FRONT ROYAL – A variety of issues were tackled regarding the Front Royal-Warren County Economic Development Authority’s civil case during a hearing Thursday in Warren County Circuit Court hearing.
Judge Bruce Albertson approved a request to amend the authority’s complaint, which outlines a series of alleged embezzlements during former EDA Executive Director Jennifer McDonald’s tenure. This amendment increased the alleged damages from $17.6 million to $21.3 million and added six defendants.
The defendants added were: McDonald’s husband Samuel North; McDonald’s mother Linda Hassenplug and her Little Rugratz Daycare LLC; former EDA Administrative Assistant Michelle “Missy” Henry; former B&G Goods store owner William Lambert; and Jesse Poe, who the complaint describes as an associate in the financial affairs of McDonald and Henry.
Albertson denied the EDA’s request to add April Petty, who once sold a house with McDonald as her real estate agent, as a defendant.
William Schmidheiser, Petty’s lawyer, reasserted the argument outlined in a recently filed motion that Petty is a victim of McDonald’s embezzlement rather than a co-conspirator. He asked the court to not include Petty as a defendant in the case without further investigation.
Albertson said he will consider the EDA’s request to add Petty as a defendant in two to three weeks.
Also during the hearing, Albertson granted BerlikLaw lawyers Jay McDannell and Lee Berlik their request to withdraw as counsel for McDonald and her LLCs.
This comes as the EDA’s amended civil suit alleges that McDonald used $10,000 of stolen money to pay the firm.
The EDA’s attorneys requested that BerlikLaw turn over documents related to that payment.
McDannell said the documents should be exempt due to attorney-client privilege, which EDA attorney Cullen Seltzer said is not applicable when fraud is involved.
Seltzer added that “how she pays her fees” is not legal advice.
He noted two forged documents, which were entered into court during previous hearings after McDonald was criminally charged, illustrate her “consciousness of guilt.”
The alleged forged documents, Seltzer said, include a forged EDA resolution authorizing McDonald’s real estate deals and forged EDA meeting minutes stating that McDonald disclosed her familial relations to property owners involved in a workforce housing project land dead.
Seltzer requested that BerlikLaw turn over related documentation because while he does not believe McDannell forged the paperwork, “it happened and it happened somehow.”
Albertson did not rule whether BerlikLaw must comply with those document requests and a decision will be made during a future hearing.
Also discussed was the recent discovery that McDonald conveyed 68 Pine Hills Road to her sister, although that property was previously seized by order of former Circuit Court Judge Clifford L. Athey.
While the EDA’s lawyers argued that McDonald should be held in contempt of civil court, McDannell said McDonald did not know that was one of the properties seized. McDannell said McDonald consulted a title settlement agency regarding the land conveyance and the company did not find a lien on the property.
McDannell said this must mean that although McDonald was orally told not to sell that land, a written order was not submitted.
“It was an honest mistake,” he said.
McDannell added that McDonald gifted the property to her sister so it could be sold in attempts to pay legal fees.
“She is under enormous financial stress. She needs to be able to pay her attorneys,” McDannell said.
Albertson set an 8 a.m. Dec. 12 hearing regarding the alleged contempt. At that point in the proceedings, Berlik’s and McDannell’s withdrawal requests had been granted and McDonald was representing herself.
Albertson told McDonald that if she does not receive a written notice of the Dec. 12 hearing, she still must appear because she has been orally ordered to do so.
Before his recusal was granted, McDannell said that continuing with the civil lawsuit amid related ongoing criminal proceedings is “inappropriate” and a “logistical nightmare” as the Fifth Amendment to the U.S. Constitution grants the right against self-incrimination. Individuals indicted by a special grand jury investigating EDA-related matters include McDonald, North, Lambert, Poe and Henry, all of whom are defendants in the civil case.
McDannell added that some of the EDA board members who approved filing the civil case — Tom Patteson, Greg Drescher, Mark Baker, Ron Llewellyn, Bruce Drummond and Gray Blanton — have since been indicted. Each stands charged on two misdemeanor counts of misfeasance and one misdemeanor count of nonfeasance.
“This is not to suggest the case should be put off forever,” McDannell said.
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Correction: This story has been updated to correct the last name of EDA board member Mark Baker, who was among board members who approved the filing of the civil case and who was recently indicted.