FRONT ROYAL – Though criminal charges have not been filed against former EDA Executive Director Jennifer McDonald, it is likely they are on the way. Officials from the Town of Front Royal say they first learned of activity that will likely result in criminal charges on August 23, 2018 and notified Virginia State Police shortly thereafter.
Finance Director B.J. Wilson wrote in a Monday, April 8 email, “August 23, 2018 marks the day that the Town felt there was significant suspicion of misrepresentation and potential fraudulent activity regarding the EDA.
“On August 23, 2018 a meeting was held between the Town & EDA to discuss information previously presented to the Town and information requested by the Town from the EDA via a FOIA request. Those in attendance of this meeting were:
- Greg Drescher – At the time, EDA Chairman
- Jennifer McDonald – EDA Executive Director
- Dan Whitten – Legal Counsel for the EDA
- B.J. Wilson – Town of Front Royal Director of Finance
- Jeff Mitchell – Mitchell & Company P.C. (Auditor for Town of Front Royal)
- Joe Waltz – Town of Front Royal Town Manager
- Hollis Tharpe – Mayor of Front Royal
- Bill Sealock – Councilman for Front Royal
- Doug Napier – Town Attorney for Front Royal
Wilson went on to explain that several documents requested from McDonald and the EDA included:
- Avtex project joint funding agreement between the Town, County, and EDA
- Virginia Department of Transportation Performance Bond documents in the amount of $1.9 million paid to V-DOT
- Original amortization schedule from the EDA’s financial institution related to all Town debt owed to the EDA and breakdown of how the Town’s debt is incorporated into loans
Wilson said he requested the Avtex project joint agreement funding documents based on previous statements made by Jennifer McDonald that the EDA was billing the Town for expenses of the Avtex project, although the Avtex project was not listed on invoices received by the Town.
The Director of Finance said McDonald had previously represented to the Town that she had a copy of the agreement and would send a copy to the Town. Neither the Town of Front Royal nor Warren County had records of the agreement described by McDonald, which caused concern.
Wilson said that during that August 23, 2018 meeting McDonald acknowledged that she was unable to locate the Avtex project joint funding agreement and that charges for the Avtex project would not be billed to the Town.
Also regarding that meeting, Wilson wrote, “Mrs. McDonald previously represented to the Town that the EDA had paid a $1.9 million performance bond to V-DOT for Leach Run Parkway and was billing the Town for a portion of the $1.9 million. During the August 23, 2018 meeting, Mrs. McDonald acknowledged that this performance bond did not exist, and charges should not be billed to the Town.”
According to Wilson, the amortization schedules provided to the Town on August 23, 2018 were different than those previously provided to the Town by Jennifer McDonald. He said that based on the events of that meeting and the improper amortization schedules, it was determined that the EDA had not previously billed the Town correctly.
Wilson’s email continued that based on calculations sent to the Town by the EDA, it had “resulted in an over billing of approximately $291,000. This figure has yet to be confirmed and remains unknown at this time.”
When this reporter asked County Attorney Dan Whitten, on April 3, face-to-face at the EDA office on Kendrick Lane, exactly when the EDA Board had suspicions of misconduct or criminal activity, he replied “Early September. I think it was September 14 when we got the consultant. The date we notified law enforcement is privileged information.”
Later that day, Whitten clarified his earlier statement via email, “I wanted to clarify my statement earlier so it is in written format.
“The EDA Board had suspicions of misconduct in early September 2018, and on September 14, 2018, the EDA Board, through legal counsel, engaged Cherry Bekaert for internal review discovery services. It was not until Cherry Bekaert found clear evidence of criminal activity that the EDA had clear suspicion of criminal activity. At such point, the EDA, through outside consultants, did notify the Department of Justice. The exact date of such notification will remain confidential.”
This reporter replied to Whitten, “Thank you for the clarification.
“However, when you, Mr. Drescher, Ms. McDonald and some town employees had a sit-down meeting on Thursday, Aug. 23, 2018 and Ms. McDonald admitted that she had fraudulently billed the Town for a fake contract and for VDOT work that had never been performed–after which Drescher stepped down as chair the next day–shouldn’t you have had a pretty good idea that criminal activity had ALREADY OCCURRED?
“Why is the date on which the alleged crime reported confidential? Is the board not legally required to report at first suspicion of wrongdoing?”
Whitten replied back on April 4, “At the meeting, Jennifer did not admit that she billed the contract for a fake contract or VDOT work that was never performed. She admitted she overbilled the town by 291k which is not evidence of criminal conduct. We needed to further investigate.
After a presentation from our consultant which showed criminal conduct, we gave permission to the consultant to report to authorities.”
Asked to weigh in regarding the situation and its impact on the community, Town Attorney Doug Napier stated via email Wednesday morning, “Town Council and Town staff had been baffled, then grew increasingly suspicious, of what was being submitted to the Town’s Finance Director in response to his questions to the EDA’s Executive Director regarding the EDA’s billing of the Town, for several months prior to the Town’s August 23 face-to-face meeting with Mrs. McDonald—the EDA’s documentation and financial numbers regarding the Town simply did not make sense to the Finance Director or to the Town’s auditor.
“The August 23 meeting showed Town staff and the Town’s auditor that something was significantly illegally wrong with the EDA’s finances, to the point that it was obvious that law enforcement needed to be brought in. Town Council was advised ASAP of what had happened, and Town Council gave the green light immediately to turn the matter over to the Virginia State Police, which is what happened.”
SEE RELATED STORY:
https://royalexaminer.com/drescher-llewellyn-explain-eda-departure-decisions/
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