Royal-Warren County EDA Lawsuit Canceled After Defendant Files Bankruptcy | Winchester Star
FRONT ROYAL — The jury trial scheduled to begin Monday in the Front Royal-Warren County Economic Development Authority fraud case has been canceled because the defendant has filed for bankruptcy.
Samuel D. North — the husband of former EDA executive director Jennifer R. McDonald — filed a petition Friday in U.S. District Court for the Western District of Virginia seeking Chapter 13 bankruptcy protection. Following the filing, the Warren County Circuit Court quashed North’s lawsuit.
The bankruptcy filing puts the EDA’s case against North as a defendant in the authority’s lawsuit on hold. The EDA claims North owes the authority $70,000 of a $110,000 loan he received in 2015 to buy property on Robinhood Lane in Front Royal. The agency is also seeking damages from North of $140,000 out of an aggregate claim of $350,000 if a jury decides he conspired with others to defraud the EDA.
The EDA says North committed five counts against the EDA: fraud, conspiracy, embezzlement or theft, unjust enrichment, and abuse of his legal authority.
The EDA claims that McDonald, its executive director from 2008 to 2018, and others used authority funds without permission in schemes that included real estate transactions for their own financial advantage. The EDA says McDonald ran the programs from 2014 through 2018. The EDA board of directors terminated McDonald’s employment in mid-December 2018.
Warren County Circuit Court released McDonald as a co-defendant in the case granting partial summary judgment. McDonald’s admits no wrongdoing but owes the EDA $9 million.
The EDA alleges in its lawsuit that North participated with McDonald’s in buying property on Robinhood Lane in 2015 with authority money.
McDonald’s filed for Chapter 7 bankruptcy on September 24, 2020, the day before his scheduled trial in the EDA civil case. The federal court closed McDonald’s bankruptcy case on May 24 after it liquidated its assets through an appointed trustee.
North reports in its bankruptcy filing total assets valued at $322,783 and liabilities of $239,882. He brings in a monthly income of $3,500 and expenses of $2,997.
North reports that he owes money to more than one but less than 49 creditors. It reports assets valued between $101,000 and $500,000 and liabilities in the same range.
In his petition, North reports total assets valued at $322,783, which includes his share ownership in his home with McDonald’s, vehicles and other property. North reports in his petition that he owns Smalls Plumbing, which he operates out of his home and that of McDonald’s Faith Way.
Last week, the court held jury trials for developer Donald F. Poe and his company Earth Right Energy Solar-Commercial LLC. The jury found in favor of the EDA for its allegations against Earth Right and Poe of fraud, unjust enrichment, conversion, conspiracy and acting outside its authority. The EDA claimed that Poe, through his company, defrauded authority in the summer of 2018 by installing solar panels on the agency’s Kendrick Lane and received payment even though the plaintiff had been told that Earth Right would do the job for free. The jury found in favor of the EDA in its complaint against Poe for his involvement with McDonald’s involving the purchase of property on Happy Creek Road. The jury awarded the EDA $1.24 million.
Earlier this month, a jury ruled in favor of the EDA in its lawsuit against April Petty for fraud, conversion, acting outside her authority and unjust enrichment. The EDA claimed that McDonald used the authority’s money to pay off Petty’s mortgage in order to sell Petty’s house. Petty claimed she was unaware of McDonald’s actions. The jury did not find Petty guilty of conspiracy.
The trial for EDA claims against McDonald’s uncle William Lambert remains on schedule to begin today.