The Front Royal-Warren County Economic Development Authority moved a step forward Friday in its efforts to recoup money it claims its former executive director used for her own real estate deals.

The EDA claims in a lawsuit that former Executive Director Jennifer R. McDonald embezzled or misappropriated millions of dollars from the agency for her own benefit. McDonald used the money to finance various real estate “schemes,” as the plaintiffs allege in the lawsuit.

Attorneys Cullen D. Seltzer and Sean M. Hutson, of Sands Anderson, represented the EDA at the hearing. Attorney Peter D. Greenspun represented McDonald. Other attorneys representing other defendants named in the suit appeared at the hearing by telephone conference call.

Circuit Judge Bruce D. Albertson held a hearing in Warren County Circuit Court on Friday on motions filed in the lawsuit. Attorneys for the EDA and McDonald presented a list of stipulations agreed upon by parties in the lawsuit.

Albertson accepted stipulations between the parties that 27 of the plaintiff’s exhibits in the case are admissible and support the claim for damages in the amount of $62,315,315. McDonald, MoveOn8 LLC and DaBoyz LLC, identified as the defaulted defendants, take no position regarding the basis for the amount of the damages claim, a stipulation states.

“Nothing in this stipulation is or shall be construed as an admission of wrongdoing or agreement to the assertions in the Complaint and Amended Complaint or the damages claim referenced herein by any of the Defaulted Defendants,” a third stipulation states.

The defaulted defendants have endorsed an order providing a money damages judgment of $62,315,315 in favor of the plaintiff.

EDA Board Chairman Jeff Browne explained by phone Friday that the action taken at the hearing sets the damages, but also gives 60 days for parties to negotiate a final amount and potentially avoid going to trial.

The EDA filed the lawsuit against McDonald and her companies as well as other defendants in March 2019 and the case proceeded through the court. But the day before the court scheduled a hearing in September on the plaintiff’s motion for default judgment, McDonald and her company, MoveOn8 LLC, filed for bankruptcy protection in the U.S. District Court for the Western District of Virginia. The filing put the local lawsuit on hold. In December, a federal bankruptcy court judge granted the EDA’s motion for relief from stay to allow a lower court to determine McDonald’s default damages amount.

The lawsuit identifies a total amount misappropriated of approximately $21 million but Virginia law allows a plaintiff to seek triple damages in cases that claim the losses occurred as a result of a conspiracy.

Neither McDonald nor the co-defendants are charged with any criminal offenses related to the investigation. A Warren County Circuit Court judge last year dismissed indictments against McDonald and co-defendants accused of stealing from the EDA at the request of the special prosecutor assigned to the case. The Harrisonburg-Rockingham County Commonwealth’s Attorney’s Office has handed over the case to federal authorities.

Albertson also granted a motion for a protective order concerning co-defendant April Petty’s private financial records. Petty’s attorney William E. “Bill” Shmidheiser III argued that many of the documents obtained by the plaintiff do not relate to the claims in the lawsuit. However, the plaintiff, as previously ordered by the court, makes all documents available to parties in the case via a secure database on the internet. While the plaintiff’s attorneys did not outright object to the motion, they contended that Petty does not have the right to determine what documents are and are not related to the lawsuit. Albertson agreed with Shmidheiser.

Prior to the hearing, the EDA board held an emergency meeting and, in a closed session, discussed with its legal counsel the lawsuit. The EDA took no action related to the discussion when members returned to open session. The meeting was classified as an emergency because board Chairman Jeff Browne called for it within 24 houts.

– Contact Alex Bridges at abridges@nvdaily.com