UPDATE: Second former EDA staffer arrested on embezzlement charges

Michelle Leigh ‘Missy’ Henry – Mug Shot from RSW Jail website

RSW Regional Jail officials confirmed that former Front Royal-Warren County Economic Development Authority Administrative Assistant Michelle “Missy” Henry was being processed into the facility Monday afternoon, June 24. Henry was booked at 4:37 p.m. on two felony counts of embezzlement for the “unlawful use, disposal, conversion, embezzlement of property of the EDA”.

Henry’s arrest comes exactly a month after former EDA Executive Director Jennifer McDonald’s arrest, also by the Virginia State Police, on May 24. McDonald was arrested on four felony counts related to the EDA fraud investigation, two of Fraud-Obtain Money by False Pretenses in excess of $200; and two of Larceny-Embezzlement in excess of $200. It is believed those charges relate to credit card payments McDonald attributed to Afton Inn redevelopment work.

Dates attached to the Henry’s warrants are for actions occurring between October 1 and December 30, 2016 and September 1, 2014 to December 30, 2016.

Henry’s name figured prominently in one of 10 new allegations attached to plaintiff filings in the EDA civil litigation ordered by Judge Clifford L. Athey Jr. on May 22. Henry was cited for involvement in dispersal of assets tied to the B&G Goods retail operation in the old Stokes Mart building that the EDA purchased in 2014, as well in a possible scheme related to the building’s purchase.

“MCDONALD is suspected of colluding with HENRY, LAMBERT, and possibly POE to acquire the Stokes Mart property under false pretense to facilitate several different embezzle schemes of which payments herein as repairs and maintenance for B&G or paid directly to LAMBERT are approximately $21,000,” CPA fraud investigator Cherry Bekaert wrote.

LAMBERT is believed to be Billy Lambert, who with Glen Simms were the B&G Goods proprietors, to whom the EDA issued a small business loan. Poe is believed to be Donald Poe, one of the proprietors of Earth Right Energy which is named in a solar business operation also cited in the EDA civil litigation.

It is also believed that McDonald’s sister, Kathy Butler, was in a relationship with Lambert at the time of the EDA’s involvement with B&G Goods. Emails between McDonald and Henry in the Cherry Bekaert summary suggest a possible plan to conceal some activities from “Billy” around the sale off of store materials and a van in the wake of the November 2016 closing of the business.

“Suggest how we can maybe sell inventory. And get that van back to sell. He tell garnett HE got title free and clear and that’s not the edas…blah blah…Or whatever u think is the best way to handle this,” Henry emailed McDonald on December 19, 2016.

“I’m on my way to see Billy now what does he think is going to happen to that $36,000 loan,” Henry added in an email to McDonald the following day.

“That’s what we are going to tell him selling the van would help pay. Maybe put it that way that we were thinking the van would help pay that off,” McDonald replied to Henry on December 20, 2016.

Several emails exchanged between Henry and McDonald on February 4, 2017, further address a financial split from the sale of items sold following the closing of B&G Goods.

“How much money would make u happy for me to have before we start splitting what is bought* in at the store?” McDonald wrote to which Henry replied, “I wud b ecstatic to get u back all u put in…but that’s unreasonable.”

“$15,000 and then we split everything from there?” McDonald suggested, adding several messages later, “I made even more that $15k so please let your conscious rest easy” and concluding the

February 4, 2017 email chain to Henry, “And now i can feel better bcuz I felt bad that u were out money”.

The Cherry Bekaert report further states, “On 02-27.2019 we learned through WHITTEN that he and the EDA Interim Director ANZIVINO questioned HENRY about her involvement with B&G after learning of the above text exchanges.

“HENRY admitted that both she and MCDONALD personally invested money in B&G. HENRY revealed her investment was $7,000 but apparently said nothing about what MCDONALD had invested. WHITTEN also did not recall the EDA BOD giving approval for a $30,000 loan to B&G as mentioned above. HENRY was asked about DABOYZ (McDonald real estate company) paying of B&G’s loan but apparently stated she didn’t know why that was done.”

Even though EDA officials said Henry resigned, her personal photos and children’s art work remained at her unmanned desk for at least two weeks after her March 18 resignation.

Missy Henry’s arrest comes in the wake of several days of interviews conducted by the Special Grand Jury last week. That Special Grand Jury was empanelled to investigate potential criminality tied to the EDA fraud investigation and consequent civil litigation.

The new court filings in the civil litigation from which the above messaging and summaries are included are from the “work papers” of contracted investigative public accounting firm Cherry Bekaert. Cherry Bekaert was contracted in mid-September 2018 and has only recently appeared to have wrapped up its investigation as a consequence of a decision by the Warren County Board of Supervisors not to commit additional funding to the $600,000 already spent for the investigation into indications of fraud in EDA financial operations over the past decade.

The initial result of that investigation is the EDA civil litigation filed March 26 seeking $17.6 million dollars in misdirected or embezzled EDA assets, a number now up over $21 million dollars.

Information received by Royal Examiner was that the Virginia State Police were at the residence Henry shares with husband Garnett at on Browntown Road Monday afternoon.

Norma Jean Shaw contributed to this report.