A former executive director of the Front Royal-Warren County Economic Development Authority pleaded not guilty Friday to federal charges of fraud, money laundering and identity theft.
Jennifer R. McDonald appeared for an arraignment hearing via Zoom in the U.S. District Court for the Western District of Virginia. The hearing lasted about three minutes.
Judge Joel C. Hoppe asked McDonald how she pleaded to the four counts of an indictment charging her with bank and wire fraud, aggravated identity theft and money laundering. McDonald pleaded not guilty to all counts.
McDonald, 44, of Front Royal, remains free on a personal recognizance bond. Assistant Public Defender Andrea Harris represents McDonald as her court-appointed legal counsel. Assistant U.S. Attorney Sean Welsh is prosecuting the case.
During the arraignment process, Hoppe asked McDonald several questions to which she responded under oath. McDonald said she holds a bachelor’s degree. McDonald said she has worked for the EDA and as a real estate agent. She currently works as a delivery driver.
McDonald said, in response to another question, that she is not, nor had been recently under the care of a doctor or psychiatrist for any mental illness or substance abuse. McDonald said she had not taken any drugs or medications or drank any alcohol in the previous 24 hours.
McDonald waived a formal reading of the indictment.
Hoppe scheduled the trial for Nov 3. Harris said she likely would file a motion that day asking the court to continue the case.
McDonald served as the EDA executive director from April 2008 to December 2018. A grand jury in the federal court handed up a 34-count indictment under seal on Aug. 25. McDonald appeared in court on Tuesday where the clerk unsealed the indictment and federal authorities arrested her on the four charges.
Convictions on the charges carry maximum punishments of up to 30 years for bank fraud, 20 years for wire fraud and 10 years for money laundering. A conviction of aggravated identity theft carries a mandatory minimum sentence of two years in prison.
At her first court appearance, Hoppe granted McDonald release on her own recognizance. Hoppe ordered McDonald into pretrial services and to abide by the conditions of the bond.
The indictment accuses McDonald of devising and participating in schemes in which she used EDA money to make payments on personal credit cards and toward balances of credit cards of family members. McDonald created false documents, including invoices and real estate documents, to disguise the scheme, the indictment states. She also forged the names of others to disguise and to effect the fraud scheme, the indictment states.
McDonald submitted false documents to bank employees and auditors and settlement agreements; and also made wire transfers, withdrew money, deposited checks and issued cashier’s checks and payments to financial institutions to further the fraud, the indictment states.
McDonald owned and operated DaBoyz LLC. The indictment identifies a DaBoyz co-owner only by the initials “D.M.” McDonald also owned and operated MoveOn8 LLC.
McDonald devised and participated in a scheme from June 3, 2014 to Dec. 20, 2018 to defraud the EDA and to obtain money and property by means of false and fraudulent pretenses, representations and promises, the indictment states. McDonald, through her position at the EDA, had access to funds belonging to the authority in checking accounts and from credit facilities in the entity’s name, the indictment states.
In one instance, federal authorities accuse McDonald of using EDA money to pay off loans for Little Rugratz LLC in which she and a family member owned an interest.
The indictment also describes real estate schemes that authorities claim McDonald pursued with EDA money.
“(McDonald), without authorization, used EDA funds to purchase real property for her benefit in the names of others and in the name of DaBoyz, LLC,” the indictment states. “For these real estate transactions, (McDonald) often earned commissions as a real estate agent.”
The indictment states that McDonald used EDA funds without authorization to buy properties at:
* 400 Craig Drive, Stephens City
* 118 Jutland Court, Stephens City
* 1309 Robinhood Lane, Front Royal
* 2890 Buck Mountain Road, Browntown, in the name of DaBoyz LLC
* 1321 Happy Creek Road, Front Royal, in the name of DaBoyz LLC
* 2951 Rileyville Road, Rileyville, in the name of DaBoyz LLC.
The indictment goes on to state that McDonald used EDA money, without authorization, to make payments toward balances accrued on personal and family members’ credit cards. McDonald created false documents, including invoices and real estate documents, to disguise the scheme, the indictment states. McDonald forged the names of others, submitted false documents to bank employees, auditors and settlement agents, the indictment states. She made wire transfers, withdrew funds, deposited checks, obtained cashier’s checks and paid financial institutions as part of the scheme, the indictment states.
The first count of the indictment charges McDonald with wire fraud. The indictment charges McDonald with transferring a total of $3,562,100 on three dates in 2016 and 2017 from an EDA account with The First Bank and Trust to a Union Bank and Trust account in the name of TLC Settlements LLC. McDonald transferred a total of $416,491 in four transactions from May 30, 2018 to July 6, 2018, from an account held at The First Bank and Trust in the name of the EDA to another account held by the authority at United Bank.
Another count in the indictment charges McDonald with bank fraud. The count accuses McDonald of making debits via cashier’s checks totalling $740,000 from a United Bank account in the name of the EDA made payable to Service Title of Front Royal, LLC, on different dates from July 24, 2014 to Aug. 31, 2015.
McDonald made wire transfers totalling $3,562,099 from an account held at The First Bank and Trust in the name of the EDA to an account held at Union Bank and Trust held by TLC Settlements LLC, on dates from Sept. 14, 2016 to April 26, 2017, the indictment states. McDonald made payments to a Sears personal credit card through Citibank with four checks from an EDA account with United Bank totalling $51,915 on different dates in June 2018.
The indictment accuses McDonald of committing aggravated identity theft from Sept. 8, 2016 to Sept. 20, 2016, during and related to wire fraud.
The criminal indictment is separate from a civil lawsuit filed by the EDA that accuses McDonald and a handful of co-defendants of misappropriation or embezzlement of authority funds for their own benefit and used in various real estate schemes. The EDA claims McDonald used more than $20 million of the authority’s money in her schemes. A state law allowed the EDA to triple the amount sought in the suit.
A judge in Warren County Circuit Court recently granted a motion for partial final judgment that marked the end of the EDA’s complaint as it pertains to McDonald but leaves the case active against the co-defendants. McDonald has agreed through her legal counsel that she is liable to the EDA for $9 million.
McDonald’s bankruptcy case in the U.S. District Court remains active as a trustee continues to liquidate her assets.