FRONT ROYAL – A lot can happen in 365 days.
A year ago today, Jennifer McDonald resigned as the Front Royal-Warren County Economic Development Authority’s executive director after a decade on the job.
Before the EDA’s Dec. 20, 2018, meeting, McDonald submitted a three-sentence resignation letter via email stating that she enjoyed the job and looked forward to the county’s continued growth and prosperity.
Another email, which the EDA’s board did not publicly release, had a tone more indicative of events to unfold in the following year. In it, McDonald stated that: “I agree to make myself liable” for $2.7 million of EDA expenditures but asked for six months “to get reimbursements” from people and companies. If not, McDonald stated she “will be personally responsible to reimburse the EDA.”
Ron Llewellyn, who served on the EDA board for nearly a decade, said that letter “was the thing that rang everyone’s bell, at least it rang mine.” Until then, Llewellyn said he considered McDonald a friend and trusted her, which he now regrets.
“I have to admit...You saw how much I defended her, for how long I defended her. And in hindsight, which is generally 20/20, I wish I had never done that,” he said.
The EDA did not grant McDonald’s request for six months of leeway and instead filed a civil lawsuit in March.
That lawsuit accuses McDonald and 13 others of stealing or misusing $21.3 million. Of that, nearly half is represented by a $10 million loan the authority gave to Curt Tran, whose ITFederal business was supposed to be the first commercial development at the Avtex Superfund site since it was deemed safe by the EPA.
Former Congressman Bob Goodlatte announced the project via a news release from his office that described a $40 million investment, 600 jobs and three office buildings. Over four years after a groundbreaking, a lone 10,000-square-foot building has not opened. It joins other EDA projects such as the Afton Inn’s renovations, a criminal justice training academy and a workforce housing project that never came to fruition.
While the $10 million loan was approved by the EDA’s board, the lawsuit claims that Tran obtained it by false pretenses by claiming to have a $140 million contract with a federal agency. The EDA’s lawsuit also notes a lengthy ITFederal business plan in which two out of 12 references of that contract state that it “did not include any guaranteed business to ITFederal.” One of those references, the lawsuit states, came on page 58 of the business plan.
Tran’s lawyer recently asked for the case to be dismissed because that $10 million loan was legitimate and not obtained under false pretenses.
Two months after the lawsuit was filed, McDonald was arrested on felony counts of embezzlement and obtaining money by false pretenses. She now stands indicted on 32 felony counts related to alleged financial improprieties.
Four days after her arrest, former Sheriff Daniel McEathron – with whom the lawsuit alleges McDonald bought $3.4 million worth of land with stolen funds – committed suicide. Before his death, McEathron unequivocally denied any wrongdoing and he was never criminally charged. Others indicted include McDonald’s husband Samuel North, Earth Right Energy owner Donald Poe, former EDA Administrative Assistant Michelle “Missy” Henry and former B&G Goods store owner William Lambert.
McDonald’s schemes, according to the lawsuit, occurred from 2014 through her resignation. During that same timeframe, unsealed Virginia State Police documents revealed that McDonald — whose most recent salary as executive director was $115,000 — had a gambling addiction resulting in losses totaling $753,207 at the Hollywood Casino in Charles Town, West Virginia.
This revelation came about a year-and-a-half after McDonald told a local media outlet she won $1.9 million on slot machines at the casino in a four-year time frame. Llewellyn said McDonald told the EDA’s board the same lie during a closed session before publicly touting a system she formulated to beat slot machines. He said the board immediately asked its longtime auditing firm, Yount Hyde & Barbour, to conduct a “deep dive” into the authority’s financial records. About three weeks later, he said the auditors told the authority that “‘everything’s fine.’”
“If they’re not seeing it, I don’t know how in the world anyone on a board, a non-paying volunteer board, is going to go behind the CPAs and the accountants and try to see if they can find something,” Llewellyn said.
Lee Berlik – McDonald’s former civil lawyer who the EDA alleges she paid with stolen money – stated in court documents that the lawsuit is a smear campaign in which the authority’s board is morphing regrettable business deals into conspiracy theories.
The amount of damages alleged in the lawsuit were determined in large part due to a forensic audit, for which the firm Cherry Bekaert was paid $486,000 to conduct. That audit, according to a report by the firm, did not review $14 million worth of questionable transactions. Ryan Huttar, an attorney representing Earth Right Energy, called Cherry Bekaert’s report a “dastardly trick” being treated as a “third party’s independent conclusion” while “the EDA hand-selected the information it provided.”
Two days after the lawsuit was filed, a special grand jury – which has handed up 86 indictments to date – was formed to investigate potential financial misappropriations within every local governmental agency. Of those indictments, 42 misdemeanor counts of misfeasance and nonfeasance against EDA board members, the Board of Supervisors and two county officials were dismissed because the charges did not represent actual crimes.
Llewellyn, one of those EDA board members charged and cleared, said the indictments against the officials were a “mistake” and “everyone should have waited until the actions were reviewed.”
Within a month of the special grand jury’s inception, FBI and Virginia State Police agents carried boxes of evidence out of the EDA’s Kendrick Lane office. In October, unsealed FBI documents stated that McDonald’s and McEathron’s land purchases constituted probable cause for wire fraud, bank fraud and money laundering.
About a month after the FBI confiscated evidence, Douglas Parsons was hired as the EDA’s new executive director. Three out of the authority’s seven board members were present during the alleged embezzlement. As that new board attempts to rehabilitate the organization’s image, the Town of Front Royal has sued the EDA for $15 million for alleged monetary loses.
To top off McDonald’s legal issues, Judge Ian Williams ruled in September that McDonald was guilty on two counts of defamation against Supervisor Tom Sayre due to her attempts to frame him as the mastermind behind hate crimes and vandalism. Williams said it was reasonable to conclude this was McDonald’s response to Sayre’s inquiries into questionable EDA deals.
While Sayre was declared a winner in the defamation case, he said that McDonald got exactly what she wanted with his defeat in the November election — him off the Board of Supervisors.
Llewellyn, who resigned the same day the civil lawsuit was filed, said he does not regret his 10 years on the board and “I feel that we accomplished a great deal during that time” and he is “sorry that primarily one individual had the ability to take away all the good that was done during that previous 10 years.”
While he understands the community’s anger, Llewellyn said he wishes that people would “wait until the end when all of this is resolved and all of the facts are out and that they have a better understanding of what really took place.”
When exactly that “end” will arrive is not clear. The criminal and civil cases continue meandering through court as the EDA teeters on the edge of insolvency. Nothing has been released by the FBI since its documents were unsealed and the special grand jury is scheduled to continue meeting through March.