FRONT ROYAL – Special Prosecutor Michael Parker announced Friday that all criminal charges handed up by the special grand jury investigating the Front Royal-Warren County Economic Development Authority will be dropped.

Parker stated via email that “these are dismissals without prejudice,” which “means the same charges, and more charges if appropriate, can be brought at any time in the future.”

Indictments handed up by the special grand jury include felony counts related to financial improprieties against former EDA Executive Director Jennifer McDonald, former EDA Administrative Assistant Michelle Henry, former B&G Goods owner William Lambert and McDonald’s husband Samuel North.

“I assure you I am not pleased about this. I also assure you this is not the end. However, while it is my duty to bring justice to the guilty, it is also my duty to be just and ethical in my conduct at all times, to everybody,” Parker stated.

“That includes people who have been accused but have not yet been found guilty. At the current time, I am unable to satisfy certain basic obligations I have to the defendants, which have existed since before I was appointed on the case. I cannot ethically keep this status quo. In fact, if I tried to keep the cases active, I’d run the risk of a judge at some point dismissing them with prejudice, so that I could not bring them back.”

There Was Never Going to Be a Pow[e]-Wow On this Deutsche Bank 5th Circuit Appeal with A Very Ethically Challenged 3-Panel of Higginbotham, Ho and Ho, ehem…Engelhardt

FRONT ROYAL – In its latest civil lawsuit, the Front Royal-Warren County Economic Development Authority seeks about $4.5 million in damages stemming from alleged illegitimate land and property purchases.

The defendants in the suit, which was filed Wednesday in Warren County Circuit Court, are TLC Settlements LLC and its employee Tracy L. Bowers; Service Title of Front Royal LLC and its employee Victoria L. Williams; Century 21 Campbell Realty Inc. and its owners Walter and Jeanette Campbell; and Rappawan Inc. and its Vice President William T. Vaught Jr. None of them have been charged criminally.

The lawsuit states the EDA is seeking a $4,454,100 judgment against the defendants “jointly and severally,” $350,000 “in punitive damages” and legal fees.

While this lawsuit is separate from the $21.3 million lawsuit the EDA filed last year, many of the alleged embezzlement schemes detailed in that lawsuit play significant roles in the new lawsuit.

The previous lawsuit alleges that former EDA Executive Director Jennifer McDonald was the driving force behind a series of dubious dealings and embezzlement schemes during her decade-long tenure.

The nine defendants in the suit filed Wednesday, according to the complaint, were McDonald’s “confederates and co-conspirators” in various real estate deals allegedly conducted unlawfully with EDA money.

“Each Defendant unlawfully aided and abetted McDonald in breach of her fiduciary duty to the Warren EDA. The EDA was damaged as a direct result of such aiding and abetting,” the lawsuit states.

One allegation in the lawsuit centers around the EDA’s workforce housing project, which was supposed to be constructed on a Royal Lane property the authority purchased from the Campbells, who are McDonald’s aunt and uncle.

In March 2016, the lawsuit states that the EDA voted to purchase the Royal Lane property for $445,000 not knowing that its owners were related to McDonald.

That contradicts former EDA Vice Chairman Greg Drescher’s statement during a June 2017 Board of Supervisors work session during which he and McDonald were posed a series of questions regarding the workforce housing project.

During that meeting, then supervisors Chairman Linda Glavis asked: “Were all the EDA board members aware of the relationship?”

Citing the EDA’s board meeting minutes from 2014, Drescher said “they were.”

Additionally, a May 2017 timeline released by the EDA stated that on or about Aug. 14, 2014, “McDonald disclosed in closed session to the EDA Board of Directors her familial relationship with the Campbells.” That timeline added that in September 2015, “McDonald disclosed in open session at the EDA Board of Directors meeting her familial relationship to the Campbells.”

The timeline was part of a 400-page package detailing the workforce housing project.

A cover letter signed by Drescher and then EDA Chairman Patty Wines stated: “If, after careful study of these documents you have additional concerns, please contact Jennifer McDonald. She will be happy to clarify.”

The lawsuit states that on March 13, 2016, Jeannette Campbell emailed McDonald with instructions to “pay $125,000 directly to loan servicing department.” Two days later, the lawsuit claims that a $125,000 check was issued from the EDA’s checking account to “Owen Loan Servicing LLC” and forwarded to “Ocwen Loan Servicing LLC” for a payment on a house belonging to April Petty, who is a defendant in the EDA’s first lawsuit. Petty has not been criminally charged.

The lawsuit adds that McDonald allegedly forged a contract showing a $575,000 sales price on the Royal Lane property. The lawsuit explains that the closing for the Royal Lane property was conducted by TLC Settlements and Bowers.

The remaining allegations center around a series of home and land purchases.

For example, the lawsuit details how McDonald allegedly used $345,000 of EDA money to purchase a house for William Lambert – who is a defendant in the EDA’s first lawsuit and is believed to have been McDonald’s sister’s fiancé. In August 2014, the lawsuit states that the closing was conducted by Service Title of Front Royal and Victoria Williams.

“In spite of the clearly identified source of the funds, and without any authority granted by the Warren EDA…..Service Title entered the funds of $345,000 in an escrow subaccount ledger,” the complaint states.

The lawsuit claims that Lambert never lived in the house but instead rented it out to the previous owners. When Lambert sold the house, the lawsuit states that the closing was handled by Bowers on behalf of TLC Settlements.

Other deals in which EDA funds were allegedly illegitimately used that Williams and Service Title of Front Royal handled were a $285,000 and $110,000 purchase of homes.

The lawsuit also details the 2016 transactions in which McDonald’s DaBoyz LLC — jointly owned with former Sheriff Daniel McEathron — purchased several parcels of land from Rappawan Inc. and Vaught for $1.9 million. About a month later, the lawsuit explains that Bowers and TLC Settlements closed on a deal in which DaBoyz sold the same parcels back to Rappawan for a $600,000 loss.

The lawsuit claims Vaught and Rappawan “got back all the land originally sold” and received an additional $600,000 of EDA money. Meanwhile, the lawsuit claims McDonald put $1.3 million “of the EDA’s cash in her pocket.” Those deals, according to the lawsuit, were handled by Bowers and TLC Settlements.

The lawsuit claims that in September 2016, McDonald gave a bank “a disbursement request for a Virginia Department of Transportation Letter of Credit of $2 million.” That same day, the lawsuit states that $2 million “was wired from a Warren EDA bank account at First Bank and Trust to a bank account of TLC Settlements.” That wire, according to the lawsuit, was accompanied with the EDA being “clearly identified” as the source of the money.

The lawsuit also details how TLC Settlements allegedly handled two other land purchases totaling about $1.5 million. For the purchases, the lawsuit states money was wired from an EDA bank account to a TLC bank account. The lawsuit adds that TLC then entered the money into an “escrow sub-account ledger” in DaBoyz’s name.

FRONT ROYAL, Va. — Before the $21 million allegedly went missing, before the sheriff put his gun in his mouth and fired, before Tuesday’s announcement that the entire top tier of the Warren County government had been indicted, there was the dream.

It was a dream of renewal for this town 70 miles from Washington, which fell on hard times after a rayon manufacturing plant closed in 1989, leaving 1,300 people jobless and 440 acres full of toxic waste.

Twenty-five years later, with the land cleaned up and Front Royal increasingly attractive to tourists and former city dwellers, officials announced plans for a data center and retail complex that would bring 600 jobs and act as a catalyst for other projects.

The deal was brokered by Jennifer McDonald, a longtime Front Royal resident who directed the Warren County economic development authority. Washington-area developer Truc “Curt” Tran pledged to finance it with $40 million from wealthy immigrant investors and a $140 million federal contract his technology company had secured. As an added bonus, Tran would fund a police training academy overseen by longtime Sheriff Daniel T. McEathron.

But those were lies, documents in Warren County Circuit Court allege.

Tran never had the money to build the data center project on the 30 acres his company bought from McDonald’s agency for $1, a civil lawsuit alleges. And the training academy was one of several hoaxes that, prosecutors and civil lawsuits claim, allowed Tran, McDonald, McEathron and others to siphon away millions in public funds, which they allegedly used to buy properties, pay bills and gambling debts, and enrich relatives and friends.

Now McEathron is dead, Tran is being sued by the economic development authority and there are state and federal investigations underway. McDonald faces 28 state counts of embezzlement, money laundering and obtaining money through false pretenses. She has denied the allegations and did not return interview requests, while Tran declined to comment through his attorney.

The claims against them, industry groups say, reflect the perils of weak oversight in economic development agencies — quasi-public entities that oversee large, complicated transactions, and whose boards often lack the financial savvy and investor scrutiny that protect their corporate counterparts. In Montgomery County, Md., an economic development official pleaded guilty this year to embezzling $6.7 million. The head of economic development in St. Louis pleaded guilty to steering lucrative contracts to the county executive’s political donors. In New Jersey, a grand jury is investigating how $500 million in tax incentives went to firms that, in part, allegedly lied on their applications.

“The lessons here are that there’s a need for better financial accountability,” said Jeff Finkle, head of the nonprofit International Economic Development Council. “People beyond one person who is managing a project where the temptation may be too great.”

On Tuesday, the Virginia State Police announced that 14 current and former local officials — including all five county supervisors — were charged with misdemeanor misfeasance and nonfeasance “based on the individuals’ knowledge of and inaction [regarding] the EDA’s mismanagement of funds.”

The economic development authority is teetering on insolvency. And normally neighborly Front Royal once again feels toxic, as residents wonder where else the corruption may have taken root.

“The story is just getting more complicated,” said longtime resident Melanie Salins, who co-founded a community group that has tracked a growing web of suspicious land and business deals. “For them to be able to steal from us and look us in the face like everything’s fine, it’s offensive.”

A project with ‘absolutely everything’

McDonald started as a property manager for the authority in 1999 after graduating from High Point University in North Carolina with a political science degree. She became director in 2008, eventually earning $115,000 a year.

Chatty and self-assured, she excelled at navigating both complex land transactions and the clubby local political landscape. She presided over the powerful Rotary Club, cheekily wore a Dallas Cowboys jersey on football Sundays in a community of die-hard Washington Redskins fans and boasted (falsely, it turned out) about winning $102,000 at the slot machines in nearby Charles Town, W.Va.

As director, she helped lure Walmart, Target and a Lowe’s home improvement store to Front Royal, as well as a $100 million hospital that is under construction, a former board member said. In 2014, she met Tran, who had sought help with the data center idea from the office of then-Rep. Bob Goodlatte (R-Va.), according to Pete Larkin, who was Goodlatte ’s chief of staff.

A soft-spoken resident of upscale Great Falls, Va., whose website boasts of contracts with the U.S. Office of Management and Budget, Tran wanted to turn part of the former Avtex Fibers manufacturing campus into a hub for cloud computing, with a three-building, $40 million complex that according to its business plan would include a restaurant, a coffee shop and a music store.

McDonald’s board approved a $10 million, 90-day loan. Tran promised funding from 80 foreign investors enrolled in the federal EB-5 visa program, which offers applicants and their families a path to citizenship in exchange for the jobs their money helps create. Officials and residents gushed over the plan.

“This is our first step into a new era,” then-Mayor Timothy Darr said at a 2015 groundbreaking, as McDonald, Tran and Goodlatte smiled nearby.

The regional Criminal Justice Training Academy was announced the following year. McDonald said an anonymous donor would provide $8 million, and told her board the donor was Tran, the civil lawsuit says. McEathron, a fellow Rotarian, would be in charge.

The broad-shouldered sheriff was a morning fixture at a vinyl-booth diner on Main Street. He had launched a summer camp and amused his deputies by playing faux saxophone as they lip synced to “Love Shack” by the B-52’s. The training academy further raised his profile.

“This is the first time we’ve ever done anything like this,” McDonald said, according to an account in the Northern Virginia Daily.

McEathron boasted: “We can offer absolutely everything at this facility.”

Starting to unravel

It all seemed incredibly fortunate. Until late 2016, when some town officials and residents looked up Tran’s company online.

They found it hadn’t yet been allowed to solicit investments under the EB-5 program. The $140 million federal contract appeared to be a mirage, with Tran receiving no payments from it. Skeptics asked increasingly pointed questions at public meetings, sparking warnings from Town Council members that the naysayers would blow Front Royal’s big chance.

“They chewed me up and down,” said Bébhinn Egger, a former council member who was among the first to raise alarms. “It only took me about 15 minutes of research to see that there was something fishy going on.”

In an email to McDonald in early 2017, Tran said the questions meant “our ability to raise capital within the EB-5 investor community is now in jeopardy,” court records filed as part of the civil lawsuit show. His company was eventually approved for the program, then later disqualified, a decision Tran is appealing, according to U.S. Citizen and Immigration Services, which administers the EB-5 program.

The Town Council authorized $1.7 million of infrastructure improvements for the Avtex site, and according to the lawsuit, McDonald allegedly paid Tran at least $1.5 million for construction costs without informing her board.

In 2018, Front Royal’s finance director discovered a bigger red flag: The authority had overbilled Front Royal nearly $300,000 for its portion of debt service related to the Avtex site and a road improvement project. At a meeting about the discrepancy, McDonald nonchalantly said she had mistakenly falsified some invoices, Town Attorney Doug Napier recalled.

“She was not at all contrite,” Napier said. “It just shocked me.”

The revelation prompted a call to state police and an independent review of the authority’s books that uncovered a dizzying array of phony invoices, phantom projects, secret land deals and bank wire transfers to entities controlled by McDonald or her friends, according to a copy of the review completed in May by the Cherry Bekaert accounting firm. The probe was commissioned by the authority and is the basis of the criminal and civil proceedings.

McDonald allegedly billed the authority more than $50,000 to pay for renovating a vacant inn, then used those funds to pay credit card bills, according to the review. She is accused of doctoring invoices to secure $4.6 million for purchasing tax credits, then embezzling that money.

A plumbing company owned by her husband, Sammy North, allegedly collected at least $66,200 in secret payments, the review found. North has also been arrested, as was Donald F. Poe, a family friend accused of conspiring with McDonald to funnel $841,409 to his solar panel installation company for work the board didn’t authorize.

North did not return messages seeking comment. Ryan Huttar, an attorney for Poe’s company, said that his client performed the work it was hired to do and that it reimbursed the authority $335,000 when one job was canceled.

Attorneys in the civil lawsuit say McDonald allegedly convinced the authority to buy land from her aunt and uncle for a workforce housing project without disclosing that they were her relatives, and billed the authority an additional $130,000 in the transaction, most of which went to pay off what appeared to be her mortgage.

“You’d think somebody, somewhere along the line, would have an inkling that something was amiss earlier on,” said Napier, who filed a lawsuit on behalf of Front Royal seeking $15 million in damages from the authority and Warren County.

“This community is sort of like Mayberry,” Napier said. “We’re not used to criminality in government here.”

Jennifer McDonald, left, then director of the Warren County economic development authority, and then Warren County Sheriff Daniel T. McEathron stand on the parcel of land in Front Royal that was to be the site of an $8 million regional criminal justice training facility. (Rich Cooley//Northern Virginia Daily)

Allegations, arrests, tragedy

McEathron wasn’t charged. But he may have felt the tide turning against him.

He and McDonald had launched a real estate investment company called DaBoyz LLC in 2016, shortly after they announced the police academy. The firm used $3.5 million in authority funds to buy four properties, the independent review found. McDonald and McEathron also bought a three-bedroom home in Virginia Beach, which they rented to McEathron’s son and daughter-in-law, court records in the civil lawsuit show.

In one curious transaction, which lawyers for the authority say may have been an attempt to launder money, DaBoyz paid Rappawan, a construction company, $1.9 million for a large tract of land and then sold it back a month later for $1.3 million. Rappawan owner William T. Vaught Jr. declined to comment, citing the criminal investigations.

In March, the authority filed its own lawsuit, against McDonald, McEathron, Tran, their companies and two contractors. The following month, the FBI raided the authority’s offices, seizing documents in what signified the launch of a U.S. Justice Department investigation, according to local news reports at the time. A spokesman for the U.S. attorney’s office for the Western District of Virginia declined to discuss the probe, which Warren County officials confirmed was underway.

The sheriff was despondent over his tarnished image, his attorney said. He took early retirement in May. A few weeks later, he testified before a local grand jury, appearing at the county courthouse with his wife, a member of the county School Board.

Then, just before Memorial Day weekend, McDonald was arrested.

The following Tuesday, McEathron killed himself outside his family’s secluded mountainside home. Some of his deputies found his body. The gun was nearby.

“Either knowingly or unknowingly, he allowed himself to become involved in some of the things that apparently happened,” said Ron Llewellyn, a former county supervisor who was a friend of McEathron’s and served on the authority’s board when McDonald was director.

Llewellyn was among those indicted this week. He denies wrongdoing and said the allegations against the sheriff go against his memories of a man he saw as a pleasant, by-the-book law enforcement official.

But, he added, the evidence against McEathron is damning.

“I just can’t believe that he wasn’t aware of some of it,” Llewellyn said.

Sammy North, Jennifer McDonald’s husband, in an August booking photo from Rappahannock-Shenandoah-Warren County Regional Jail. He is charged with fraud and money laundering. (RSW Jail)

‘Tip of the iceberg’

McDonald was charged this summer with additional counts of money laundering and grand larceny. Her husband was arrested on counts of money laundering and obtaining money by false pretenses. The local grand jury, which was initially set to finish its work this month, requested another six months to investigate.

While out of jail on $75,000 bond, McDonald lost a different court battle, with a judge in a defamation lawsuit ruling that she staged burglaries at her office and home in 2017 to try to deflect suspicions against her. The judge awarded County Supervisor Thomas H. Sayre (R-Shenandoah) $20,000 in damages for being implicated in those phony crimes.

Tuesday’s announcement included charges against Sayre, who denied wrongdoing through his attorney. Several others denied wrongdoing as well, or declined to comment.

Tran’s company has put a small, one-story office building on the Avtex site and is working to repay the $10 million loan from the authority. Tran was able to extend the term to 2045, officials said.

Because of one of the lawsuits, Tran is forbidden to sell the property, valued at $2.2 million. Court levies have also been placed on seven properties McDonald owns, plus six cars and $82,500 she has in the bank.

In hopes of regaining financial stability, the authority is trying to sell several of its properties, including a building on Main Street that Jeff and Ginny Leser leased in 2018 to open a general store. The couple hadn’t known about the brewing scandal. Or that the same building previously housed a store McDonald, her friend William Lambert and her former aide Michelle Henry allegedly used as a vehicle to steal more agency money.

Henry has been charged with embezzlement; Lambert with money laundering and obtaining money by false pretense. Lambert’s attorney, Phillip Griffin, said he has entered a plea of not guilty, adding that his client is “a minor player” in the scandal. Henry did not return phone messages; neither did Ryan Nuzzo , the attorney who represented her at her bond hearing.

The Lesers spent $9,000 to fix a bathroom the authority refused to repair. Last month, they closed their store, frustrated by sluggish sales, a warped ceiling and leaky roof, and the possibility that the building could be sold out from under them.

Ginny Leser (Jahi Chikwendiu/The Washington Post)

“I try not to feel like a failure,” Ginny Leser said in an interview. “But I do feel foolish.”

Local activists, who had called for the state and federal investigations to be expanded, rejoiced at Tuesday’s announcement.

“Somebody is finally listening,” said Salins, co-founder of the Warren County Coalition watchdog group. “It’s not every day that your entire government gets arrested. It’s so shameful.”

Residents had been pointing to emails between McDonald and other officials — some of which surfaced in the independent review, and some of which were printed out and dropped anonymously in mailboxes — that appear to demonstrate the government was aware of some suspicious transactions.

And they had been demanding answers from Supervisor Tony Carter (R-Happy Creek), another of the people charged in the recent indictments. Carter works for his mother’s insurance company, Stoneburner-Carter, which holds insurance policies on four properties owned by the authority and has collected about $46,000 in premiums since 2015, according to records obtained through a Freedom of Information Act request.

He didn’t return calls Tuesday, but said earlier that the insurance contract does not pose a conflict because he doesn’t own the company and, therefore, doesn’t directly benefit from the payments.

“If I did have ownership, that would have precluded me from writing those policies,” he said. “I did what was legally correct.”

Kristie Atwood, whose Facebook page One Mad Mother has become a repository of news about the investigations, called the latest indictments “just the tip of the iceberg.”

For years, the local government “has been skewed [in favor] of the elite and the ‘good ol’ boys’ club,’ ” she said. “With luck, and these indictments, our community is going to turn around for the good.”

FRONT ROYAL – Jennifer McDonald, the former Front Royal-Warren County Economic Development Authority executive director, was arrested Friday night on two felony counts of fraud and two felony counts of embezzlement, according to the Rappahannock-Shenandoah-Warren Regional Jail’s website.

McDonald was arrested by the Virginia State Police and was booked at 7:20 p.m. Friday at RSW, and remains in jail custody, held without bond, according to the jail’s website. The arrest came after a special grand jury investigating potential misfeasance and malfeasance in the EDA, town, county, schools and Sheriff’s Office questioned several officials on Wednesday, Thursday and Friday.

On Wednesday, several individuals associated with the case were seen in the lobby of the Warren County courtroom where the special grand jury was meeting. They included McDonald; former Warren County sheriff Daniel McEathron; town Finance Director B.J. Wilson; former EDA administrative assistant Missy Henry; former EDA bookkeeper Josie Rickard; former EDA chairman and current school superintendent Greg Drescher; Kristie Atwood; former Town Councilwoman Bébhinn Egger; Front Royal Police Capt. Crystal Cline; Front Royal police detective Landin Waller; Town Attorney Doug Napier; and County Attorney Dan Whitten.

On March 26, the EDA filed a $17.6 million civil embezzlement lawsuit against McDonald, ITFederal developer Curt Tran, McEathron, Donald Poe, Justin Appleton and limited liability companies associated with those individuals. When McDonald resigned in December, she stated in an email to the EDA board that she is liable for $2.7 million in EDA losses.

According to previous reports, the first thread in the case unraveled in May 2018 when Vice Mayor William Sealock asked town Finance Director B.J. Wilson to examine the standing of the town’s fund balances. Shortly thereafter, Wilson began noticing discrepancies and it was discovered that the EDA owes the town $291,000 stemming from overpayments related to debt service.

{p dir=”ltr”}Supervisor Tom Sayre, who has a pending defamation lawsuit against McDonald, said over the phone that the situation is a “multi-layered crime story” that began unraveling over two years ago and he is “so thankful the light of truth is finally emerging, albeit slowly.”

{p dir=”ltr”}“I look forward to seeing all the facts laid bare. It only takes a few people to do a lot of damage and some to turn a blind eye. Otherwise, we are good, hardworking, loving, honest people in Front Royal and Warren County and with faith and perseverance, we are going to reclaim it,” he said.

Supervisor Tony Carter noted over the phone that with litigation in process, it is not appropriate to comment on the matter.

“Right now this is ongoing litigation and because of that, I don’t think it’s prudent to comment. We have to let the wheels of justice move.”

Town Councilman Chris Holloway stated in an email that McDonald’s arrest “was something that was expected.”

Donald F. Poe, a family friend, was also arrested and charged with fraud and money laundering. (RSW Jail)

“I’m glad to see the legal process finally start to take effect. I’m sure this is the first of more to come,” he stated.

Vice Mayor William Sealock and EDA Chairman Gray Blanton both decline to comment on the situation.

All other town council members and supervisors did not respond to phone inquiries for comment.

The Virginia State Police has been investigating suspicious financial activities at the EDA since August. In April, the state police and FBI were seen at the EDA’s Kendrick Lane office removing boxes of evidence. Shortly after that raid, unsealed court documents revealed that the state police believe McDonald lost $753,207 gambling from 2014 to 2018.

The alleged embezzlement that the lawsuit outlines involves ITFederal, the EDA’s workforce housing project, a solar energy project, land purchases, the Afton Inn renovation and a proposed criminal justice academy.

Regarding ITFederal, the EDA’s lawsuit alleges that McDonald and Tran used a $10 million loan for their personal benefit. The suit further alleges that McDonald, Tran and McEathron used a proposed criminal justice academy as “an artifice orchestrated to divert Warren EDA funds to personally benefit” them.

The lawsuit also alleges that McDonald used credit lines reserved for the town and county for her personal benefit. Funds intended for a workforce housing apartment complex were used instead by McDonald to purchase land from her aunt and uncle, according to the lawsuit.

The lawsuit also alleges that DaBoyz, a limited liability company owned by McDonald and McEathron, purchased several parcels of land using town and county credit lines. The lawsuit states that other alleged misuse of town and county credit lines includes a $1.2 million payment McDonald made to Earth Right Energy Solar Commercial LLC, which is owned by Poe and Appleton, for the installation of solar equipment.

The lawsuit also alleges that McDonald defrauded the Afton Inn developer to make payments on her personal credit card.

The date and time of McDonald’s first court appearance is not yet listed on the Warren County court website.

FRONT ROYAL – Nine defendants were named in a civil case filed Tuesday in the Circuit Court of Warren County by the Front Royal-Warren County Economic Development Authority for their alleged involvement in the misappropriation of $17,640,446.16 of the authority’s money.

Defendants named in the case filed by Richmond attorney Daniel M. Siegel, with the Sands Anderson firm, are former EDA Executive Director Jennifer McDonald, Warren County Sheriff Daniel McEathron, ITFederal principal Truc “Curt” Tran, ITFederal LLC, MoveOn8 LLC, DaBoyz LLC and Donald Poe and Justin Appleton, principals of Earth Right Energy Solar Commercial LLC.

The complaint states that McDonald, who worked at the EDA for nearly 20 years – 10 of them as executive director – “engaged in a variety of schemes to unlawfully take money from the Warren EDA for her personal benefit” from at least 2016 to 2018.

The filing states that “McDonald stole from the Warren EDA, misused its financial assets, deceived its leadership, withheld necessary information from the Warren EDA, misappropriated Warren EDA assets for her personal aggrandizement, and conducted a years-long campaign of deceit and exploitation.”

It further states that “Defendant McDonald enjoyed, and abused, an extraordinary position of trust. There was no part of the Warren EDA’s operations, records, or financial affairs with which she was not familiar.”

Defendants “engaged in a variety of schemes and artifice to unlawfully enrich themselves at the expense of the Warren EDA,” the filing states and involve the following projects:

a. Work Force Housing – Royal Lane Property Embezzlements;

b. Afton Inn Project Embezzlements;

c. Criminal Justice Academy a/k/a Skyline Regional Training Academy;

d.  ITFederal Loan;

e.  Subsequent Payments to ITFederal;

f.  Unlawful Payments Concerning Earth Right Energy, LLC;

g.  Unlawful Payment of Town and Warren County Funds for Defendant McDonald Owned/Controlled Real Estate.

The filing states that McDonald has admitted to taking money from the Town of Front Royal and Warren County bank credits facilities for several purposes other than which they were intended. It notes that Defendant McDonald “often doctored and/or created false documents and then made or directed to be made false entries in the Warren EDA’s books and records to conceal the diverted monies.”

Moreover, the filing indicated that McDonald admitted via email on the day she resigned that she is liable for $2.7 million in EDA losses. According to the filing, she had agreed to pay that money back to the EDA by June 20, 2019 by either getting reimbursed by ITFederal, an unnamed private investor, and Earth Right Energy or pay it back herself.  She did not specify if  Sheriff McEathron was the unnamed investor, though the pair bought a number of properties together in excess of $2 million.

“The admission grossly undervalues the extent of her theft and unlawful distributions but is one indication of her consciousness of guilt in her conduct,” the filing notes.

The filing states that DaBoyz LLC, which was owned and operated by McDonald and Warren County Sheriff Daniel McEathron, purchased property at 2951 Rileyville Road in Page County for $554,427 through “credit facilities” belonging to the EDA.

According to the filing, on Sept. 14, 2016, the EDA wired $2 million to an account at First Bank and Trust to TLC Settlements LLC. That $2 million was subsequently paid to DaBoyz LLC. The filing says that DaBoyz LLC. then purchased several parcels of land.

The filing states that LLCs owned solely by McDonald or with McEathron “unlawfully diverted money” from the EDA through bank credit lines restricted for Front Royal and Warren County use.

The filing states that McDonald “authorized the wire transfer of money from a Warren EDA credit facility to the sellers of 1321 Happy Creek Road.  The wire transfer was for $1,007,672.84.” That property, the filing states, was “conveyed” to Moveon8 LLC, another company owned and operated by McDonald and McEathron.

The filing states that McDonald fraudulently altered invoices for payments on the Afton Inn project, resulting in the embezzlement charge.  McDonald doctored invoices for payments by United Bank that were supposedly used for the project. The filing states the invoices totaled over $50,000, though the project’s developer claimed those invoices were not submitted by the company.

The filing states that McDonald used that money to pay on her personal Sears credit card and Chase bank card accounts.

The filing also states that the Criminal Justice Training Academy a/k/a Skyline Regional Training Academy was “an artifice orchestrated to divert Warren EDA funds to personally benefit” McDonald, McEathron and Tran.

Curt Tran on site on Dec. 20, 2018, the day EDA Executive Director Jennifer McDonald tendered her resignation while under job performance scrutiny by her board.

The filing further states that of the $10 million loan to ITFederal, “little to no proceeds” were applied to the ITFederal project. Instead, it says that McDonald and Tran “converted all or a portion of the proceeds of the ITFederal loan to their own personal benefit.”

Regarding the Earth Right Energy Solar Commercial LLC project that would have put solar panels on county schools, the filing states that McDonald directed over $1.2 million be given to Poe’s company using lines of credit established for Front Royal and Warren County. $841,904 was for the installation of equipment that was never performed, according to Tuesday’s filing.

The filing further states that defendants caused the EDA to make transactions for equipment or enter into agreements with Earth Right Energy LLC that were not approved by the EDA.

McDonald, McEathron, Tran nor Poe could be reached via telephone for comment; contact information for Appleton could not be found.

An EDA news release issued Tuesday afternoon states that the board, like the community was “shocked by the breadth of these allegations.”

It went on to say that the board was “disappointed that these transactions didn’t come to our attention earlier through regularly scheduled annual audits, we commit to doing everything we can to ensure this does not happen again. We recognize that this board must regain the public’s trust while seeking to recover pubic funds and holding those responsible accountable for their actions.”

Under the leadership of interim executive director John Anzivino, the board stated in the release that it had “put into place new policies ranging from expense approvals to screening of employees. We’ve reinstated a loan committee and appointed a budget committee for additional oversight while expanding the scope of the audit committee. We’re also seeking more engagement of current board members and their understanding of the responsibilities and oversight duties of this unpaid, volunteer role as well as new members with new ideas and different perspectives.”

The EDA board and the Warren County Board of Supervisors have begun discussions to make the County the fiscal agent for the EDA effective July 1, 2019 the release stated, which would bring all financial transactions under the watch of Acting Warren County Treasurer Jamie Spiker, which would, the release stated, “provide additional layers of oversight, protection and accountability so we can focus on what we do best – growing our region’s economy.”

The release further stated, “While we’re taking important steps now to safeguard our future, let us not lose sight of the many accomplishments of the EDA in recent years showing our significant role in our community’s economic development. Such accomplishments include the growth in the expansion of existing industries as well as the ongoing development of two industrial parks, one former Superfund site and a technology park.”

Since the mid-1990s, the EDA says it has helped  create over 2,500 jobs and $500 million in investment in Warren County and the Town of Front Royal.