FRONT ROYAL – Waiting in the lobby of the Warren County Circuit Courtroom on Wednesday morning was a group of people summoned by the special grand jury investigating the alleged embezzlement of millions of dollars in public funds.
Among those present in the lobby were former Front Royal-Warren County Economic Development Authority executive director Jennifer McDonald; EDA and County Attorney Dan Whitten; Town Attorney Doug Napier; Town Finance Director B.J. Wilson; former EDA chairman and Schools Superintendent Greg Drescher; former Sheriff Daniel McEathron and his wife, School Board member Donna McEathron; former EDA administrative assistant Missy Henry; former EDA employee Marla Jones; former town councilwoman Bébhin Egger; Kristie Atwood; former EDA bookkeeper Josie Rickard; Front Royal Police Capt. Crystal Cline; and Front Royal police detective Landin Waller.
Egger, Atwood, Wilson, Cline and Whitten confirmed that they were present for the special grand jury proceedings.
The special grand jury was convened in March by Warren County Circuit Court Judge Clifford L. Athey Jr. to investigate misfeasance and malfeasance to include embezzlement or misappropriation of public funds by the EDA, the Town of Front Royal, Warren County, the Warren County Sheriff’s Office and Warren County Public Schools.
The special grand jury was convened shortly after the EDA filed a $17.6 million lawsuit against nine defendants including McDonald, Daniel McEathron, developer Curt Tran, businessman Donald Poe and several limited liability companies associated with those individuals.
The civil lawsuit is based on the findings of Cherry Bekaert LLP, a firm the county hired on behalf of the EDA in September to delve into the authority’s finances. So far, the county has approved up to $760,000 for the firm and legal representation regarding the case. Whiten said over the phone those expenses cover costs through March and further appropriations are imminent.
The special grand jury, which deliberates secretly, has not yet handed up any indictments.
As those summoned by the special grand jury waited in the lobby, a motions hearing in the civil case proceeded across the hallway.
During that hearing, Athey ordered that the EDA's legal representative, the Sands Anderson law firm, must make “the final report” of the forensic audit that delved into the authority's finances available for discovery in the civil case and for examination by the special grand jury. Cullen Seltzer, of Sands Anderson, then said a forensic audit never took place and disputed whether the "final report" referenced by Athey will ever exist.
Seltzer said that Cherry Bekaert was not commissioned to put together a forensic audit, but the firm’s goal is to “attempt to get through” all of the EDA’s financial documents. He said that the firm has reported back to the EDA through PowerPoint presentations and memorandums but that a final report has not and will not be prepared.
This comes after EDA officials have used the terms “forensic audit” and “final report" for months. In early April, Whitten said that EDA board members saw a "draft report," copies of which were destroyed. In March, EDA Chairman Gray Blanton referred to a final report that was “an inch thick.”
Whitten said over the phone that he is not sure when or why the term "forensic audit" originated and that Cherry Bekaert has always been commissioned to perform "intrinsic fact-finding."
Whitten said draft reports that the authority has seen consisted of timelines and exhibit. He said the board has discussed making a final summary report more easily understood available to the public. He said he does not know when the report will be released, but it will likely be as proceedings have progressed further.
Whitten added that Cherry Bekaert's work should be done within a week or two.
Athey responded to Seltzer’s explanation of Cherry Bekaert's activities by saying “we’ve been hearing this for six months," that the EDA needs “to put up or shut up,” and the authority must “produce their documents in whatever form they’re in.”
Athey said that within 10 days the EDA also needs to amend the lawsuit's bill of particulars to include detailed claims against each defendant and for how much they are being sued.
The EDA’s complaint consists of 160 paragraphs detailing the alleged wrongdoings of each defendant and the amount of money involved in each alleged embezzlement. The filing’s bill of particulars, however, which is supposed to be a detailed list of charges, lumps all defendants into one group being jointly sued.
Athey also quashed the plaintiff’s subpoena filed seeking financial documents of transactions between McDonald and her legal representation. Asked why these documents were requested, Seltzer said he would like to know if McDonald is using stolen money to pay for her defense.
Jay McDannell, McDonald’s lawyer, also requested that the civil case be delayed so his client does not self-incriminate herself in the parallel criminal investigation.
Athey denied motions for suspended discovery and a stay in the case. He noted that there is no precedence to delay civil proceedings due to possible self-incrimination. He added that the special grand jury is merely an “investigatory” body and has yet to indict anyone. Should that change, however, “that may be the time to reconsider the issue.”
Another hearing in the civil case regarding the amended bill of particulars is set for 9 a.m. May 29.