FRONT ROYAL — The report of Cherry Bekaert, the firm commissioned to study the Front Royal-Warren County Economic Development Authority’s finances, states that DaBoyz LLC — operated by former EDA director Jennifer McDonald and former Warren County Sheriff Daniel McEathron — paid off the majority of a $39,900 loan given to the now-closed B&G Goods store.

The report by Cherry Bekaert, which appeared last week in Warren County Circuit Court filings, is the basis of the EDA’s $17.6 million embezzlement lawsuit against McDonald and eight other individuals and businesses. McDonald — who was charged in May on four felony counts of embezzlement — remains the lone individual criminally charged in the EDA scandal. The claims regarding B&G Goods were one of a series of new allegations that increased the amount of alleged embezzlement to $21 million.

The filing states that in September 2014 the EDA approved the $530,000 purchase of the building at 506 E. Main St. “for the alleged purpose of business development with B&G Goods.”

The filing states that the store was given two loans totaling $39,900, which includes an October 2015 $9,900 payment to B&G Goods owner Billy Lambert that is listed in the EDA’s QuickBooks as a “Rural Business Loan.” In February 2016, the filing states that McDonald “authorized and directed” another $30,000 loan to B&G Goods, a loan for which there is no record showing that it received EDA approval.

B&G Goods opened in April 2015 and closed in November 2016, according to the filing.

The filing states that McDonald told the EDA board in April 2017 the roughly $39,900 in loans were satisfied when Lambert turned over the store’s inventory and a van to the EDA. An attempt to reach Lambert — who was not one of the individuals named in the EDA’s civil lawsuit — was unsuccessful. The filing states that a $35,231 check signed by McDonald and McEathron was written from DaBoyz LLC in December 2016, with the memo line stating “pay off B&G.” Further allegations against DaBoyz in the lawsuit outline how the company allegedly used over $3 million from town and county credit lines to purchase several parcels of land.

The filing adds that the inventory and van represented as payment of the loan was sold by McDonald and Missy Henry, former EDA administrative assistant, at a “yard sale” in which the two allegedly took the proceeds for their personal use. Henry was not one of the individuals named in the EDA’s civil lawsuit.

The alleged yard sale is detailed in the filing through copies of text messages exchanged between McDonald and Henry.

The filing states that in December 2016, Henry stated in a text message to McDonald: “I’m on the way to see Billy now what does he think is going to happen to that $36,000 loan”

McDonald responded: “Thats what we are going to tell him selling the van would help pay. Maybe put it that way that we were thinking the van would help pay that off.”

In January 2017, the filing states Henry sent a text to McDonald stating: “Fyi...Someone told patty” — Patty Wines, who is deceased, was the EDA’s chairman at the time — “ive been at b n g. She called w questions today. I told her anything that amounted to much he took with him. Its just peddly stuff left.”

McDonald responded: “Ok sounds good.”

Henry responded: “Now we need to sell the van for 2500.00.”

McDonald responded: “Thats great now lets go shopping.”

When interviewed about the texts, the filing states that Henry admitted to having invested $7,000 in B&G Goods and that McDonald invested money in the business as well.

The filing then details a February 2017 text message exchange between the two in which McDonald states: “How much money would make u happy for me to have before we start splitting what is bought in at the store.”

Henry responded: “I wud b ecstatic to get u back all u put in...But thats unreasonable.”

McDonald responded: “Ok well give me a number.”

Henry responded: “$15,000 and then we split everything from there?”

Henry responded: “If u want to do that then ill agree. We got to sell this dang van!”

McDonald responded: “Ok so from here on whatever is sold we split including the van bcuz i have more than that by making an investment so every dollar we make at the store is a 50/50 split.”

McDonald added: “I made even more than $15k so please let your conscious rest easy.”

The filing notes that B&G Goods was supposed to pay rent to offset the EDA’s debt service for purchasing the building but since B&G Goods went out of business and stopped paying rent, any EDA payments on debt service should also represent funds McDonald embezzled from “bank credit facilities” that were designated for town and county use.

– Contact Josh Gully at jgully@nvdaily.com