FRONT ROYAL – The Front Royal-Warren County Economic Development Authority’s $17 million civil lawsuit alleges that former director Jennifer McDonald directed that a credit line reserved for town and county projects be used for a $577,511 land purchase from her aunt and uncle.
The land in question, a 3.5-acre lot at the end of Royal Lane, was supposed to be the site of a 36-unit apartment complex for median-salaried citizens such as teachers and police officers.
No construction has commenced at the site, although the complex was expected to open by the 2018-19 school year.
The lawsuit’s case filing states that McDonald did not disclose that her aunt and uncle, Jeanette and Walter Campbell, owned the property until April 2017. It adds that McDonald did not timely disclose her employment with the Campbell-owned Century 21 Campbell Realty.
During a June 6, 2017, work session with the Board of Supervisors regarding the project, then-EDA chairman and Warren County Public Schools Superintendent Greg Drescher said all EDA board members were aware of McDonald's relationship to the Campbells in 2014.
When asked over the phone Thursday when he became aware of McDonald’s relationship to the Campbells, Drescher said that he has “been advised to not discuss anything related to all of this.”
He added that he looks forward to being able to answer questions from “the right authorities when the time comes.”
The Campbells were supposed to donate the property to the EDA and in turn, receive a tax credit. County and EDA Attorney Dan Whitten said over the phone Wednesday that a deed of gift was never written.
A March 1, 2017 deadline that has never been thoroughly explained by EDA officials was missed and the Campbells could no longer receive that tax credit. The EDA board then approved the $445,000 purchase of the property that had an assessed value of $310,000.
McDonald said during the June 6, 2017, work session that the deadline was between the Campbells and whatever agency with which they qualified for a tax break.
Drescher said during that work session that it is important that the EDA present itself as an organization that is fair and has integrity. He noted that the EDA originally intended to purchase the property, but it was later offered as a gift due to the tax credit. While there was no legal obligation that the EDA purchase the property from the Campbells after the missed deadline, he said there was perhaps a moral reason to do so.
During that work session, Drescher said that the EDA board was made aware of the March 1, 2017, deadline in 2014.
Also, during that session, Whitten noted that neither he nor former county attorney Blair Mitchell was aware of the deadline until 2017. Whitten said over the phone Wednesday that he never saw a written representation of the deadline and only heard of it from McDonald.
Drescher said during the 2017 work session that there was no evidence in writing of the deadline while McDonald said she had in fact seen proof of the deadline.
According to previous reports, during the work session, county Supervisor Tom Sayre said he discussed the deadline with Drescher on the phone. During that conversation, Sayre said Drescher conveyed that he could not recall being notified of the deadline.
Previous reports state, however, Drescher said he was “sure” it was discussed.
“But you don’t recall it?” Sayre asked.
“I’m sure it was,” Drescher said.
Sayre brought up that phone conversation and work session during the supervisors meeting this week and asked Drescher if he would “like to correct” whether he knew of the deadline.
Drescher responded that he has been advised not to make any comments on the EDA investigation, and he does not want to “do anything that inhibits asset recovery.”
Sayre then asked: “Do you think you owe me an apology?”
“Like I said, I think at this time I’ve been advised not to respond to those types of questions,” Drescher said.
The lawsuit's case filing states that although the EDA approved a $445,000 purchase from the Campbells, McDonald directed the EDA to spend $577,511. The filing states that money spent above the $445,000 was “engineered” by McDonald “through a forged sales contract.”
According to previous reports, McDonald said the EDA had worked with a private firm that would ultimately take over the project. That private firm was later revealed to be the Winchester-based Aikens Group. The filing states that McDonald continuously claimed that the firm would reimburse the EDA for the purchase of the land.
The EDA sold the property to Cornerstone L.P., an entity of the Aikens Group, in November 2018 for $10. Aikens Group representatives have not responded to inquiries regarding the project.
Whitten said he did not know if the EDA authorized the $10 sale. He noted that by the time the Aikens Group bought the land, he had recused himself from representing the EDA on the project because of the questions being asked by the supervisors. He explained that since his bosses were questioning an EDA purchase, he could not give both parties advice.
Joseph Silek Jr. was the lawyer who began representing the EDA in matters regarding the project. Silek is also the registered agent of MoveOn LLC., one of McDonald’s companies that the lawsuit alleges used stolen money to purchase land.
Silek said over the phone Tuesday that he has no comment regarding the sale of the land or the workforce housing deal due to the pending litigation.
Correction: This story has been updated. The deadline date for the tax credit was March 1, 2017, not 2016.