FRONT ROYAL – Supervisor Tom Sayre, at the Board of Supervisors regular Tuesday meeting, lamented that he was never told that Stoneburner Carter Insurance - a company at which Supervisor Tony Carter is employed - is the broker on insurance policies for a number of properties owned by the Front Royal-Warren County Economic Development Authority.
The EDA-owned properties insured by Stoneburner Carter include the former Stokes Market building on Main Street and nearby apartments, the Afton Inn, a warehouse at 426 Baugh Drive and a building at 1325 Progress Drive.
After the meeting, Carter declined to say how much commission Stoneburner Carter receives as a broker but said the total premiums on the EDA properties are about $30,000.
County and EDA Attorney Dan Whitten explained over the phone Wednesday that Stoneburner Carter is also the broker on a “package policy” for the EDA’s Kendrick Lane office, which provides crime, terrorism and embezzlement coverage.
In March, the EDA filed a $17.6 million civil lawsuit outlining a series of embezzlements centering around the alleged activities of the authority’s former executive director Jennifer McDonald, who has been indicted on 14 felony counts of embezzlement and obtaining money by false pretenses. Former EDA administrative assistant Michelle "Missy" Henry and businessman Donald Poe have also been indicted on counts related to inappropriate financial activity related to the EDA.
Carter noted he discovered the theft coverage in January and advised the EDA on the process of claiming losses that are potentially covered but he does not know how much money the authority may get returned.
“That’s out of my hands. That’s up to the claims and it’s up to the EDA to provide additional information as far as circumstances,” Carter said. “I think it is a good thing from the county’s standpoint or the EDA’s standpoint that at least there’s coverage in place.”
Whitten said he believes the crime policy requires a conviction and the EDA is attempting to figure out if it can claim losses before that happens.
Sayre noted during the meeting that he had to learn of the policies on his own volition and asked Whitten of the “rationale that somebody would not need to disclose that.”
Whitten responded that Carter is not on the EDA board and that the contract is between Stoneburner Carter and the EDA board. If Carter were on the EDA board, Whitten said disclosure would be necessary.
The supervisors do, however, provide EDA operating funds and appoint the authority’s board members and Sayre said: “So let me get this straight...A board member can help appoint people to a board... and profit by that and that’s not a conflict of interest?”
Whitten responded that Carter is an employee of Stoneburner Carter - which is owned by Carter’s mother - and conflict of interest laws treat employees differently than owners.
Stoneburner Carter also wrote Warren County Fire and Rescue’s insurance policy and Carter did disclose his employment and did not vote when that policy was recently renewed. According to previous reports, Carter said in June 2018 when fire and rescue's policy was renewed he did not write the policy and was not involved in procuring the service but he abstained because he has a personal interest in the company.
Commonwealth's Attorney Brian stated in an advisory opinion that Carter has no conflict of interest regarding the fire and rescue policy and that would remain the case even if Carter's "equity interest" in the business increased.
The fire and rescue policy was last put out to bid four years ago and since then it has received an annual extension. According to previous reports, Stoneburner Carter's bid of $65,414 per-year edged out Chesterfield Insurers by $352.
Stoneburner Carter also provides much smaller accident insurance policies for parks and recreation activities such as gymnastics, basketball and flag football.
Regarding Stoneburner Carter’s fire and rescue insurance policy, citizen Paul Gabbert asked County Administrator Doug Stanley during a public comment period about the solicitation process.
Stanley said: “The county put it out to bid. When you put things out to bid it’s governed by the Code of Virginia as far as the process...It was put out, advertised in a newspaper; it was put on our website and advertised and we solicited bids.”
He added that the county does not control who submits bids.
Whitten explained over the phone that the county’s procurement policy requires the county to receive three “phone bids” for expenses under $10,000; three written quotes for expenses between $10,000 and $20,000; and that expenses over $20,000 be put out to bid. He added that the EDA did not have a procurement policy until July 1, when the county's policy was adopted.
Whitten said over the phone he is not sure whether the EDA made attempts to receive bids from other companies, as McDonald “handled that” and she “never asked for legal advice.” He added that all of Stoneburner Carter’s policies for the EDA were under $10,000 and did not require board approval.
Whitten said at the supervisors meeting that when the EDA's insurance policies expire, the authority will put them out to bid “and we will try to make an effort to get as many bidders as possible.”