FRONT ROYAL - A lawyer for Curt Tran and his business, ITFederal,  two of the nine defendants targeted by the Front Royal-Warren County Economic Development Authority in a $17.6 million lawsuit, is requesting that charges against his clients be dismissed for a variety of reasons, including that the authority’s complaint offers baseless allegations and no support for its conclusions.

Allegations levied against Tran include that he conspired with former EDA director Jennifer McDonald and former Sheriff Daniel McEathron - two other defendants in the lawsuit - to use a criminal justice academy to divert funds from the EDA for their personal benefits.

Tran is the developer of ITFederal, a company that is supposed to open a building on the Avtex Superfund site off Kendrick Lane. Plans for ITFederal coming to town were announced in 2015 by former U.S. Rep. Bob Goodlatte, R-Roanoke, who said the company would bring 600 jobs to the area and carry out a $40 million construction project. Original plans for the project included three buildings, one of which would be a data center.

A groundbreaking ceremony was held in October 2015 and one 10,000-square-foot building remains under construction today at the site. 

Brandon Elledge, Tran’s lawyer, states in court filings that the allegation regarding the criminal justice academy is made without evidence and that the EDA’s complaint does not demonstrate that Tran knew of the academy or of McDonald’s and McEathron’s “alleged scheme.” He points out that the EDA’s complaint notes that Tran did not sign a contract to fund the academy.

The EDA’s complaint states that McDonald told the authority’s board that Tran would serve as an anonymous investor who would fund construction of the police academy while his identity would not be publicly revealed. Elledge states that McDonald used Tran’s identity “without his knowledge or consent” and misrepresented to the EDA board that he was investing in the project.

The criminal justice academy has since been canceled, for reasons EDA attorney Dan Whitten cited as construction costs increasing above the $8 million the private investor offered to contribute.

The EDA further alleges that ITFederal was granted a $10 million loan from the authority to construct the company’s headquarters. Instead, the EDA’s complaint alleges, “little to no proceeds” were used for construction while Tran and McDonald used “all or a portion” of the loan for their personal benefit.

The EDA's lawsuit adds that Goodlatte requested that the loan be given although Tran did not need it. The town provided the EDA a short-term $10 million loan and the EDA subsequently paid back the town through a bank loan. The collateral on that bank loan is the remaining 117 acres at the Avtex site.

Whitten previously said that the EDA gave "the whole $10 million" to Tran and that he is not aware of any stipulations stating that the money must be spent at the Avtex site. 

Regarding the $10 million loan, Elledge states that ITFederal has followed the conditions of a promissory note and that the EDA cannot allege that the loan was used outside of the parameters of the agreement.

The EDA’s lawsuit also alleges that three websites related to Tran and his businesses “appear to be bogus” and were seemingly created to create the false impression of significant income sources to fraudulently induce the EDA to loan ITFederal $10 million.

Elledge states the allegation that the websites were created to obtain the loan “is nonsensical on its face and cannot establish fraud or fraudulent inducement.” 

ITFederal purchased the 30-acre parcel to construct its headquarters for $1 from the EDA with the stipulation that a $2 million investment be made and a 10,000-square-foot building be constructed. If ITFederal does not meet those conditions by September 2020, the land will be returned to the EDA and the developer would owe the authority $2 million, minus whatever has been invested in the project.

While Tran previously said ITFederal would not open at the site, he said he was seeking other companies to open in the building.

The EDA’s lawsuit is suing all nine defendants as a group, which Elledge states is “improper” because it does not fairly inform Tran of accusations against him. He adds that the EDA “does not allege any cohesive fraudulent scheme here but rather a series of independent transactions” that are only connected by McDonald’s involvement. Elledge states that although the EDA’s complaint “is long on allegations as to McDonald’s misconduct,” there is little besides “vague statements” regarding Tran and ITFederal.

He adds that there is no legal or factual basis as to why Tran and ITFederal should be held liable for “transactions they had nothing to do with.”

In addition to requesting that the charges be dismissed, Elledge also states that Tran and ITFederal should be awarded legal fees for costs up to this point.

– Contact Josh Gully at jgully@nvdaily.com