Virginia Lawyers Weekly VA Lawyers Weekly
The Front Royal-Warren County Economic Development Authority has filed a lawsuit alleging its former executive director misappropriated more than $17.6 million in public funds.
The allegations were leveled against Jennifer R. McDonald; the suit also named several of her business associates, including Warren County Sheriff Daniel T. McEathron.
In a complaint, the EDA said that McDonald and her associates used her role as executive director of the organization to commit a slew of crimes ranging from embezzlement and fraud to outright theft.
“Defendant McDonald stole from the Warren EDA, misused its financial assets, deceived its leadership, withheld necessary information from the Warren EDA, misappropriated Warren EDA assets for her personal aggrandizement, and conducted a years-long campaign of deceit and exploitation, all to the detriment of the Warren EDA,” the EDA said in the complaint.
The complaint was filed in Warren County Circuit Court March 26 and requested damages worth $17,640,446 plus treble damages and at least $1 million in punitive damages. The complaint also requested that the court rescind the alleged fraudulent transactions and impose the resulting costs on the defendants.
Other named defendants in the lawsuit are IT Federal LLC and its owner True “Curt” V. Tran; Earth Right Energy Solar Commercial LLC and its leaders, Donald F. Poe and Justin Appleton; and a pair of real estate companies owned by McDonald, DaBoyz LLC and MoveOn8 LLC.
The allegations
The complaint lists a number of alleged embezzlements related to the funding of several building projects in and around Warren County, unauthorized payments to outside companies on the EDA’s behalf and unauthorized use of EDA funds to cover McDonald’s personal and real-estate business expenses.
On one occasion, McDonald allegedly used her authority to wire $2 million in EDA funds to her company DaBoyz, which she then used to buy land. She is also said to have authorized transfers of $1,007,672 and $554,427 to purchase property on behalf of the company, which the EDA said was co-owned by McEathron at the time.
Other allegations include using deception to talk the EDA Board into giving a $10 million loan to a company owned by Tran to aid in the development of a property which never came to fruition and paying Earth Right Energy $1.28 million, without authorization, to install solar energy equipment at public schools in the area.
In almost all of these instances, McDonald is accused of “doctoring” and falsifying documents to conceal the diverted money.
What next?
McDonald served as executive director of the EDA for more than 10 years. She resigned from her position in December, according to local news reports, after a Front Royal finance director discovered financial incongruities.
In the complaint, the EDA said that McDonald admitted in her resignation email to being liable for about $2.7 million in losses and that she admitted to taking money from the Front Royal and Warren County bank credit facilities, for “purposes other than which they were intended.”
“This admission grossly undervalues the extent of her theft and unlawful distributions, but is one indication of her consciousness of guilt in her conduct,” the EDA said in the complaint.
The allegations in the complaint are based on an investigation conducted by outside financial and legal consultants hired after McDonald’s resignation.
“We, like many others, were misled and unaware of the extent and magnitude of this scheme,” the EDA Board said in a news release. But at the same time, the EDA acknowledged their own part in allowing the alleged misdeeds to happen.
“We recognize that this board must regain the public’s trust while seeking to recover public funds and holding those responsible accountable for their actions,” the EDA said. “[We’ve] already implemented a number of changes ahead of the arrival of a new executive director who is expected to join us in the spring.”
Cullen D. Seltzer, Daniel M. Siegel and F. Jesse Bausch of Richmond are representing the EDA in the case. They declined to comment, citing the pending litigation.
It is not clear at this time whether McEathron, Tran or Poe have retained counsel, but attempts to reach them for comment were unsuccessful. Appleton declined to comment other than to say he has hired an attorney.
McDonald will be represented by Lee E. Berlik of Reston. Berlik said that the lawsuit makes a number of unwarranted accusations and that his client intends to defend herself fiercely.
“[We] will contest these assertions in a public trial at the earliest possible date,” Berlik said.
Special Grand jury convened
A special grand jury will convene to determine if there is enough evidence to establish probable cause to indict McDonald and the other defendants for their alleged use of public funds for their own enrichment.
The grand jury was requested by Warren County Commonwealth’s Attorney Brian M. Madden the same day that the EDA’s lawsuit was filed.
Madden also did not respond to requests for comment, but he said in a statement that while his office has been investigating the matter since last year, the request for the grand jury came partly in reaction to the lawsuit.
