FRONT ROYAL – During former Front Royal-Warren County Economic Development Authority Executive Director Jennifer McDonald’s Monday bond hearing, Assistant Commonwealth Attorney Bryan Layton said that some of the 14 newest felony charges levied against her relate to wetland credits.

McDonald now stands indicted on 28 felony charges including embezzlement, money laundering and obtaining money by false pretenses stemming from her time at the EDA.

A report by Cherry Bekaert — the firm that investigated the EDA’s finances — alleges that McDonald perpetuated around $21 million worth of embezzlement and misappropriation.

In a number of accusations, the report states that McDonald, “possibly in collusion with other parties,” is suspected of embezzling about $1,127,000 “in monies obtained from bank credit facilities designated for Town and County-sponsored capital improvement and development projects.”

The report states that this particular alleged embezzlement related to “wetland credits” that McDonald “represented to us” were necessary for various town and county projects.

County and EDA Attorney Dan Whitten explained over the phone that if a project is impacting wetlands, wetland credits are purchased to offset that impact.

He said that in October 2014, the EDA did obtain a wetland credit from the Shenandoah Wetland Company for the construction of Leach Run Parkway because the road ran through a creek.

That wetland credit, he said, cost $293,600 and was approved by the EDA board and the Board of Supervisors.

Franklin Root, Shenandoah Wetland Company owner, said over the phone that his company did indeed sell one wetland credit to the EDA years ago and the transaction was “perfectly legitimate” and “above board.”

He said the company was subpoenaed and supplied paperwork regarding the one transaction. He said those documents “spoke for themselves” and his testimony was not needed.

Root said it is his understanding that the contract for that legitimate transaction was somehow manipulated after the fact.

“It sounds like they’ve got a mess up there. But like I said, we had one legitimate transaction...I wish we had that much in sales to them,” he said.

The report states that after the legitimate transaction, the EDA later made out several checks to Bank of America for the unapproved purchase of wetland credits. Whitten explained these checks were written for projects that did not need wetland credits. These expenses, according to the report, were recorded in the EDA’s general ledger accounts as wetland credit purchases. Whitten noted, however, that Bank of America does not administer wetland credits.

“I wasn’t aware until the investigation started that they were sending money to Bank of America for wetland credits,” Whitten said.

He added that it is believed that McDonald had a Bank of America credit card that she is suspected of “paying off” through the checks.

Asked how it was not realized checks were being written for wetland credits that were not needed to a bank that does not administer wetland credits, Whitten said he does not know.

“All of this money was going out of the EDA so I can’t really explain why the accountant or the auditor or the treasurer didn’t catch it,” he said.

Several checks written to Bank of America contain the signatures of former EDA Chairwoman Patty Wines, who is dead, and former EDA Chairman Greg Drescher.

Whitten said he does not know if Wines or Drescher signed the checks or if the signatures were forged.

“You would have to ask Greg if he signed those checks or whether it’s a fraudulent signature. I’m not sure,” Whitten said.

Drescher did not respond to a phone message.

– Contact Josh Gully at jgully@nvdaily.com