Twenty-five years later, with the land cleaned up and Front Royal increasingly attractive to tourists and former city dwellers, officials announced plans for a data center and retail complex that would bring 600 jobs and act as a catalyst for other projects.
The deal was brokered by Jennifer McDonald, a longtime Front Royal resident who directed the Warren County economic development authority. Washington-area developer Truc “Curt” Tran pledged to finance it with $40 million from wealthy immigrant investors and a $140 million federal contract his technology company had secured. As an added bonus, Tran would fund a police training academy overseen by longtime Sheriff Daniel T. McEathron.
But those were lies, documents in Warren County Circuit Court allege.
Tran never had the money to build the data center project on the 30 acres his company bought from McDonald’s agency for $1, a civil lawsuit alleges. And the training academy was one of several hoaxes that, prosecutors and civil lawsuits claim, allowed Tran, McDonald, McEathron and others to siphon away millions in public funds, which they allegedly used to buy properties, pay bills and gambling debts, and enrich relatives and friends.
Now McEathron is dead, Tran is being sued by the economic development authority and there are state and federal investigations underway. McDonald faces 28 state counts of embezzlement, money laundering and obtaining money through false pretenses. She has denied the allegations and did not return interview requests, while Tran declined to comment through his attorney.
The claims against them, industry groups say, reflect the perils of weak oversight in economic development agencies — quasi-public entities that oversee large, complicated transactions, and whose boards often lack the financial savvy and investor scrutiny that protect their corporate counterparts. In Montgomery County, Md., an economic development official pleaded guilty this year to embezzling $6.7 million. The head of economic development in St. Louis pleaded guilty to steering lucrative contracts to the county executive’s political donors. In New Jersey, a grand jury is investigating how $500 million in tax incentives went to firms that, in part, allegedly lied on their applications.
“The lessons here are that there’s a need for better financial accountability,” said Jeff Finkle, head of the nonprofit International Economic Development Council. “People beyond one person who is managing a project where the temptation may be too great.”
On Tuesday, the Virginia State Police announced that 14 current and former local officials — including all five county supervisors — were charged with misdemeanor misfeasance and nonfeasance “based on the individuals’ knowledge of and inaction [regarding] the EDA’s mismanagement of funds.”
The economic development authority is teetering on insolvency. And normally neighborly Front Royal once again feels toxic, as residents wonder where else the corruption may have taken root.
“The story is just getting more complicated,” said longtime resident Melanie Salins, who co-founded a community group that has tracked a growing web of suspicious land and business deals. “For them to be able to steal from us and look us in the face like everything’s fine, it’s offensive.”
A project with 'absolutely everything'
McDonald started as a property manager for the authority in 1999 after graduating from High Point University in North Carolina with a political science degree. She became director in 2008, eventually earning $115,000 a year.
Chatty and self-assured, she excelled at navigating both complex land transactions and the clubby local political landscape. She presided over the powerful Rotary Club, cheekily wore a Dallas Cowboys jersey on football Sundays in a community of die-hard Washington Redskins fans and boasted (falsely, it turned out) about winning $102,000 at the slot machines in nearby Charles Town, W.Va.
As director, she helped lure Walmart, Target and a Lowe’s home improvement store to Front Royal, as well as a $100 million hospital that is under construction, a former board member said. In 2014, she met Tran, who had sought help with the data center idea from the office of then-Rep. Bob Goodlatte (R-Va.), according to Pete Larkin, who was Goodlatte ’s chief of staff.
A soft-spoken resident of upscale Great Falls, Va., whose website boasts of contracts with the U.S. Office of Management and Budget, Tran wanted to turn part of the former Avtex Fibers manufacturing campus into a hub for cloud computing, with a three-building, $40 million complex that according to its business plan would include a restaurant, a coffee shop and a music store.
McDonald’s board approved a $10 million, 90-day loan. Tran promised funding from 80 foreign investors enrolled in the federal EB-5 visa program, which offers applicants and their families a path to citizenship in exchange for the jobs their money helps create. Officials and residents gushed over the plan.
“This is our first step into a new era,” then-Mayor Timothy Darr said at a 2015 groundbreaking, as McDonald, Tran and Goodlatte smiled nearby.
The regional Criminal Justice Training Academy was announced the following year. McDonald said an anonymous donor would provide $8 million, and told her board the donor was Tran, the civil lawsuit says. McEathron, a fellow Rotarian, would be in charge.
The broad-shouldered sheriff was a morning fixture at a vinyl-booth diner on Main Street. He had launched a summer camp and amused his deputies by playing faux saxophone as they lip synced to “Love Shack” by the B-52’s. The training academy further raised his profile.
“This is the first time we’ve ever done anything like this,” McDonald said, according to an account in the Northern Virginia Daily.
McEathron boasted: “We can offer absolutely everything at this facility.”
Starting to unravel
It all seemed incredibly fortunate. Until late 2016, when some town officials and residents looked up Tran’s company online.
They found it hadn’t yet been allowed to solicit investments under the EB-5 program. The $140 million federal contract appeared to be a mirage, with Tran receiving no payments from it. Skeptics asked increasingly pointed questions at public meetings, sparking warnings from Town Council members that the naysayers would blow Front Royal’s big chance.
“They chewed me up and down,” said Bébhinn Egger, a former council member who was among the first to raise alarms. “It only took me about 15 minutes of research to see that there was something fishy going on.”
In an email to McDonald in early 2017, Tran said the questions meant “our ability to raise capital within the EB-5 investor community is now in jeopardy,” court records filed as part of the civil lawsuit show. His company was eventually approved for the program, then later disqualified, a decision Tran is appealing, according to U.S. Citizen and Immigration Services, which administers the EB-5 program.
The Town Council authorized $1.7 million of infrastructure improvements for the Avtex site, and according to the lawsuit, McDonald allegedly paid Tran at least $1.5 million for construction costs without informing her board.
In 2018, Front Royal’s finance director discovered a bigger red flag: The authority had overbilled Front Royal nearly $300,000 for its portion of debt service related to the Avtex site and a road improvement project. At a meeting about the discrepancy, McDonald nonchalantly said she had mistakenly falsified some invoices, Town Attorney Doug Napier recalled.
“She was not at all contrite,” Napier said. “It just shocked me.”
The revelation prompted a call to state police and an independent review of the authority’s books that uncovered a dizzying array of phony invoices, phantom projects, secret land deals and bank wire transfers to entities controlled by McDonald or her friends, according to a copy of the review completed in May by the Cherry Bekaert accounting firm. The probe was commissioned by the authority and is the basis of the criminal and civil proceedings.
McDonald allegedly billed the authority more than $50,000 to pay for renovating a vacant inn, then used those funds to pay credit card bills, according to the review. She is accused of doctoring invoices to secure $4.6 million for purchasing tax credits, then embezzling that money.
A plumbing company owned by her husband, Sammy North, allegedly collected at least $66,200 in secret payments, the review found. North has also been arrested, as was Donald F. Poe, a family friend accused of conspiring with McDonald to funnel $841,409 to his solar panel installation company for work the board didn’t authorize.
North did not return messages seeking comment. Ryan Huttar, an attorney for Poe’s company, said that his client performed the work it was hired to do and that it reimbursed the authority $335,000 when one job was canceled.
Attorneys in the civil lawsuit say McDonald allegedly convinced the authority to buy land from her aunt and uncle for a workforce housing project without disclosing that they were her relatives, and billed the authority an additional $130,000 in the transaction, most of which went to pay off what appeared to be her mortgage.
“You’d think somebody, somewhere along the line, would have an inkling that something was amiss earlier on,” said Napier, who filed a lawsuit on behalf of Front Royal seeking $15 million in damages from the authority and Warren County.
“This community is sort of like Mayberry,” Napier said. “We’re not used to criminality in government here.”
Allegations, arrests, tragedy
McEathron wasn’t charged. But he may have felt the tide turning against him.
He and McDonald had launched a real estate investment company called DaBoyz LLC in 2016, shortly after they announced the police academy. The firm used $3.5 million in authority funds to buy four properties, the independent review found. McDonald and McEathron also bought a three-bedroom home in Virginia Beach, which they rented to McEathron’s son and daughter-in-law, court records in the civil lawsuit show.
In one curious transaction, which lawyers for the authority say may have been an attempt to launder money, DaBoyz paid Rappawan, a construction company, $1.9 million for a large tract of land and then sold it back a month later for $1.3 million. Rappawan owner William T. Vaught Jr. declined to comment, citing the criminal investigations.
In March, the authority filed its own lawsuit, against McDonald, McEathron, Tran, their companies and two contractors. The following month, the FBI raided the authority’s offices, seizing documents in what signified the launch of a U.S. Justice Department investigation, according to local news reports at the time. A spokesman for the U.S. attorney’s office for the Western District of Virginia declined to discuss the probe, which Warren County officials confirmed was underway.
The sheriff was despondent over his tarnished image, his attorney said. He took early retirement in May. A few weeks later, he testified before a local grand jury, appearing at the county courthouse with his wife, a member of the county School Board.
Then, just before Memorial Day weekend, McDonald was arrested.
The following Tuesday, McEathron killed himself outside his family’s secluded mountainside home. Some of his deputies found his body. The gun was nearby.
“Either knowingly or unknowingly, he allowed himself to become involved in some of the things that apparently happened,” said Ron Llewellyn, a former county supervisor who was a friend of McEathron’s and served on the authority’s board when McDonald was director.
Llewellyn was among those indicted this week. He denies wrongdoing and said the allegations against the sheriff go against his memories of a man he saw as a pleasant, by-the-book law enforcement official.
But, he added, the evidence against McEathron is damning.
“I just can’t believe that he wasn’t aware of some of it,” Llewellyn said.
'Tip of the iceberg'
McDonald was charged this summer with additional counts of money laundering and grand larceny. Her husband was arrested on counts of money laundering and obtaining money by false pretenses. The local grand jury, which was initially set to finish its work this month, requested another six months to investigate.
While out of jail on $75,000 bond, McDonald lost a different court battle, with a judge in a defamation lawsuit ruling that she staged burglaries at her office and home in 2017 to try to deflect suspicions against her. The judge awarded County Supervisor Thomas H. Sayre (R-Shenandoah) $20,000 in damages for being implicated in those phony crimes.
Tuesday’s announcement included charges against Sayre, who denied wrongdoing through his attorney. Several others denied wrongdoing as well, or declined to comment.
Tran’s company has put a small, one-story office building on the Avtex site and is working to repay the $10 million loan from the authority. Tran was able to extend the term to 2045, officials said.
Because of one of the lawsuits, Tran is forbidden to sell the property, valued at $2.2 million. Court levies have also been placed on seven properties McDonald owns, plus six cars and $82,500 she has in the bank.
In hopes of regaining financial stability, the authority is trying to sell several of its properties, including a building on Main Street that Jeff and Ginny Leser leased in 2018 to open a general store. The couple hadn’t known about the brewing scandal. Or that the same building previously housed a store McDonald, her friend William Lambert and her former aide Michelle Henry allegedly used as a vehicle to steal more agency money.
Henry has been charged with embezzlement; Lambert with money laundering and obtaining money by false pretense. Lambert’s attorney, Phillip Griffin, said he has entered a plea of not guilty, adding that his client is “a minor player” in the scandal. Henry did not return phone messages; neither did Ryan Nuzzo , the attorney who represented her at her bond hearing.
The Lesers spent $9,000 to fix a bathroom the authority refused to repair. Last month, they closed their store, frustrated by sluggish sales, a warped ceiling and leaky roof, and the possibility that the building could be sold out from under them.
“I try not to feel like a failure,” Ginny Leser said in an interview. “But I do feel foolish.”
Local activists, who had called for the state and federal investigations to be expanded, rejoiced at Tuesday’s announcement.
“Somebody is finally listening,” said Salins, co-founder of the Warren County Coalition watchdog group. “It’s not every day that your entire government gets arrested. It’s so shameful.”
And they had been demanding answers from Supervisor Tony Carter (R-Happy Creek), another of the people charged in the recent indictments. Carter works for his mother’s insurance company, Stoneburner-Carter, which holds insurance policies on four properties owned by the authority and has collected about $46,000 in premiums since 2015, according to records obtained through a Freedom of Information Act request.
He didn’t return calls Tuesday, but said earlier that the insurance contract does not pose a conflict because he doesn’t own the company and, therefore, doesn’t directly benefit from the payments.
“If I did have ownership, that would have precluded me from writing those policies,” he said. “I did what was legally correct.”
Kristie Atwood, whose Facebook page One Mad Mother has become a repository of news about the investigations, called the latest indictments “just the tip of the iceberg.”
For years, the local government “has been skewed [in favor] of the elite and the ‘good ol’ boys’ club,’ ” she said. “With luck, and these indictments, our community is going to turn around for the good.”