FRONT ROYAL — Lawyers for Earth Right Energy Solar-Commercial LLC, one of the nine defendants in the Front Royal-Warren County Economic Development Authority’s $17.6 million embezzlement and misappropriation lawsuit, state in court filings that allegations against the company are based on a frivolous financial study.

The basis for the lawsuit is a report by Cherry Bekaert, a firm hired to investigate the EDA’s finances, which outlines a series of allegations.

Three of those eight defendants are Earth Right Energy and its owners Donald Poe and Justin Appleton.

Allegations levied against the company are that Jennifer McDonald, former EDA executive director, conspired with Poe to enter into contracts between the company and EDA for the installation of solar panels.

Ryan Huttar, Earth Right Energy’s lawyer, states in court filings that it is a “dastardly trick” that Cherry Bekaert’s report is being treated “as a third party’s independent conclusion.”

“The EDA hand-selected the information it provided (Cherry Bekaert) and limited (Cherry Bekaert’s) scope by withholding information,” Huttar states.

Regarding what information was reviewed to compile the allegations, the Cherry Bekaert report states that the firm was provided documents by the Sands Anderson law firm representing the EDA in its civil case.

The Cherry Bekaert report states that “Sands Anderson conducted document searches of the EDA offices” in March and April “and made copies of documents as directed by you (the EDA). Electronic copies of said documents obtained by Sands Anderson were provided to us; however, other than scanning these documents for their applicability to the various allegations contained in these working papers, we did not perform any additional inquiries, interviews, or other procedures associated with the documents.”

The report adds that Cherry Bekaert was “not provided a copy of the inventory of items seized” during an April 16 search of the EDA offices by FBI agents.

Huttar states that the EDA is attempting to use Cherry Bekaert’s report “as an independent basis for the allegations” but limitations imposed upon the firm by the EDA illustrate “that the report itself is at best self-serving half-truth passively conveyed.”

The Board of Supervisors loaned the EDA $460,000 to commission the study. Supervisors have explained not wanting to pay more for further investigation due to the possibility of diminishing returns.

The Cherry Bekaert report states that the deals with Earth Right Energy resulted in the embezzlement of $1.28 million stemming from payments made for work at 426 Baugh Drive and the EDA’s office, some of which was never completed.

Of the $1.28 million, the EDA’s lawsuit states that Earth Right Energy paid back $334,851, decreasing alleged damages to $945,037.

The report states contractual details between Earth Right Energy and the EDA state the authority would receive a Federal Investment Tax Credit to offset the costs of installation. The report states that EDA Attorney Dan Whitten explained that the EDA’s nonprofit political subdivision status renders it unable to benefit from such tax breaks. Upon being told that, McDonald relayed to the board that Earth Right Energy could use the tax credits and the installations would be “100 percent free,” according to the Cherry Bekaert report.

While the report states that the EDA board never approved the installation of solar equipment, there are checks made out to Earth Right Energy Solar-Commerical signed by former EDA Chairman and current Warren County Public Schools Superintendent Greg Drescher and former EDA Vice Chairman Bruce Drummond.

Whitten said in a phone interview Tuesday that whether those checks were forged must be asked of Drescher and Drummond. Drescher declined to comment and Drummond could not be reached.

The complaint further alleges that in September 2018, McDonald entered into a $27 million contract with Earth Right Energy for the installation of solar equipment on the county’s nine schools. That contract, which the complaint states was given without EDA board approval, “was unlawfully procured, is invalid and unenforceable.”

Regarding a potential solar energy deal for the schools, the report details an email exchange in which Drescher stated to McDonald that since Earth Right Energy’s proposal was unsolicited, the project would have to be put out to bid for other companies to make offers “before we can do anything.” This, he said, is “one of the rules of being a public entity.”

McDonald responded that “I understand 100%.”

The Cherry Bekaert report states that McDonald set up a meeting between Drescher, Poe and “five others” to discuss Earth Right Energy’s proposal to install solar equipment on schools. During that meeting, the Cherry report states that Drescher “admitted feeling somewhat intimidated by the large presence and recalled Poe asking him to sign a non-disclosure.”

The report states that Drescher told Poe “the timing was not right for such a project and the meeting concluded.” Upon seeing the $27 million contract, the report states Drescher “was shocked.”

The report states that McDonald told Cherry Bekaert representatives that the EDA board “approved the purchase and installation of solar equipment” during a closed session, which Whitten said would have been a violation of Freedom of Information Act laws.

– Contact Josh Gully at jgully@nvdaily.com