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EDA in Focus

Tran defense motions echo earlier filings, cite vague summary of allegations

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‘Curt’ Tran was all smiles during discussion with media during EDA board closed session on Dec. 20, 2018. However, Tran expressed distress at the fact Jennifer McDonald’s job was in jeopardy that day. The EDA announced McDonald’s resignation following re-adjournment to open session. Royal Examiner File Photos/Roger Bianchini

On May 2, the attorney for ITFederal and its CEO Truc “Curt” Tran followed attorneys for the other seven defendants in the EDA civil suit of March 26 in filing defense motions attacking the style and substance of the case against their clients.

In the demurrer seeking dismissal of five of the six counts (1-4 and 6) in the EDA Civil Complaint it is asserted that the filing by attorney Cullen Seltzer of the Richmond law firm of Sand-Anderson lacks the legally-required specificity and factual basis to support its oft-stated conclusion that the defendants have acted to improperly divert EDA assets based “on information and belief”.

“And many of the Plaintiff’s allegations being made solely ‘on information and belief’ is fatal under the heightened pleading requirement for fraud,” Tran/ITFederal attorney Brandon H. Elledge writes citing case history, adding of such wording, “and thus to avoid dismissal, a fraud plaintiff must supplement such allegations with ‘a statement of facts on which the belief is founded’ and also ‘must delineate at least the nature and scope of plaintiff’s efforts to obtain, before filing the complaint, the information needed to plead with particularity’.”


As to the sixth count omitted from the Tran/ITFederal request for dismissal, Count 5 – “Breach of Fiduciary Duty of Loyalty” – the demurrer notes that it “does not purport to state a claim against Mr. Tran and ITFederal” but rather asserts actual claims “only against Defendant McDonald” – which does appear to be the case as it would impact all defendants other than McDonald. See Related Story:

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

“As an employee of the Warren EDA, Defendant McDonald owed the Warren EDA a fiduciary loyalty,” Count 5 begins in recounting the obligations of McDonald’s role as the executive director of the EDA.

Talk about smiles, these at the ITFederal groundbreaking – you won’t catch these two smiling at each other these days as Supervisor Tom Sayre and Jennifer McDonald are engaged in dueling civil defamation lawsuits. Social Media Courtesy Photo

And it is in the absence of the detail of the preceding 160 paragraphs leading to the $17.6 million-plus civil suit’s call for compensation in six counts against all nine defendants upon which defense attorneys have focused their arguments for dismissal.

The six counts seeking a judgment of “not less than $17,640,446.16” against “the Defendants jointly and severally” are: 1/ Fraud and Fraud in the Inducement; 2/ Conversion; 3/ Conspiracy; 4/ Unjust Enrichment; 5/ Breach of Fiduciary Duty of Loyalty; and 6/ Ultra Vires (improper) Transactions and Agreements.

And other than that one mention of the minimum of $17.6-million-and-change of allegedly misdirected or embezzled EDA assets there is no other reference to specific amounts of money tied to any defendant in the plaintiff presentation of the resultant civil “Counts” against those defendants. In fact, only “Defendant McDonald” and “Defendant Earthright Energy LLC” are cited in the six counts – McDonald in the aforementioned Count 5 “Breach of Fiduciary Loyalty” that does appear focused on her alone; and Earthright Energy LLC in Count 6 “Ultra Vires Transactions and Agreements” related to work arrangements or contracts engaged in with Earthright Energy through McDonald without approval of the EDA Board of Directors “in the manner required by law.”

However as alluded to above and noted in previous stories on the EDA complaint and defense motions against it, there is detail concerning specific amounts of money involved in specific transactions involving specific defendants throughout the first 160 paragraphs of the complaint. Those 160 graphs appear to present the basis of fact and finance leading to the final 39 paragraphs stating of the more generalized summary of offenses described in Counts 1 through 6 of the EDA civil suit. See Related Story:

Defendant attorneys cite vagaries, legal conflicts in EDA civil suit

However for Tran/ITFederal attorney Elledge that detail too, is lacking.

“While the Complaint is long on allegations as to McDonald’s misconduct, it offers very little as to Defendants … Tran … and ITFederal except for conclusory recitations or vague statements made only ‘on information and belief’,” Elledge asserts, adding, “Mr. Tran and ITFederal expressly deny the meritless claims asserted against them and any alleged wrongdoing in this matter.”

Of the summary nature of the stating of the Counts against the defendants, the Tran/ITFederal defense memorandum of support of the demurrer for dismissal states, “… the group pleading method employed by the Warren EDA in its Complaint is improper and fails to fairly inform Mr. Tran and ITFederal of the nature of the claims levied against them …”

However, is that true of the first 160 paragraphs of the 199-graph complaint – well 209-graphs if you include the 10 paragraph “Prayer for Relief” seeking return of EDA assets, attorneys fees and “punitive damages (of at least one million dollars) jointly and severally against the Defendants”?

This way to the Promised Land of commercial investment and high-dollar tech jobs in your community, then Congressman Robert Goodlatte may have been gesturing – or he may have been pointing ‘Curt’ Tran toward the bank by way of the EDA for a little help with that investment.

The complaint devotes many paragraphs to the securing of a $10-million bank loan for Tran/ITFederal through the EDA, citing the involvement of McDonald and then-U.S. Congressman Robert Goodlatte, R-6th, along with Tran. It is noted that loan was made at Goodlatte’s request despite repeated assertions by “Tran and Defendant McDonald …that Tran did not need the financial support of the Town and Warren EDA”.

However that “unnecessary” $10 million dollars of financial support was acquired, along with the gift of a 30-acre parcel at the Royal Phoenix site publicly valued by the EDA at $2 million for a one dollar price. Conditions were attached to that gift, including completion of the project by an eventually extended completion date of mid-2020; and a reduction of the scope of the project from an approximate 40,000 s.f. in a three-building complex alleged by Goodlatte to produce over 600 high-paying tech jobs through ITFederal to the community, to a 10,000 square-foot building producing at least 10 jobs of indeterminate wage.

And while the complaint notes that far less than $10 million appears to have been spent to date on the ITFederal Project here, the Tran/ITFederal motion for dismissal asserts Tran did nothing wrong and has worked within the parameters of his agreement with the EDA, both on the loan and a Memorandum of Understanding (MOU) regarding nearly $1.5 million in what is described as “Subsequent Payments to ITFederal” alleged to have been unauthorized by the EDA.

The lone ITFederal building on site in January 2019 – while more work has been done completing the outside façade, the one-story, 10,000 s.f. size has not expanded beyond minimum requirements to become eligible for EB-5 Visa Program funding.

Regarding the Count of “Conversion” of EDA assets to Tran’s personal benefit, Elledge writes on behalf of his clients, “The only Warren EDA funds allegedly retained by ITFederal are a $10 million loan pursuant to a promissory note and a deed of trust and some $1.5 million pursuant to a Memorandum of Understanding. Thus, ITFederal received those funds in accordance with such agreements. Plaintiff does not – and cannot – allege a breach of such agreements, and it, therefore, alleges no right to immediate possession of the funds. Rather, it lawfully controls them subject to the terms of the loan documents and the MOU …

“The only payments due to Plaintiff is the repayment terms of the promissory note, and it has not – and cannot – allege that ITFederal has breached or defaulted on any of its contractual obligations,” the Tran/ITFederal filing in support of its motion for dismissal states.

But at issue for the EDA as plaintiff is an alleged fraud perpetrated by Tran in conjunction with McDonald in her role as EDA executive director and possibly others, to acquire the loan, gift of property and “Subsequent Payments to ITFederal”. That fraud is alleged to involve a $140 million in purported ITFederal government contract the plaintiff found no evidence exists – though Elledge asserts it does – as well as websites said to create a false impression of financial viability of Tran companies the plaintiff asserts there is no discovered substantive support of, and false representations of Tran’s personal worth and intentions of investment in this community.

“Plaintiff does not allege any cohesive fraudulent scheme here, but rather a series of independent transactions connected only by the involvement of Defendant McDonald … In the portions of the Complaint referencing Mr. Tran and ITFederal, Plaintiff obscures who actually made what representations at issue by repeating the phrase ‘Tran and Defendant McDonald represented, through McDonald (emphasis in context) … Such vague construction fails to establish Mr. Tran’s connection to the alleged misrepresentations by omitting how Mr. Tran managed to represent anything ‘through McDonald’,” the Tran/ITF filing states, adding, “By lumping Mr. Tran together with Defendant McDonald and referencing ‘multiple occasions,’ Plaintiff unsuccessfully tries to create an impression of wrongdoing without articulating who made what statement to whom on which occasion.”

From a different angle, Tran/ITFederal attorney Elledge echoes Jennifer McDonald attorney Lee Berlik’s argument that his client is being villainized for the alleged actions of other defendants and/or bad decisions by past EDA boards.

“Plaintiff suggests every statement by every counterparty it now regrets crediting was a false statement by Ms. McDonald … instead of a false statement to Ms. McDonald (emphasis in context),” Berlik wrote in his April 16 filing on his client’s behalf, adding, “The Warren EDA is looking for someone to blame for every decision it now regrets since new leadership has taken over – and Ms. McDonald is it.”

File photo of EDA board meeting, circa 2016-17, with since-deceased Patty Wines holding the chairman’s seat. Empty seat to left is Jim Eastham’s, who was absent as he battled the cancer that eventually killed him. Other members from left are Ron Llewellyn and Greg Drescher, resigned effective March 23, 2019, Executive Director McDonald, Wines, long-time Treasurer Billy Biggs who resigned last October due to health issues, now Vice-Chairman Bruce Drummond and Toray’s Brendan Arbuckle who resigned when he left the area. Standing is County Administrator Doug Stanley giving an update on County business.

From Tran’s legal perspective he has simply taken advantage of a series of sweetheart deals offered by the EDA Board of Directors at the urging of friends in high places, including Congressman Goodlatte and the EDA’s then executive director.

What could possibly be wrong with that?

At issue in the wake of the filing of the series of defense demurrers for dismissal of the cases against their clients is will that question in regard to all defendants ever be argued in front of a jury in a Warren County or any other courtroom?

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EDA in Focus

EDA Litigation Update – that and other impacts on Economic Development

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The morning of Friday, July 30, this reporter sat down for a “Town Talk” with Economic Development Authority (EDA) Board of Directors Chairman Jeff Browne. Well, maybe we should call it a “County Talk” since the Town of Front Royal continues to distance itself from what Browne pointed out is still legally the Front Royal-Warren County EDA, as unresolved civil litigation initiated by the Town regarding financial liability from the EDA financial scandal continues to swirl and the Front Royal Town Council continues its initiative to create a parallel, unilateral EDA.

Those moves have come despite the total realignment of the EDA staff and board of directors, and a repeated EDA offer to work out of court to determine who is owed what in the wake of alleged embezzlement and misdirection of EDA assets between at least 2015 and 2018 under the leadership of former EDA Executive Director Jennifer McDonald.

LITIGATION!!! – Now there’s a topic of conversation to begin our discussion by whatever name we choose to call it. Acknowledging that public interest, and discontent, is high concerning the slow pace at which both civil and criminal court proceedings have developed related to the EDA financial scandal, Browne agreed to open our conversation with an update on those legal developments.
Prominent among those are the recent Bankruptcy Court ruling forwarding a $9-million “non-dischargeable judgment” that central financial scandal figure McDonald, along with the EDA, has agreed to.

Watch the discussion progress through that litigation front among others, including what is known on the criminal side since it was handed over to federal officials in the Western District of Virginia, and how all this legal maneuvering impacts the EDA’s day-to-day operational goal of economic development, targeting business recruitment and retention. It is an operational environment also traversing Warren County’s extremely low statewide 37% COVID-19 pandemic vaccination rate, something that could be frowned upon by some potential economic development clients.



And after all that, we end on an upbeat, or beats:

First, that the new EDA board and staff are actively and jointly working to market Warren County in its entirety to the type of Technology, Manufacturing, and Logistics companies that would fit in well with what this community has to offer.

And second, the anticipation of an Open House to be hosted by a recently recruited drone manufacturer and operations manager, Silent Falcon at the County’s Front Royal Airport (FRR). While no date has yet been set as Silent Falcon continues development of its new home base, at least one kid, if a somewhat aging one, is anxiously anticipating coverage of that event. – And I think we’ll bring the video crew along for that one – Mark, Mike, who wants the drone assignment?


Town Talk is a series on the Royal Examiner where we will introduce you to local entrepreneurs, businesses, non-profit leaders, and political figures who influence Warren County. Topics will be varied, but hopefully interesting. If you have an idea, topic, or want to hear from someone in our community, let us know. Send your request to news@RoyalExaminer.com

 

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EDA in Focus

Financial Scandal Era Audits near completion as EDA ponders Budget Adjustments

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Friday evening, July 23rd, through the office of Administrative Assistant Gretchen Henderson, the Warren County Economic Development Authority (EDA) released a summary of action items on the agenda of the EDA Board of Directors regular monthly meeting held that morning. Prominent on that agenda were matters related to the completion of the contracted audits of the EDA’s Fiscal Year 2018 and 2019 budgets. Those were the final two full years of leadership under past board member and former Executive Director Jennifer McDonald.

The audits are expected to shed some light on how and under what rationales EDA assets were moved or committed to projects during the final two years of what related civil suits against McDonald and alleged co-conspirators assert was a conspiracy to defraud the EDA and move its assets to the personal benefit of McDonald and others. The EDA civil actions seeking recovery of those allegedly misappropriated assets cite activities believed to have been occurring at least between 2014 and 2018. Brown Edwards, the contracted auditing firm doing those audits, is not the same company that did the EDA audits annually during the alleged financial scandal. Discussion of potential liability of that previous auditor for not recognizing/alerting the EDA to unusual money movement has been broached, if not pursued at this point. The total amount of allegedly embezzled assets has fluctuated between $26 million and a recent jump to $62 million related to McDonald’s Chapter 7 Bankruptcy filing.

See related story on recent rulings in McDonald’s Bankruptcy Court filing and the EDA’s civil litigation against alleged embezzlement-misappropriation of EDA funds co-defendant ITFederal

EDA and McDonald agree to $9-million exemption to her bankruptcy claim

EDA crunches operational budget numbers, moves scandal year audits forward

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Crime/Court

UPDATE: EDA and McDonald agree to $9-million debt exemption to her bankruptcy claim

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On Tuesday, July 20, U.S. Western District Harrisonburg Division Bankruptcy Court Judge Rebecca B. Connelly issued a “Non-Dischargeable Consent Order Judgement” in Jennifer McDonald’s bankruptcy filing. The judge’s order decrees that “The Warren EDA is granted judgment against and is entitled to recover from Debtor, the sum of $9,000,000; and this judgment shall survive discharge of the Debtor in this Chapter 7 bankruptcy …”

The preface to Judge Connelly’s ruling notes that “In the interest of resolving this matter and avoiding litigation uncertainty, risks, and costs, but without the Debtor admitting the Warren EDA’s allegations, the Warren EDA and the Debtor have engaged in arm’s length negotiations and agree that the Warren EDA’s non-dischargeable claim is in the amount of $9,000,000 …”

Jennifer McDonald on the job, circa December 2016, during EDA Board meeting. The late Patty Wines, then EDA Board Chair, is at right. Royal Examiner File Photos by Roger Bianchini

The bottom line appears to be that the EDA and its former executive director have agreed that $9 million is the amount of the EDA’s civil court claim against McDonald, without her agreeing that she actually did anything wrong to justify the claim. So, that amount will be subject to collection in the civil action claim by the EDA outside the bankruptcy court process. The bankruptcy court order notes that any amount the EDA was to recover in the bankruptcy action would apply to achieving its $9-million civil claim in Warren County Circuit Court.



A reading of an “Exhibit A1 – the Stipulation” explaining detail of the “Non-Dischargeable Consent Order Judgement” further elaborates that McDonald as “The Debtor waives any right to contest the validity, enforceability, extent, and scope of the terms of the Stipulated Non-Dischargeable Judgment … and waives any right to seek relief from this Stipulation on any grounds” based on any applicable law.

Remaining at issue between the parties appears to be how the EDA will collect that $9-million dollar judgement the parties have agreed to. A number of McDonald-owned properties were frozen by the court early in the civil process, while properties co-owned with other family members were not. Since that order several relatives were named as co-defendants. The “Stipulation” also notes that the EDA-McDonald agreement order “shall not release or discharge any entity other than the Debtor from any liability owed to the Warren EDA” under its Amended Complaint in civil court against all co-defendants.

No ‘Summary Judgement’ against ITFederal

Also, on the EDA vs. McDonald et al. civil action side, on July 14, Harrisonburg-based presiding Circuit Court Judge Bruce D. Albertson dismissed an EDA motion for a “Summary Judgement” ruling against Truc “Curt” Tran’s ITFederal LLC. Plaintiff and defense attorneys made oral arguments on the EDA motion before Albertson on June 10. The bottom line here appears to be that the court has ruled there is not enough substantive information in the plaintiff’s original complaint to rule ITFederal immediately liable for the claim against it.

ITFederal’s $10-million EDA loan to achieve the development of its 30-acre parcel (valued at about $2 million but gifted to ITFederal by the EDA for one dollar) at the Royal Phoenix Business Park/former Avtex Superfund site, with as much as another $2 million in developmental expenses, was the largest single claim in the initial EDA financial scandal civil action.

‘Curt’ Tran on-site in EDA Office parking lot Dec. 20, 2018, as Jennifer McDonald was being scrutinized by her board of directors in closed session. She resigned a short time later. Below, in the fall of 2016 former 6th District Rep. ‘Bob’ Goodlatte pointed to ITFed as a coming leader of economic revival in Front Royal; but then the anticipated federal EB-5 Visa Program funding failed to materialize – at least there’s that $10-million EDA loan to fall back on …

The EDA alleges that the ITFed loan was achieved under false pretenses as part of the over-arching embezzlement-misappropriation of funds conspiracy allegedly orchestrated by McDonald as EDA executive director after former federal Sixth Congressional District Representative Robert Goodlatte brought Tran here with much ballyhoo for a fall 2016 ITFederal ribbon cutting at the Avtex site. And now the EDA claim against ITFederal, which remains current on its EDA loan payments of about $40,000 a month with an estimated $2 million spent on site, will, unlike the EDA claim against McDonald, continue as a contested part of the EDA’s civil action.

See related EDA meeting, 2018-19 audit story – “Financial Scandal Era Audits near completion as EDA ponders Budget Adjustments”

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EDA in Focus

EDA crunches operational budget numbers, moves scandal year audits forward

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The Board of Directors met today for their regular monthly meeting. Following an approximately two-hour Closed Meeting, on a motion by Jim Wolfe and seconded by Scott Jenkins, the EDA Board unanimously agreed to add an additional $10,000 to the contract with Brown Edwards, who is completing the FY2018 and FY2019 audits, pending documentation of work completed and review by legal counsel.

Under New Business, the Board agreed to table action on updating the EDA Bylaws. The Board of Directors did pass three additional motions:

On a motion by Jorie Martin and seconded by Jim Wolfe, the EDA Board unanimously approved requesting to the Board of Supervisors an increase of three line items to the EDA’s FY2022 Operations budget:

 Professional fees-Auditor $32,500: this increase is to account for a $10,000 amendment to the Brown Edwards contract for FY 2018 and FY2019, and $40,000 to conduct the FY2020 and FY2021 audits.


 Marketing-$5,880: this increase is to account for updated plans to participate in economic development programs and site visits, as well as marketing materials.

 Maintenance-$14,310: The EDA is reimbursing the commercial tenant at 1325 Progress Drive for HVAC replacement and repairs. Additionally, the HVAC at 400 Kendrick Lane-West and 426 Baugh Drive need extensive service.

On a motion by Jorie Martin and seconded by Jim Wolfe, the EDA Board unanimously approved a Request For Proposals (RFP) to advertise for auditing services for the fiscal year 2020 and 2021.

Finally, on a motion by Jorie Martin and seconded by Jim Wolfe, the EDA Board approved reimbursing Visionary Optics, the tenant at 1325 Progress Drive, $4,500 for expenses related to HVAC replacement and repairs.

The EDA Board of Directors will have their next regular monthly board meeting via Zoom on Friday, August 27, 2021, at 8 a.m.

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EDA in Focus

EDA Finance Committee scrutinizes FY-22 Budget proposal, dynamics

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Friday morning, July 9, the Finance Committee of the Warren County Economic Development Authority met to discuss the EDA’s Fiscal Year-2022 Budget proposal. In addition to Committee Chairman Jim Wolfe and members Jorie Martin and Tom Patteson, present for the in-person meeting at the EDA’s Kendrick Lane Office were EDA Board Chairman Jeff Browne, Executive Director Doug Parsons, Administrative Assistant Gretchen Henderson, and County Board of Supervisors Chair Cheryl Cullers.

From left, Tom Patteson, Jim Wolfe, Jeff Browne, Doug Parsons, Jorie Martin, and Cheryl Cullers were back in the EDA in-person meeting format Friday morning. Royal Examiner Photos by Roger Bianchini

The County Board of Supervisors holds the purse strings for the EDA, as the new EDA board and staff continue to navigate the financial and legal aftermath of the $26-million-dollar-plus financial scandal uncovered during the administrative leadership of former EDA Executive Director Jennifer McDonald and a previous EDA Board of Directors.

How the financial consequences of that yet-to-be resolved civilly or criminally alleged misuse, embezzlement or fraudulent acquisition of EDA resources continues to impact the retooled EDA was a topic of interest during the committee meeting. As annual debt service revenues from property rentals and loan paybacks versus loan debt service expenses were discussed in a second phase of the budget review, that point was made quite pointedly after a debt service revenue deficit of $704,700 was noted.


“Let’s make this clear for the public,” Committee Chairman Wolfe injected with a glance the media’s way, continuing, “So, there are three (primary) figures on the page … there is the $220,000 General Fund Operating Allocation. And the way to think about it is as a matter of public policy the County says, ‘economic development is a good idea, let’s put some money toward that kind of development’.

“There’s another operating supplement of … $39,200.

“And because of all the debts of prior activities, there’s another roughly $700,000 in unfunded debt payments because of past transactions. Those don’t have anything to do with current economic development or moving forward. That’s trying to clean up after the other ones. – Did I misstate that in any way?” Wolfe concluded with a question for his EDA colleagues.

EDA Finance Committee Chairman Jim Wolfe wanted to make it perfectly clear where the EDA’s debt service-revenue deficit originates – in the past under different leadership.

Rather than a correction, Executive Director Doug Parsons elaborated on Wolfe’s observation with added detail on how the deficit numbers broke down between inherited debt versus that acquired by the new EDA – the short answer being all six of current EDA loans with a total annual debt service of about $1.5 million were inherited and none acquired by the retooled EDA board and staff.

During the committee meeting Parson also pointed to a $658,000 General Fund Cap number plugged in by the county administrator that could be adjusted upwards to help cover that $704,700 debt service shortfall. The shortfall was created by the difference in the $1,556,700 annual debt service of the six inherited EDA loans and the $852,000 of Offsetting annual revenue from the Baugh Drive Warehouse rent ($345,600) and the ITFederal Loan payback ($506,400).

The ITFederal loan Albatross – while it generates $506,400 of annual payback revenue, the EDA operates at an annual deficit of $90,900 as it pays a higher interest rate and $597,300 annually on its bank loan to finance the project. And did anyone ever figure out why a previous EDA board okayed a $10-million loan to ITFederal of which only about $2 million had to be spent on its ‘free’ 30-acre Avtex site project? OH, the other $8 million to the Criminal Justice Academy project – you got that in writing, right?

Operations and the Future

In the first phase of discussion it was the Operational Budget under scrutiny as the new EDA board and staff continues to move forward with economic development in the community, while still traversing the legal and civil liability minefield of the financial scandal referenced above. A 28-line-item FY-22 Operational Budget totaling $367,100 was brought to the table.

Major areas of concern discussed included “Marketing” of the community to potential businesses seeking a favorable geographic and social environment; “Maintenance” of EDA properties – variables and potential HVAC costs at Baugh Drive and the EDA office complex were put on the table; “Legal” and “Auditing” fees; “Insurance” including, not only “Property Insurance”, but also “Professional Liability” insurance; the impact of a 2.5% Cost Of Living Act (COLA) increase on staff salaries; and continued efforts on community education to limit and reverse the spread of the Spotted Lanternfly in the county.

Wolfe observed from his experience that marketing was often a first budget line item to be reduced during tight economic times, but added that “it should be the last”. A $10,000 “Marketing” request was reduced to $4,300 by the County Administration. While the importance of advertising was agreed upon, its type and context to achieve maximum positive exposure and result remains an issue the EDA Board has devoted some discussion to recently. How that may translate into a final number submission remains to be seen.

A $10,000 “Maintenance” request was unaltered by the County. However, with looming HVAC maintenance or replacement issues at several locations, the potential need of more than the originally submitted amount was noted.

Well, only the occupied parts will need HVAC work in the immediate future – at the EDA Office complex or other properties.

Legal, Auditing & Insurance variables

Legal fees were listed at $84,000 – pared back from a $96,000 request – and auditor fees at $17,500. It was explained the $17,500 was for one fiscal year’s audit. But the advantage of seeking both the FY-2020 and FY-2021 audits in the coming budget year was broached to catch the EDA up with the County in the auditing process. This past year the EDA went through a lengthy, soon-to-be finalized by the firm of Brown-Edwards, audit of the FY-2018 and FY-2019 budget years when alleged embezzlements and other financial misappropriations were occurring.

Of the coming-year audits beginning with FY-2020, Parsons commented: “They will be drastically more simple than 2018 and 2019 because we were all here” throughout those years’ budget and operational processes.

It was noted that while the EDA must put the FY-2020-and-21 audit services out to bid, due to their experience here through more trying budget cycles it seemed a longshot that Browne-Edwards would not get the call back.

On the insurance front, $10,000 was listed for “Property Insurance” and $400 for “Professionally Liability Insurance”. With the EDA having received a $500,000 “Liability” payoff from current carrier Cincinnati Insurance, the potential of a bidding war to pick up the Warren County EDA’s liability coverage seems slim.

“I’ve been working on this for nine months and nobody will touch us,” Martin told her colleagues of interest from other companies. The advisability of sticking with Cincinnati if possible, but changing local agent Stoneburner-Carter due to proprietor Tony Carter’s current and past seat on the Warren County Board of Supervisors, was broached.

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EDA in Focus

County EDA Board elects officers for coming fiscal year; reviews operational, budget and banking matters

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On Friday, June 25, the Economic Development Authority Board of Directors met for their monthly board meeting, which included a two-and-a-half-hour closed session during which legal, banking, and real estate matters were discussed. The latter topic included the potential disposition of real property related to Avtex Redevelopment, as well as real estate at Baugh Drive and the Stephens Industrial Park. No announcements came out of the closed session.

During the open session that followed, the Directors discussed EDA committee reports, a draft Fiscal Year-2022 budget, and held officer elections for the coming Fiscal Year. Starting July 1, 2021, EDA Board officers will be Chair-Jeff Browne, Vice-Chair-Greg Harold, Treasurer-Jim Wolfe, Secretary-Jorie Martin. Tom Pattison’s motion to nominate that slate of officers passed without opposition, and there were no counter nominations.

A masked Jeff Browne chairs the EDA Board’s first in-person meeting in over a year at the WCGC, as what he termed a ‘hybrid’ meeting which was ZOOM broadcast prepares to go into closed session at 8:10 a.m.

Browne, who took over as EDA board chairman in the wake of Ed Daley’s departure for what was initially an interim appointment as County Administrator that has stretched on long enough that the “interim” has been removed from his title, called the board’s current and recent personnel “a great group to work with”.


Browne also noted that Friday’s meeting at the Warren County Government Center was the EDA board’s first in-person meeting in over a year since the COVID-19 pandemic restrictions went into effect. He called the meeting, held for the most part in the caucus room adjoining the main meeting room “a hybrid meeting” as it was broadcast, as have been all EDA meetings over the past year, on ZOOM.

During committee reports, Jorie Martin noted positive work on the Joint County-Town Tourism Board – “The bottom line is that I’m hoping this board will continue to work together, and I think it’s much more effective for us to be together as the County and the Town working together for tourism,” she noted, pointing to the next Joint Tourism meeting on Wednesday, June 30. Hmm, County and Town working together on economic development as opposed to litigating and duplicating efforts – what a novel idea.

Back in open meeting, Jorie Martin and Doug Parsons maintain masking precautions in the WCGC caucus room as committee reports were heard.

Operations and Budget

During his Executive Director’s Report, Doug Parsons informed his board of two “Business Retention and Expansion” projects with “significant new jobs and investment” prospects he termed “very exciting”. The EDA executive director also gave recently elevated County Planning Director Joe Petty a pat on the back, calling him “great to work with” on these initiatives.

Parsons also noted recently recruited drone manufacturer and operations contractor Silent Falcon’s plans for an Open House “to showcase their products and renovated space” at the County’s Front Royal Airport (FRR) in July or early August (OH BOY, Royal Examiner video camera field trip!!!).

Jim Wolfe, left of Martin, leads the discussion of marketing strategies and real estate opportunities on the horizon. Earlier, Executive Director Parsons also reported on upcoming events and opportunities to expand the EDA’s marketing presence state and nationwide. One will recall that Silent Falcon was recruited to the county from out of state and region.

The makeup of committees as to numbers and bylaws adjustments to accommodate necessary changes was discussed with EDA attorney Sharon Pandak. It was noted that with a two-person committee, a public notice of a “meeting” would be necessary just for one committee member to call the other to discuss projects. With a three-member (or more) committee, that would not be necessary.

Chairman Browne noted the advantage of having a point person forwarding projects to the point of authorization and final decision-making by the board. He stressed the importance of striking a balance between efficient operations and transparency in the wake of operational irregularities discovered during the financial scandal investigation. That criminal investigation, now in the hands of the Western District of Virginia federal prosecutor’s office, and consequent civil litigation targeting the previous executive leadership of Jennifer McDonald, and alleged co-conspirators, found a lack of adequate oversight by the previous EDA Board of Directors in place dating from around 2014-15 to early 2020. The new board is trying to avoid such absentee oversight without creating unnecessary micro-management that could stall successful recruitment or other economic development efforts.

After noting the relocation into the new Warren Memorial Hospital space earlier in the week, it was agreed that Jim Wolfe would spearhead efforts with ownership to market the old hospital. Options related to the presence of a commercial kitchen in the 108,000 s.f. space was broached as to possible uses as a culinary school and working restaurant in a portion of the building.

A draft FY-2022 Budget was reviewed, with comments on potential impacts of bank loan refinancing opportunities. Executive Director Parsons said if all refinancing opportunities came to fruition, it would equal $138,000 annually “to the good” for the EDA as it continues to emerge from the shadow of the alleged financial scandal that pre-dates the current EDA board and staff.

Also noted was a $90,900 adjustment from the potential of refinancing of the IT Federal loan, which is the single biggest line item – $10-million to $12-million – in the EDA’s civil litigation regarding the above-referenced financial scandal alleged to have occurred under the previous board and executive director’s tenures, the latter which ended in December 2019.

Parsons was noting an average monthly legal expense of about $7,000 just prior to the loss of the ZOOM connection to the board’s first “in-person meeting in over a year” at the Warren County Government Center. Contacted later, Parsons said several phone connections failed around the same time shortly before the meeting’s adjournment, cutting communications with several remote participants or observers, including EDA Attorney Sharon Pandak.

A little ZOOM phone orientation issue as the EDA Board convenes at 8 a.m. in the WCGC’s main meeting room. The meeting soon adjourned to a closed session in the adjacent caucus room, where the remainder of the closed and open sessions were held.

The Board of Directors will hold a Special Meeting on Friday, July 9, 2021, from 10-to-11:30 a.m. to take part in FOIA/COIA training, led by EDA Counsel Sharon Pandak of Greehan, Taves, and Pandak. The EDA Board of Directors’ next monthly meeting is scheduled for Friday, July 23, 2021.

(Some info in this story came from an EDA Press Release on the meeting.)

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