VDOT: Traffic Alert for Warren County from June 3-7, 2024

Below is a press release from the Western District of Virginia District Attorney’s Office dated May 29, the day of Jennifer McDonald’s sentencing in Harrisonburg federal court. It provides the prosecutor’s perspective on the nature of the former Front Royal-Warren County Economic Development Authority executive director’s crimes, which center on the unauthorized misappropriation of EDA cash funds for personal use, and acknowledges that federal and state authorities are working on the case.

Testimony in court put the amount of money diverted for their personal use at between $5 million and $6.5 million. Here it is listed as $5.2 million, which is not coincidentally the amount prosecutors requested at Wednesday’s sentencing and received from the court as part of their sentence as forfeiture compensation for McDonald. It was explained that the “forfeiture compensation amount” was separate from any restitution or court costs that the court could also order.

As readers will recall, the total amount misdirected for fraudulent purposes in the EDA “financial scandal” of 2014 to 2018 was estimated at about $26 million. On paper, the EDA has recovered about $20 million in civil suits and out-of-court settlements, plus an estimated $8 million in legal fees. However, most of the larger civil court judgments, which found liability totaling about $20 million, are being appealed by the defendants (see the Royal Examiner’s EDA in Focus news category for details of these cases). To settle pending civil liability claims against her, McDonald gave the EDA an estimated $9 million worth of real estate held by one of her real estate LLCs.

Here is the statement from the Federal Prosecutor’s Office in full:

Jennifer McDonald used EDA funds as her “personal piggy bank”

HARRISONBURG, Virginia – The former executive director of the Economic Development Authority of Front Royal and Warren County (EDA), who was found guilty last November of embezzling more than $5 million in agency funds, was sentenced today to 14 years in federal prison.

Jennifer Rae McDonald, 45, of Front Royal, Virginia, was found guilty of seven counts of wire fraud, six counts of bank fraud, sixteen counts of money laundering and one count of aggravated identity theft following a nine-week jury trial in November 2023.

The Western District of Virginia federal courthouse in Harrisonburg, where Jennifer McDonald was tried last year and sentenced this week. Below: McDonald at work at an EDA board meeting with then-Chair Patty Wines to her left. After her death, Wines became a key figure in McDonald’s defense argument that there was a secret $6.5 million EDA payment to her that Wines approved in exchange for not filing a sexual harassment complaint against a then-high-ranking male district employee.

Jennifer McDonald (right) and then FR-WC-EDA Board Chair Patty Wines in action.

“For more than four years, Jennifer McDonald used EDA funds as her personal piggy bank, using public funds to purchase real estate and pay for her personal expenses,” U.S. Attorney Christopher R. Kavanaugh said today. “Today’s verdict demonstrates how seriously this office takes fraud and the misuse of public funds. I am grateful to the FBI and Virginia State Police for their tireless work to untangle these defendants’ web of lies.”

“The FBI is committed to investigating elected officials who abuse their offices for personal gain,” said Special Agent in Charge Stanley Meador of the FBI’s Richmond Division today. “I am proud of the work our team and our partners have done to uncover Ms. McDonald’s complex fraud scheme and bring her to justice.”

The FBI and VSP were on-site at EDA headquarters on April 16, 2019, about four months after McDonald’s resignation via email on December 20, under increased surveillance by its board. McDonald’s office and work computers were searched for evidence as it could be a possible crime scene.

According to court documents and evidence presented at trial, McDonald was the executive director of the EDA, a public agency designed to attract and support businesses in Warren County and the city of Front Royal. The EDA was overseen by a board of directors and assisted by an administrative assistant, but the EDA’s centerpiece was McDonald.

Beginning in 2014, McDonald began stealing money from the EDA. For more than four years, she used the EDA’s bank accounts and lines of credit to embezzle public funds to purchase real estate and pay for her personal expenses. She falsified documents to deceive the EDA board, outside auditors, and government officials in Warren County and Front Royal so she could continue her scheme.

When confronted by law enforcement and others, McDonald created fake loan documents, encouraged others to lie to a grand jury, and fabricated an outrageous story claiming the fraud was part of a “secret settlement” and fabricated other fake documents to cover up her fraud.

In the end, McDonald plundered the EDA’s bank accounts and is responsible for losses of $5,201,329.

During the trial, evidence was presented that at least $2.4 million of the money stolen by McDonald was used for her gambling – including net losses of over $750,000.

In January 2018, McDonald posed in her office with winning receipts totaling about $1.8 million that she had won over the previous three years on the slot machines at the Hollywood Casino at the Charles Town Racetrack. Evidence at trial suggested she was more likely to be lucky, which partly explained her decision to misuse EDA assets for her personal purposes, including expensive real estate transactions that began to attract attention.

The Federal Bureau of Investigation and the Virginia State Police investigated the case.

Assistant U.S. Attorneys Sean Welsh and Rachel Swartz and Trial Attorney Andrea Broach are representing the case for the United States. Updated on May 29, 2024