A judge on Tuesday ordered the Front Royal-Warren County Economic Development Authority to recover $ 9 million from its former executive director Jennifer McDonald.
U.S. bankruptcy judge Rebecca B. Connolly granted EDA judgment authorizing EDA to recover the amount from McDonald, according to an order filed with the U.S. District Court for the Western District of Virginia.
The amount is less than the more than $ 60 million in questionable financial transactions that the EDA claims McDonald’s perpetuated during his ten-year tenure.
Jeff Browne, chairman of the EDA board of directors, spoke by phone about the court order on Wednesday.
“I would say we’re unlikely to collect all of this, to be frank,” Browne said. “But, obviously, until it’s fully discharged and we are able to investigate everything she’s doing and find out all the assets available, it can potentially pay off that debt.”
The EDA can still pursue its civil actions against any other defendant in its attempts to recoup its financial losses, Browne added. Any money recovered from other defendants would reduce the claim by $ 9 million, Browne noted.
The EDA would break even if it got the full amount back, Browne explained. The remaining money the EDA seeks to recover is being repaid by Truc “Curt” Tran, said Browne, whose company, ITFederal, planned to build a facility at the former Avtex site at Front Royal.
The EDA claims in a civil lawsuit filed in Warren County Circuit Court on March 26, 2019, that McDonald and other defendants took money from the authority for their own benefit. The plaintiff alleges in his circuit court file that McDonald and alleged co-conspirators engaged in various schemes between 2014 and 2018 to withdraw money from the EDA for personal gain. Many schemes involved real estate owned by McDonald’s or its DaBoyz LLC or MoveOn8 LLC companies.
The EDA complaint accused McDonald and others of fraud, conspiracy, unjust enrichment, breach of contract, breach of fiduciary duty and other charges.
McDonald then filed a voluntary Chapter 7 bankruptcy claim on September 24, 2020. As of the filing date, the EDA alleges that its claim against McDonald is $ 62,315,316.
McDonald and his co-defendants had also faced charges of embezzlement and other offenses related to a criminal investigation into the EDA’s finances during roughly the same period. Charges in Warren County Circuit Court in 2019 were then dismissed by a judge at the behest of a special prosecutor. However, the prosecutor’s office has since passed on its information from the investigation to federal authorities. No criminal charges have been laid against McDonald or a co-accused.
McDonald resigned from his post at EDA in 2018.
Connolly’s order goes on to state that the EDA will be allowed to present the order to Circuit Court as evidence of the $ 9 million identified as the EDA’s claim against McDonald’s, and to register the amount as a judgment. against her as a debtor and other defendants. identified in the circuit court.
Lawyers for EDA and McDonald’s have come to an agreement on the claim amount of $ 9 million after negotiating a deal. The parties resolved the issue of the claim to avoid “litigation uncertainty, risk and cost, but without the debtor admitting Warren EDA’s allegations,” Connolly’s order says.
“For the avoidance of doubt, although the Debtor accepts the non-dischargeable Claim, the Debtor does not admit that she has taken any particular action or behavior, that she has not taken any particular action or behavior, or that she made false declarations or omissions ”, specifies the ordinance.
The Richmond Sands Anderson law firm represents EDA in bankruptcy proceedings. Maryland lawyer Stephen A. Metz represents McDonald’s.