A judge ordered on Tuesday that the Front Royal-Warren County Economic Development Authority can recover $9 million from its former Executive Director Jennifer McDonald.

U.S. Bankruptcy Judge Rebecca B. Connolly granted the EDA the judgment entitling the EDA to recover the amount from McDonald, according to an order filed in U.S. District Court for the Western District of Virginia.

The amount falls short of the more than $60 million in questionable financial dealings the EDA claims McDonald perpetuated during her decade-long tenure.

Jeff Browne, chairman of the EDA board of directors, spoke by phone Wednesday about the court’s order.

“I would say it’s unlikely that we collect all of it, to be frank,” Browne said. “But, obviously, until it is discharged in full, and we’re able to investigate anything that she’s doing and uncover any assets that are available, it potentially can pay off that debt.”

The EDA can still pursue its civil claims against any other defendants in its attempts to recover its financial losses, Browne added. Any money recovered from other defendants would reduce the $9 million claim, Browne noted.

The EDA would break even if they recovered the full amount, Browne explained. The remaining money the EDA seeks to recover is being paid back by Truc “Curt” Tran, Browne said, whose company, ITFederal, planned to build a facility on the former Avtex site in Front Royal.

The EDA claims in a civil complaint filed in Warren County Circuit Court on March 26, 2019, that McDonald and other defendants took money from the authority for their own benefit. The plaintiff alleges in its Circuit Court filing that McDonald and alleged co-conspirators engaged in a variety of schemes between 2014 and 2018 to take money from the EDA for personal benefit. Many of the schemes involved real estate owned by McDonald or her companies DaBoyz LLC or MoveOn8 LLC.

The EDA complaint accused McDonald and other parties of fraud, conspiracy, unjust enrichment, breach of contract, breach of fiduciary duty and other counts.

McDonald then filed on Sept. 24, 2020, a voluntary petition for Chapter 7 bankruptcy. As of the filing date, the EDA alleges its claim against McDonald totals $62,315,316.

McDonald and co-defendants had also faced charges of embezzlement and other offenses related to a criminal investigation into the EDA finances for roughly the same time period. The charges filed in Warren County Circuit Court in 2019 were later dismissed by a judge at the request of a special prosecutor. However, the prosecutor’s office has since sent its information from the investigation to federal authorities. No criminal charges have been filed against McDonald or any co-defendants.

McDonald resigned from her position with the EDA in 2018.

Connolly’s order goes on to state that the EDA shall be allowed to present the order to the Circuit Court as evidence of the $9 million identified as the EDA’s claim against McDonald, and to enter the amount as a judgment against her as the debtor and other defendants identified in the circuit court.

Attorneys for the EDA and McDonald agreed on the $9 million claim amount after negotiating a deal. Parties resolved the matter of the claim to avoid “litigation uncertainty, risks, and costs, but without the Debtor admitting the Warren EDA’s allegations,” Connolly’s order states.

“For the avoidance of doubt, although the Debtor is agreeing to the Non-Dischargeable Claim, the Debtor is not admitting that she took any particular actions or conduct, that she failed to take any particular actions or conduct, or that she made any misrepresentations or omissions,” the order states.

The Richmond law firm Sands Anderson represents the EDA in the bankruptcy proceedings. Maryland attorney Stephen A. Metz represents McDonald.

– Contact Alex Bridges at abridges@nvdaily.com