FRONT ROYAL – Jennifer McDonald, the former Front Royal-Warren County Economic Development Authority executive director, was arrested Friday night on two felony counts of fraud and two felony counts of embezzlement, according to the Rappahannock-Shenandoah-Warren Regional Jail’s website.

McDonald was arrested by the Virginia State Police and was booked at 7:20 p.m. Friday at RSW, and remains in jail custody, held without bond, according to the jail’s website. The arrest came after a special grand jury investigating potential misfeasance and malfeasance in the EDA, town, county, schools and Sheriff’s Office questioned several officials on Wednesday, Thursday and Friday.

On Wednesday, several individuals associated with the case were seen in the lobby of the Warren County courtroom where the special grand jury was meeting. They included McDonald; former Warren County sheriff Daniel McEathron; town Finance Director B.J. Wilson; former EDA administrative assistant Missy Henry; former EDA bookkeeper Josie Rickard; former EDA chairman and current school superintendent Greg Drescher; Kristie Atwood; former Town Councilwoman Bébhinn Egger; Front Royal Police Capt. Crystal Cline; Front Royal police detective Landin Waller; Town Attorney Doug Napier; and County Attorney Dan Whitten.

On March 26, the EDA filed a $17.6 million civil embezzlement lawsuit against McDonald, ITFederal developer Curt Tran, McEathron, Donald Poe, Justin Appleton and limited liability companies associated with those individuals. When McDonald resigned in December, she stated in an email to the EDA board that she is liable for $2.7 million in EDA losses.

According to previous reports, the first thread in the case unraveled in May 2018 when Vice Mayor William Sealock asked town Finance Director B.J. Wilson to examine the standing of the town’s fund balances. Shortly thereafter, Wilson began noticing discrepancies and it was discovered that the EDA owes the town $291,000 stemming from overpayments related to debt service.

{p dir=”ltr”}Supervisor Tom Sayre, who has a pending defamation lawsuit against McDonald, said over the phone that the situation is a “multi-layered crime story” that began unraveling over two years ago and he is “so thankful the light of truth is finally emerging, albeit slowly.”

{p dir=”ltr”}“I look forward to seeing all the facts laid bare. It only takes a few people to do a lot of damage and some to turn a blind eye. Otherwise, we are good, hardworking, loving, honest people in Front Royal and Warren County and with faith and perseverance, we are going to reclaim it,” he said.

Supervisor Tony Carter noted over the phone that with litigation in process, it is not appropriate to comment on the matter.

“Right now this is ongoing litigation and because of that, I don’t think it’s prudent to comment. We have to let the wheels of justice move.”

Town Councilman Chris Holloway stated in an email that McDonald’s arrest “was something that was expected.”

“I’m glad to see the legal process finally start to take effect. I’m sure this is the first of more to come,” he stated.

Vice Mayor William Sealock and EDA Chairman Gray Blanton both decline to comment on the situation.

All other town council members and supervisors did not respond to phone inquiries for comment.

The Virginia State Police has been investigating suspicious financial activities at the EDA since August. In April, the state police and FBI were seen at the EDA’s Kendrick Lane office removing boxes of evidence. Shortly after that raid, unsealed court documents revealed that the state police believe McDonald lost $753,207 gambling from 2014 to 2018.

The alleged embezzlement that the lawsuit outlines involves ITFederal, the EDA’s workforce housing project, a solar energy project, land purchases, the Afton Inn renovation and a proposed criminal justice academy.

Regarding ITFederal, the EDA’s lawsuit alleges that McDonald and Tran used a $10 million loan for their personal benefit. The suit further alleges that McDonald, Tran and McEathron used a proposed criminal justice academy as “an artifice orchestrated to divert Warren EDA funds to personally benefit” them.

The lawsuit also alleges that McDonald used credit lines reserved for the town and county for her personal benefit. Funds intended for a workforce housing apartment complex were used instead by McDonald to purchase land from her aunt and uncle, according to the lawsuit.

The lawsuit also alleges that DaBoyz, a limited liability company owned by McDonald and McEathron, purchased several parcels of land using town and county credit lines. The lawsuit states that other alleged misuse of town and county credit lines includes a $1.2 million payment McDonald made to Earth Right Energy Solar Commercial LLC, which is owned by Poe and Appleton, for the installation of solar equipment.

The lawsuit also alleges that McDonald defrauded the Afton Inn developer to make payments on her personal credit card.

The date and time of McDonald’s first court appearance is not yet listed on the Warren County court website.

– Contact Josh Gully at jgully@nvdaily.com