FRONT ROYAL – The lawyer for April Petty has stated in court filings that she “is innocent of any wrongdoing” alleged in the Front Royal-Warren County Economic Development Authority’s recently amended $21 million civil lawsuit.
Petty was one of the five individuals the EDA recently requested to be added to its amended civil complaint, which alleges a series of embezzlements and financial misappropriations perpetuated by the authority’s former Executive Director Jennifer McDonald.
The EDA’s lawsuit describes Petty as “an associate in the financial affairs” of McDonald.
William Schmidheiser, Petty’s lawyer, recently filed a motion in Circuit Court countering that “Petty hereby states under oath, that she was in no way, shape or form” an associate in McDonald’s financial affairs.
The filing adds that although Petty was “acquainted with” McDonald, it was “on no more than a casual basis.”
“She had never been in Jennifer McDonald’s house, never gone out to lunch or dinner with her, never had any business dealings with her, other than this single transaction where Jennifer McDonald was the broker for the sale of April Petty’s house,” the filing states.
The lone allegation against Petty in the EDA’s complaint is that McDonald misappropriated $125,000 of EDA money to make a mortgage payment to Ocwen Loan on a 186 Howellsville Road home owned by Petty.
Before officially adding Petty as a defendant, Schmidheiser states that “April Petty asks the Court to deny the Plaintiff’s Motion to Amend Complaint...until Plaintiff has done the additional investigation of its claims.”
When Petty decided to sell her Howellsville Road home in 2015, the filing states she was “not behind on her mortgage at Ocwen.” When Petty listed the house, the filing states her friends recommended McDonald “as an excellent, successful real estate agent.”
In March 2016, the filing states McDonald told Petty there was a buyer for the house who would pay the full $329,900 asking price. It adds that McDonald told Petty the buyer “had cash from the prior sale of their own house, and wanted to put up $125,000 as a Deposit, which would be paid down against her $329,900 sale price.”
While that may sound odd “to experienced lawyers,” the filing states Petty did not know how real estate transactions work and it was presented as “perfectly normal.”
The filing alleges that McDonald “must have” falsely told the home buyers that Petty “was in financial trouble” and a bargain was available in a “distress sale." It adds that McDonald “must have” told the home buyers if they made a $50,000 cash payment on Petty’s mortgage, $70,000 would be knocked off her asking price.
Then, the filing alleges that McDonald kept the $50,000 and had the EDA issue a $125,000 check to Ocwen to pay Petty’s mortgage “to cover [McDonald's] embezzlement from her brokerage clients.”
The filing states that resulted in Petty believing she received the full asking price and the buyers not questioning where their deposit went. It adds Petty “had no knowledge” that EDA money was used to pay her mortgage until being shown a financial statement while testifying before a special grand jury investigating the matter.
The filing adds that while Petty believed the buyers were paying the full asking price, a HUD-1 statement lists a $215,000 purchase price. While that may be the case, the filing states “Petty hereby states under oath that she did not review the details” of closing papers.
“To the extent she thought about it at all, she thought that the HUD-1 was showing the balance of the purchase price to be paid to her at Closing, after the $125,000 Deposit,” the filing states.
The filing notes that Petty was never asked by McDonald to sign a real estate contract. Schmidheiser said that Petty kept all documents related to the sale and she does not have a real estate contract.
The filing states that there must be a real estate contract with a “much higher” purchase price than $215,000 because the buyers borrowed $211,105 from Citizens Bank for the purchase. Schmidheiser said banks do not loan that much money on a $215,000 purchase, and the sales contract must list a higher sales price.
So, before Petty is added as a defendant, the filing states the EDA should subpoena Citizen Bank and the buyers for relevant documents.
The filing requests that the court not destroy Petty’s life because the EDA thinks she may have been “an associate in the financial affairs” of McDonald's.
The filing notes that “short of getting cancer, or having a child die in a car accident,” being frivolously sued is “about the worst disaster which can befall a normal, hard-working citizen.” The filing adds that should be multiplied due to the factor of “being an innocent person” named as a co-defendant “in the largest, highest profile case ever filed in Front Royal” that is “written about in the local press, week after week after week.”
The filing notes that if Petty is added to the lawsuit, it will cost her thousands of dollars despite her innocence. Additionally, the filing states the media will drag her reputation “through the mud.”
“That has already started to happen,” the filing states.