Connect with us

Editors Choice

Meanwhile In N. Virginia the (Now Dead) Sheriff and Several EDA Staff were Stealing Upwards of $17M

“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.”

Published

on

BREAKING NEWS: All EDA criminal charges dropped, could be brought back

April 17, 2020

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.”

New EDA lawsuit seeks $4.5 million in damages

Originally published; 16 April, 2020

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.

In early 2018 Jennifer McDonald approached reporter Roger Bianchini with a story about three years of slot-machine casino winnings totaling over $2.1 million to help explain a cash-rich real estate business under scrutiny by Royal Examiner Editor Norma Jean Shaw.

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.

Millions of dollars are missing. The sheriff is dead. A small Virginia town wants answers

Originally published; 24 Sept., 2019

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.”

Ex-EDA director jailed on felony fraud, embezzlement charges

Originally published; May 27, 2019

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.

EDA $17.6 M lawsuit: Sheriff McEathron, McDonald, Donnie Poe, others named

Originally Published; March 27, 2019
Sheriff Danny McEathron, who announced March 18 he would retire May 1, has bought $2,849,700 worth of real estate with former EDA director Jennifer McDonald since 2016/ File photo

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.

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published.

Editors Choice

Virginia Judge Behavin’ Like an Outlaw On the Bench, Pulls a Pistol On Counsel During Trial

Judge Hummel then pulled out a black handgun from an over-the-belt leather holster beneath his robe, and started waving it around the room.

Published

on

By

A Judge Pulled a Gun in the Courtroom—and Then It Got Weird

“The whole trial was insane,” said one lawyer, who later reported the weapon-wielding jurist to the FBI.

JUL 16, 2022 | REPUBLISHED BY LIT: JUL 17, 2022

During a trial in West Virginia earlier this year, witnesses tell The Daily Beast, a state court judge whipped out his handgun, waved it in the air, and left it on the bench with the barrel pointing directly at the corporate lawyers who had irritated him.

Circuit Judge David W. Hummel Jr., who oversees cases in the tiny city of New Martinsville, repeatedly told The Daily Beast it never happened.

When reached by phone in March, he initially professed shock at the allegations.

On subsequent phone calls, however, his story kept changing as he claimed to recall more details about the incident.

“I did not have my 1911 at any point during that trial,”

he said then, referring to a common type of semi-automatic pistol.

“It was secreted in a drawer on the bench. I never showed my 1911 at the trial whatsoever—at any point during that trial.”

That judge is now under investigation by the state’s judiciary for violating the profession’s code of conduct, according to three witnesses now sharing information with law enforcement and official communications about the investigation reviewed by The Daily Beast.

The judge’s own staff has since told an investigator that the judge did, in fact, display his gun openly during an attorneys-only hearing and boasted about having it in his possession, according to two of those witnesses.

Hummel insisted to The Daily Beast that there was no recording of the incident that would back up these accusations, but two witnesses say the state investigator has acquired a videotape of the interaction.

“You don’t understand what a terrible victimization it is,”

said Lauren Varnado, the attorney who was standing at the podium when the judge pulled out his gun.

“It was pretty traumatic for multiple people. The whole trial was insane.”

“We have no power in this situation,”

she said.

“It was way scarier than even just a normal person on the sidewalk.

You need more power over us than you already have right now?

That’s frightening, because he could order us to do whatever.

Why would you ever need to pull out a gun?”

The judge’s show of force was the culmination of months of building tension between him and Varnado’s team of corporate lawyers.

The Daily Beast has reviewed hundreds of pages of court transcripts and spoken to several people involved.

As with many legal battles in West Virginia, it all started with fossil fuels.

“It was too stunning to even process it. My brain didn’t even process it until after the hearing concluded. I was on edge. I don’t know if it was loaded.”
— Lauren Varnado

Until the case settled recently, Hummel oversaw a dispute involving West Virginia landowners who sued over the royalty payments they get from the natural gas giant EQT for fossil fuels extracted from the earth hundreds of feet below their property.

But the gas company’s lawyers accused the judge of never disclosing that his parents get gas company royalties that may someday pass on to him—sparking questions about a glaring conflict of interest.

When the gas company’s lawyers sought to disqualify him, court transcripts show he grew increasingly aggravated at Varnado and her team.

At an April 2021 court hearing in which he was asked about his family’s gas interests, the transcript shows how the judge patronized EQT’s lawyers as he detailed his family tree and dismissed their concerns, ranting about how his cousin “Christy” got mad at him for not recognizing her at a wedding.

When the attempt to have higher state courts disqualify him failed, Hummel started the next court hearing in similar fashion.

“Okay. Excellent. And I’m Judge Hummel, and I have no conflicts, Supreme Court said, so here we are. And this time I don’t have to talk about my Aunt Rose’s numerals or which shoe I put on first or anything,”

he said on July 19, 2021, according to another transcript.

The eventual trial was always going to be fiercely contentious.

EQT cut its royalty payments nearly a decade ago, shortly before the energy value of the state’s natural gas production began to overtake coal.

While the state has relied heavily on the exports of coal and oil since the 1800s, natural gas from the fracking of the massive Marcellus Shale underground has the promise to enrich the state.

By the time the two-week trial started in February in New Martinsville, the locals were so angry at how the gas company had cut their royalties in recent years that EQT lawyers felt the need to be escorted by ex-CIA private security contractors, according to three members of that team.

But when lawyers on both sides were called into the century-old sandstone courthouse for a special hearing on Saturday, March 12, bailiffs at the entrance surprised the legal teams with a new rule for the day.

“Trial counsel only today,” they said, according to three witnesses who spoke to The Daily Beast on condition of anonymity, fearing potential reprisal.

Varnado’s private security guard and a paralegal were turned away.

The lawyers made their way into the courtroom on the second floor.

Once there, according to a transcript, the judge castigated the gas company’s lawyers for having private guards, noting that if there were any concerns about safety,

“I promise you, I’ll take care of them.”

“We were never told these folks were security until most recently,”

the judge said, according to a court transcript.

“I got this man here carrying a man purse, which I make fun of him every damn day for wearing such a sissy-ass contraption. And I hear he has blood coagulant. I have blood coagulant up here too, and I’ve got lots of guns. Like, bigger ones too.”

Hummel then pulled out a black handgun from an over-the-belt leather holster beneath his robe, and started waving it around the room, according to Varnado and another person in the room.

Hummel then put it down on his wooden desk, known as a judge’s bench, and left the barrel pointing at Varnado, her New York law partner David R. Dehoney, and their local West Virginia attorney Jennifer Hicks.

The gun stayed there for the rest of the hearing. When the attorneys were directed to negotiate in a private room, they found the handgun still waiting for them when they returned. When lawyers had to approach the judge, the resting gun remained pointed at their faces.

“It’s just a violation of basic gun safety, having it out like that pointing at people,” Varnado said. “It was too stunning to even process it. My brain didn’t even process it until after the hearing concluded. I was on edge. I don’t know if it was loaded.”

Indeed, pointing a firearm at anything but a target violates the National Rifle Association’s primary rule on gun safety, which is to keep a barrel pointed away from people at all times. And the judge seems to have broken a second rule of safe gun handling, which is to check whether a firearm’s chamber is empty and clear of ammunition—then say so out loud.

In the days after the hearing, Varnado reached out to the FBI to report what happened. But she decided to seek help from the feds 100 miles away in Pittsburgh, concerned that local law enforcement might be untrustworthy given the judge’s position of power and influence.

Varnado still feels confident that was the right move. When The Daily Beast reached out to Wetzel County Sheriff Michael L. Koontz, whose deputies provide security outside the courthouse, the sheriff remembered that a special hearing happened that Saturday morning—but denied any knowledge about the judge pulling out the gun.

However, two sources with direct knowledge say a sheriff’s deputy who was in the courtroom that day has since confirmed to the state investigator that the judge brandished his pistol.

When reached by phone a few weeks after the episode, Hummel first denied anything remarkable ever occurred.

“There is no incident… I absolutely, categorically deny I had a gun that day in the courtroom,” he said. “It was just me and the attorneys. I had no reason to have a firearm that day… I’ve never shown a gun in my courtroom to anybody. I don’t want them to know that I have it. I do not display my firearm at any time during trial.”

“My job is not to protect anyone with firearms,” he said. “That’s what my bailiffs and deputy sheriffs are for.”

Minutes later, the judge called back and said he now recalled having a holstered gun on him beneath his robe during the trial the previous week.

But it wasn’t the 1911 pistol, he said.

It was a long, classic-looking revolver that hails from the days of the Wild West.

“I wore the Colt Peacemaker,”

he said.

“The Peacemaker never ever came out of the holster during that trial.”

When the judge called back a third time, he acknowledged showing something to the attorneys in the courtroom that day.

But he said it wasn’t a gun.

“I did pull out a small, red first aid kit. But it was casual. I did show her a foiled packet, and said this is blood coagulant. We have preparations for active shooter situations,” he said.

In April, a spokeswoman with the Supreme Court of Appeals of West Virginia told The Daily Beast that she was not aware of the gun incident.

And records showed that Hummel had not been the subject of an admonishment or formal statement of charges.

But in the weeks since, Judicial Investigation Commission of West Virginia investigator David Hudson has been gathering evidence about the incident, asking witnesses to describe the firearm and how they felt about it being displayed by the judge, according to communications reviewed by The Daily Beast.

In a signed affidavit submitted to the investigator, Varnado, who hails from Texas, described the judge’s gun as a “Colt 45,” a widely recognized pistol otherwise known as a 1911.

The judge, his court clerk, a secretary, and a court reporter have all submitted sworn affidavits describing the events that day to the investigator, court reporter Holly A. Kocher told The Daily Beast on Wednesday.

Since March, the FBI’s Pittsburgh field office has repeatedly declined to confirm that a special agent there has been assigned to look into the incident. The judge did not respond to requests for comment on Wednesday.

The state judiciary, citing policy, declined to provide details about the ongoing ethics investigation.

But its staff pointed to its website, which indicates that judges who violate the rules face a one-year suspension.

Continue Reading

corruption

Akerman’s Lawyer Travers Clark On A Saturday Foreclosure Filin’ Bonus

Morrison, a homeowner represented by the local legal aid society, loses his case when dismissed WITH PREJUDICE.

Published

on

By

Morrison v. Carrington Mortgage Services LLC

(3:22-cv-00013)

District Court, E.D. Virginia

xxx

FEB 5, 2022 | REPUBLISHED BY LIT: FEB 6, 2022

LIV COMMENTARY (APRIL 6, 2022)

CENTRAL VIRGINIA LEGAL AID SOCIETY, INC. have achieved little for Morrison, if anything. The case is over before it has started. A dismissal WITH PREJUDICE is effectively a loss to the homeowner, who cannot bring these claims again to federal court.

STIPULATION OF VOLUNTARY DISMISSAL PURSUANT TO FED. R. CIV. P. 41(a)(1)(A)(ii)

Pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii), Plaintiff James Morrison, Jr. stipulates that this action shall be dismissed with prejudice as to Defendants Carrington Mortgage Services LLC, Wilmington Savings Fund Society, FSB as Trustee of ACM Stanwich Alamosa 2020 Trust and Professional Foreclosure Corporation of Virginia and that each party to this Stipulation shall bear their own costs and attorney fees incurred in this action. Pursuant to Kokkonen v. Guardian LifeInsurance Co. of America, 511 U.S. 375 (1994), this Stipulation of Dismissal explicitly reserves in this Court jurisdiction to enforce the terms of the Parties’ Settlement Agreement.
As evidenced by the endorsements herein, Defendants consent to the dismissal provided for herein.
DATED this 13th day of March, 2022.

Respectfully submitted,

/s/ Jessica W. Thompson

Jessica W. Thompson (VSB # 75514)

CENTRAL VIRGINIA LEGAL AID SOCIETY, INC.
101 W. Broad Street, Suite 101
Richmond, VA 23220
Telephone: (804) 200-6037
Facsimile: (804) 864-8794 Email: jessica@cvlas.org Counsel for Plaintiff

SEEN AND AGREED:

/s/ J. Travers Clark
James Travers Clark (VSB # 94706)
AKERMAN LLP
750 Ninth Street, N.W., Suite 750
Washington, D.C. 20001
Telephone: (202) 393-6222
Facsimile: (202) 393-5959 Email: trav.clark@akerman.com
Counsel for Carrington Mortgage Services LLC and Wilmington Savings Fund Society, FSB
as Trustee of ACM Stanwich Alamosa 2020 Trust
/s/ Malcolm B. Savage, III
Malcolm Savage, Esq. (VSB # 91050)
LOGS Legal Group, LLP
10021 Balls Ford Road, Suite 200
Manassas, VA 20109
Telephone: 703-449-20109 Email: msavage@logs.com
Counsel for Professional Foreclosure Corporation of Virginia

 

Defense Counsel for James Morrison, Jr.

LIV would have transcribed this removal notice, but for it being modified to an image PDF version by the Virginia Federal Court.

Just Call Me Trav

The internal memo from @uscourts has gone viral

U.S. District Court
Eastern District of Virginia – (Richmond)
CIVIL DOCKET FOR CASE #: 3:22-cv-00013-DJN

Morrison v. Carrington Mortgage Services LLC et al
Assigned to: District Judge David J. Novak
Cause: 28:1441 Notice of Removal -Violation of Real Estate Settlement Procedure Act
Date Filed: 01/05/2022
Date Terminated: 03/16/2022
Jury Demand: None
Nature of Suit: 220 Real Property: Foreclosure
Jurisdiction: Federal Question
Plaintiff
James Morrison, Jr. represented by Jessica Wagner Thompson
Central Virginia Legal Aid Society
Southside Office
229 N Sycamore Street
Petersburg, VA 23803
804-518-2124
Fax: 804-861-4311
Email: jessica@cvlas.org
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
Defendant
Carrington Mortgage Services LLC represented by James Clark
750 Ninth Street, NW
Ste 750
Washington, DC 20001
202-393-6222
Email: trav.clark@akerman.com
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
Defendant
Wilmington Savings Fund Society, FSB as Trustee of ACM Stanwich Alamosa 2020 Trust represented by James Clark
(See above for address)
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
Defendant
Professional Foreclosure Corporation of Virginia represented by Malcolm Brooks Savage , III
Shapiro & Brown, LLP
501 Independence Parkway
Suite 203
Chesapeake, VA 23320
(703) 449-5800
Fax: (703) 449-5850
Email: msavage@logs.com
LEAD ATTORNEY
ATTORNEY TO BE NOTICED

 

Date Filed # Docket Text
01/06/2022 2 Civil Cover Sheet re 1 Notice of Removal, by Carrington Mortgage Services LLC. (Clark, James) (Entered: 01/06/2022)
01/18/2022 3 ANSWER to Complaint by Carrington Mortgage Services LLC, Wilmington Savings Fund Society, FSB as Trustee of ACM Stanwich Alamosa 2020 Trust.(Clark, James) (Entered: 01/18/2022)
01/24/2022 4 ORDER Setting Pretrial Conference – Initial Pretrial Conference set for 2/17/2022 at 02:00 PM in Richmond Telephonically before District Judge David J. Novak. Signed by Patrick F. Dillard with permission of District Judge David J. Novak on 1/24/2022. (cgar) (Entered: 01/24/2022)
03/09/2022 5 NOTICE of Appearance by Malcolm Brooks Savage, III on behalf of Professional Foreclosure Corporation of Virginia (Savage, Malcolm) (Entered: 03/09/2022)
03/13/2022 6 STIPULATION of Dismissal by James Morrison, Jr. (Thompson, Jessica) (Entered: 03/13/2022)
03/16/2022 7 ORDER pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii), the Court hereby DISMISSES WITH PREJUDICE all claims by Plaintiff against Defendants.

Each party shall bear their own costs and attorney fees incurred in this action.

The Court retains jurisdiction to enforce the terms of the Parties’ Settlement Agreement pursuant to Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375 (1994).

This case is now CLOSED.

Signed by District Judge David J. Novak on 3/16/22. (adun, )

(Entered: 03/16/2022)

Continue Reading

Dark Money

Who Needs Reddit for Share Trading Tips and Tricks? Not this Broker

It’s possibly a big mistake, as Virginia Federal Judge Claude Hilton signed an order and dated it Dec 13, 2011. Its 2021 last time we looked.

Published

on

By

SEC Handed Rare Midtrial Defeat In Insider Trading Case

On Monday, Dec 13, 2021, The U.S. Securities and Exchange Commission suffered a rare midtrial loss after a Virginia federal judge dismissed the agency’s insider trading case against a mortgage broker without hearing any evidence from the defendant.

“As the date of the announcement approached, Clark allegedly took aggressive steps to fund purchases of additional out-of-the-money CEB options, including liquidating his wife’s IRA, nearly maxing out a line of credit and taking out a loan on his car.”

Rule 50(a) provides for a motion for judgment as a matter of law (JMOL) which may be made at any time before submission of the case to the jury. This was previously known as a motion for a directed verdict.

SEC Obtains Judgment Against Former Corporate Controller for Tipping Brother-In-Law Ahead of Merger Announcement

Litigation Release No. 25264 / November 15, 2021

Securities and Exchange Commission v. Christopher Clark and William Wright,

No. 1:20-cv-01529 (E.D. Va. filed December 11, 2020)

DEC 13, 2021 | REPUBLISHED BY LIT: DEC 14, 2021

On October 18, 2021, the U.S. District Court for the Eastern District of Virginia entered a final consent judgment against William D. Wright of Arlington, VA, the former Corporate Controller of CEB Inc., whom the SEC had charged with insider trading.

The SEC’s complaint, filed on December 11, 2020, alleged that Wright learned about an impending acquisition of his company. As alleged, Wright tipped non-public information concerning the acquisition to his brother-in-law, Christopher J. Clark of Arlington, VA. Based on the information tipped by Wright, Clark allegedly purchased highly speculative, out-of-the-money call options. The complaint further alleged that, after the public announcement of the acquisition of CEB for $2.6 billion, Clark liquidated his CEB options and made profits of over $240,000.

Without admitting or denying the allegations in the complaint, Wright consented to a final judgment ordering a permanent injunction against future violations of the anti-fraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; ordering a civil monetary penalty of $240,934; and barring Wright from serving as an officer or director of a public company for two years.

In a related administrative proceeding based on the entry of the final consent judgment, on November 12, 2021, the SEC issued an order barring Wright from appearing or practicing before the SEC as an accountant pursuant to Commission Rule of Practice 102(e)(3)(i), with the right to reapply after two years.

The SEC’s ongoing litigation against Clark is being handled by Daniel Maher, Olivia Choe, John Lucas, and Sarah Hall, under the supervision of David Gottesman.

The 10 Sins

SEC Obtains Judgment Against Former Corporate Controller for Tipping Brother-In-Law Ahead of Merger Announcement

SEC Charges Corporate Controller and His Brother-In-Law with Insider Trading Ahead of Merger Announcement

Litigation Release No. 24982 / December 11, 2020

No. 1:20-cv-01529 (E.D. Va. filed December 11, 2020)

DEC 11, 2020 | REPUBLISHED BY LIT: DEC 14, 2021

The Securities and Exchange Commission today charged the former Corporate Controller of CEB Inc. and his brother-in-law with insider trading in advance of a public announcement about CEB’s acquisition for $2.6 billion. The alleged insider trading scheme generated profits of $296,000.

According to the SEC’s complaint, William D. Wright learned non-public information about the acquisition of CEB while serving as a senior accounting officer of the company. In the months leading up to the merger announcement, the complaint alleges, Wright repeatedly tipped his brother-in-law, Christopher J. Clark, about the impending acquisition.

The complaint alleges that based on the information tipped by Wright, Clark purchased highly speculative, out-of-the-money call options and directed his son to purchase the same options in the son’s account.

As the date of the announcement approached, Clark allegedly took aggressive steps to fund purchases of additional out-of-the-money CEB options, including liquidating his wife’s IRA, nearly maxing out a line of credit and taking out a loan on his car.

The options Clark allegedly purchased were so speculative that Clark – alone or with his son – were the only people to buy those options on all but one of the days they traded.

As alleged, Clark and his son made profits of more than $243,000 and $53,000, respectively.

The SEC’s complaint charges Wright and Clark with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctions, civil penalties, and as to Wright, a bar from serving as an officer or director of a public company.

The SEC’s investigation was conducted by Paul Kim, John Lucas, and Deborah Tarasevich with assistance from John Rymas of the SEC Market Abuse Unit’s Analysis and Detection Center, who uncovered the suspicious trading.

The investigation was supervised by Joseph G. Sansone, Chief of the Market Abuse Unit. Daniel Maher and Olivia Choe are leading the SEC’s litigation. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

Continue Reading

Most Read

Copyright © 2022 LawsInVirginia.com is an online brand name which is wholly owned by Blogger Inc., a nonprofit 501(c)(3) registered in Delaware | Caricatures by DonkeyHotey