating a financial and moral responsibility for the Town to fund maintenance and repair costs for the Afton Inn.


Best laid plans
However, in that December 6 message, Napier also notes that an inspection by one of the Town’s “most experienced and responsible workers” revealed complications, and likely added expense, that could impact the Town’s original plan to perform the winterization work in-house.

Napier asks the EDA for immediate contact with Interim Town Manager Tederick to arrange a mutual inspection by all three involved parties “to determine what can be done to secure the building to ensure its integrity and ensure the safety of the public …It is a violation of Town Code to obstruct or place an obstruction, which would include the permitting of an obstruction, upon a Town street or sidewalk.”

Napier then added, “The Town would be derelict in the extreme in its responsibilities to the public if the Town knowingly allowed a violation or violations of its own Code, in addition to allowing a public safety hazard.”

Then, in perhaps a hint of things to come, Napier concluded that December 6 correspondence by stating, “If the Town, the EDA, and 2 East Main are unable to reach a very prompt mutual resolution of this pressing problem, the Town will have no choice but to take such legal measures, without limitation, as are necessary to protect the rights of the public safety.”

As the wind blows, the Afton totters – it said so on Facebook.


On December 13, 2019, as part of his report on Town business at the EDA Board meeting, Tederick informed the EDA that any previous correspondence indicating the Town’s willingness to fund the winterization costs was a “mistake”.

And as noted above, the Town-EDA MOA on Afton maintenance notes the EDA is not required to perform any repairs, maintenance or demolition “UNLESS the Town agrees to bear the costs of such repairs, maintenance and/or demolition.” One is left to ponder the reason funding stabilizing maintenance of the Afton Inn went from a Town public safety “priority” to NOT a priority within a month as winter approached.

As the Afton turns
Following the February 28 EDA morning meeting, we asked Harold what the EDA’s response was to that December 6 request for the mutual inspection by the three involved parties. He said he contacted Tederick to inform him he would be out of town on business that week, and suggested a meeting the following week with two representatives from each party, the Town, the EDA and 2 East Main, but without attorneys.

There was no response from the interim town manager, Harold said.

As Ed Daley, seated right, and his EDA Board listen, Matt Tederick explained on Dec. 13 that earlier communications indicating the Town would cover winterization costs for the Afton Inn were a ‘mistake’.


In response to a FOIA request, the Royal Examiner received documents indicating a January 8 letter from EDA Board Chairman Ed Daley to Tederick providing an estimate of $13,200 to $15,700 from 2 East Main Street for winterization costs it would contract for. Daley asked the interim town manager to seek town council approval of covering those winterization costs.

In a January 16 response, Tederick informed the EDA Board Chairman that council took the matter up at its January 13 meeting and instructed the town attorney to reach out to the EDA attorney “to determine the best path forward”.

“Like you, we all hope to find an expedient resolution to the former Afton Inn and the safety hazard it has become,” Tederick wrote Daley.

According to Harold, the gist of that subsequent conversation between the Town and EDA attorneys was that the Town would accept ownership of the Afton property back at no cost.

But with no guarantees on a final outcome of such a transfer and the EDA still in negotiations with 2 East Main Street to resurrect a highly desired renovation project, the EDA declined that offer.

And now the Front Royal Town Council is a second vote of approval away from implementing a Dilapidated Property Abatement Code that would force property owners to develop a structural repair plan or accept the Town’s abatement plan to be implemented, at the owner’s cost. Failure to comply would result in the Town’s legal right to seize the property as they would if a back-tax lien had been issued.

A marriage made in lawyer heaven – why didn’t some Afton Inn stabilization work occur this winter? Let’s go across the street to the courthouse and talk about it. Royal Examiner Feb. 2019 File Photo


Wonder how the lawyers will be able to bat that one around the civil courtroom – and at what cost to town taxpayers, who again will face the double jeopardy of funding both sides of that legal battle, were it to occur.

Other business
Following an almost two-hour closed session, the EDA readjourned to open session and unanimously approved three motions. Those motions were:

1 – approval of an agreement for the reacquisition of the 3.5-acre workforce housing parcel from the Aikens Group for $26,722.54. EDA board members explained the difference in the reacquisition price from the $10 the property was transferred to the Cornerstone LLC branch of Aikens as covering preliminary engineering and other costs incurred by the Aikens Group since the late November 2019 transfer of the property. The EDA purchased the parcel for $445,000 following its initial gifting to the EDA for $10 by relatives of former EDA Executive Director Jennifer McDonald. The purchase decision was made after an undisclosed tax credit deadline for the gift was missed.

2 – acceptance of a tentative agreement for the sale of the apartment building at 514 East Main Street on the Stokes Mart property for a price of $130,000.

3 – and approval of filing an FOIA (Freedom of Information Act) request to the Front Royal Town government for all communications with the Virginia Department of Historic Resources related to the Community Development Block Grant or the Afton Inn.

See the meeting’s opening Afton Inn condition discussion, and various EDA committee reports on the marketing of properties, pending property closings, the status of the Town’s $8.4 million debt to the EDA for construction of the new town police headquarters, and other EDA business in this exclusive Royal Examiner video:

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