FRONT ROYAL – The lawyer representing former Front Royal-Warren County Economic Development Authority executive director Jennifer McDonald in a $17.6 million embezzlement civil case filed by the EDA is claiming that the lawsuit is a smear campaign in which the authority's board is making conspiracies out of business deals it now deems regrettable.
McDonald and two of her limited liability corporations – DaBoyz and MoveOn8 – are three of nine defendants in the civil case. Lee Berlik, McDonald’s lawyer, states in court documents that the EDA is attempting to intentionally smear the defendants without providing sufficient details. He adds that McDonald intends "to demonstrate the innocence of her actions" but EDA’s complaint must giver her a “fair chance to understand the claims against her.”
The EDA alleges that McDonald was involved in a series of embezzlement schemes and misappropriated money during her tenure as executive director. Allegations include that she used EDA money to purchase land, authorized unlawful payments to Earth Right Energy, doctored invoices to pay off personal credit cards, personally benefited from a $10 million loan obtained by ITFederal, and conspired to personally benefit from a proposed criminal justice academy.
When McDonald resigned on Dec. 20, she sent an email to the EDA board stating that she could be held liable for $2.7 million. In the email, she asked for six months to obtain reimbursements from ITFederal, Earth Right Energy and ITFederal developer Curt Tran. She asked that the town and county "pursue no further action" until the six-month time frame expired. Dan Whitten, EDA attorney, has said no response was ever sent to that email.
Berlik pointed specifically to the EDA’s claim that by working to help ITFederal gain a $10 million loan, McDonald breached her fiduciary duty. He states that, really, the EDA “has decided some years later it doesn’t like the terms of that deal.”
He states that the “global problem” with the EDA’s lawsuit is “its intentional conflation of alleged actions and parties that performed those actions.”
Berlik adds that the lawsuit is jointly suing nine parties for $17.6 million while the complaint details allegations over several years involving unrelated situations. He states that the EDA is alleging a conspiracy between the defendants but fails to prove the existence of such a conspiracy. He states that if the EDA “believes some grand conspiracy existed between all nine defendants to harm the Warren EDA over a several year period...plaintiff must say so and it must identify alleged facts that demonstrate such a conspiracy existed.”
He states that some of the complaints in the EDA’s lawsuit seem to apply to just some defendants while all of the defendants are seemingly being claimed to be “liable for indeterminate amounts.” He states that it is unclear how MoveOn8 LLC could be held liable for any possible wrongdoing pertaining to the ITFederal loan. He adds that the EDA’s lawsuit, however, is written in a way that leaves McDonald no ability to understand what complaints are against her and the associated dollar amounts for which she is being alleged liable.
“A complaint must provide defendants with enough information to mount a legal defense, guide discovery and frame the issues that will decide the dispute on the merits,” he states.
Berlik states that the court should allow the EDA to file an amended complaint.
Berlik adds that lacking information in the complaint makes it impossible to determine whether the statute of limitations can be applied to some of McDonald’s alleged actions. He further states that McDonald may be protected by “sovereign immunity,” which he explains can protect government servants who are performing their duties. He adds that it is unclear whether McDonald relayed false information to the EDA board or she was given false information.
“It was only natural that many representations by counterparties flowed through the executive director. That was her job,” he states.
Berlik adds that McDonald relaying false information that she was given does not amount to a breach of fiduciary duty without supporting information.