FRONT ROYAL – The Board of Supervisors and Town Council began discussions Tuesday during a joint meeting to determine how the two bodies can work together in handling the fallout from the alleged embezzlement scheme at the Front Royal-Warren County Economic Development Authority.
Interim Mayor Matt Tederick said that the town is not interested in “treading over old ground,” noting that a special grand jury is investigating the accusations of embezzlement and that eventually, justice will prevail. Instead, he said the town and county must decide how to move forward as governmental bodies.
Supervisors Chairman Dan Murray noted that the meeting was meant to “open a line of communication” between the town and county and create a path forward “so we don’t put a cart before the horse.”
Tederick said he is confident that all officials want economic development, but he does not know what future form the EDA should take.
He said the EDA's potential dissolution must be discussed to decide “what this economic development engine looks like moving forward” if the EDA turns out to be insolvent.
Tederick added that the EDA’s personnel is almost completely reconfigured since the scandal broke and that the board and executive director are good people.
He added he is not actively pursuing the EDA's dissolution but the EDA’s brand may be so damaged that it cannot continue as is.
Murray pointed out that the state code prohibits the dissolution of an EDA if it has unpaid bonds, so it may not be legally possible.
Asked by Councilman Gary Gillispie if the EDA is insolvent, Murray said that is a question for the authority. County Administrator Doug Stanley noted that the EDA is still awaiting the results of its regular annual audit.
Tederick said that the town has “an open mind” and “an open heart” and wants to work with the county. He noted that the town has sued the EDA to recoup lost money while the county is funding the EDA’s legal fees in a $17.6 million embezzlement and misappropriation lawsuit against nine defendants.
He said the town and county should be working together, noting that the $17.6 million civil case is the EDA’s lawsuit, not the county's. He said the town and county should join forces in going after third parties.
“For the community’s benefit, we need to clean up this situation together and resolve it together and not be adversarial in the process,” Tederick said.
County and EDA Attorney Dan Whitten said that Robert Mitchell - the former Winchester City attorney who was hired to represent the county if any conflict of interests arose for Whitten - is examining the possibility of a potential county lawsuit against the EDA.
Town Attorney Doug Napier said there is no reason the county cannot join its lawsuit against the EDA and that it would not be helpful to duplicate efforts.
Supervisor Tom Sayre said what benefits the county will benefit the town and vice versa. The two parties should treat each other "like brothers and sisters," he said.
Napier said that the town’s lawsuit against the EDA should not be viewed as hostile and that it was filed due to concerns over the potential expiration of statute of limitations and fear of the perception that “council was sitting on its hands.”
The EDA's lawsuit was based on the findings of Cherry Bekaert, a firm hired to investigate the EDA's finances, and Tederick said the town would like an unredacted copy of the firm's report and supporting documentation.
Napier said over the phone Wednesday that having the unredacted report is necessary because the town believes there are potential parties who have not yet been sued who could be held liable. He said he wants all possible information because while someone may appear liable, that may not be the case, and he does not want to sue an innocent person.
Whitten said that he does not see an issue with the town receiving an unredacted copy of the report but he would have to consult Sands Anderson, the law firm representing the EDA in the civil embezzlement case, to ensure that supplying it would not breach client-attorney privilege.
Regarding the construction of the Front Royal Police Department Headquarters, which the EDA has funded with lines of credit that the town must pay off, Tederick said the town would like to get a loan for the project and “I assume the EDA is interested in getting paid for that debt."
Whitten responded that it must be determined what the town owes for the construction.
Councilman William Sealock said that the question of what the town owes for the department is simple and the town wants a simple answer. He said the town needs that answer now and does not want to wait six months to discover what it owes.
Regarding the Afton Inn, Tederick said “the situation is the situation” and the town has a dilapidated building sitting at a prominent intersection at the corner of East Main Street and Royal Avenue.
Renovations on the Afton Inn halted after the filing of the EDA’s lawsuit, which alleges that Jennifer McDonald, the authority’s former executive director, doctored invoices from the project’s contractor to pay off personal credit card bills.
Tederick said that while the contractor seems to want to work with the community, the town is reviewing options and has a good basis for civil litigation against the EDA.
Murray agreed that “we have to get the Afton Inn done” and either complete the renovations or turn the land into a parking lot.
Tederick also requested that the town be given the EDA’s insurance policies and a list of EDA properties and related financial details.
Whitten responded that the authority will turn over its insurance policies and that the EDA should have a summary of its properties within a month.
At the end of the meeting, the two boards unanimously approved an EDA Reform Committee consisting of Napier, Councilman Jacob Meza, Town Manager Joe Waltz, EDA Executive Director Douglas Parsons, Stanley, Supervisor Archie Fox and Whitten.
Whitten's place on that board eventually will be filled by the next county attorney, as it was announced Wednesday that he is slated to become Prince George's county attorney.
The reform committee's goal is to determine the EDA's future. It will present a preliminary report to both boards on Oct. 30 and a final report on Nov. 29.
The two boards also agreed to meet again on Aug. 27, during which the EDA board members - many of whom watched Tuesday's meeting from the audience - will be included in discussions.