Virginia town dreamt of renewal, partly with EB-5 money: now $21 million gone, 14 officials implicated, and sheriff dead by suicide
The quiet Washington town of Front Royal pinned hopes of a redevelopment project on a promise of $40 million of EB-5 money and $140 million from a supposed federal contract. A civil lawsuit claims that the lead players had no intention of building the project and stole millions to buy properties, pay off debts, and for other personal uses. 14 current and former officials are also implicated.
Front Royal, 70 miles outside of Washington, had high hopes that its economy, once decimated by the closure of a local rayon-manufacturing plant, would be revived. The plan was that a data center and retail center would create 600 jobs and further spur more development.
Jennifer McDonald, director of the Warren County economic development authority, made a deal with developer Truc Tran to make the new development happen. He claimed to finance the deal with $40 million of EB-5 money and $140 million from a supposed federal contract for his technology company. He also promised to fund a police training academy that the town sheriff, Daniel T. McEathron, would run.
Tran, whose website claims contracts with the U.S. Office of Management and Budget, promised to build a hub for cloud computing, with a three-building $40 million complex. He received $10 million in local funds from McDonald’s board.
The future seemed bright indeed with the McDonald and McEathron looking like local heroes.
The dream turns tragic
But the lawsuit claims Tran never had the money to build the project on 30 acres of land he had purchased from McDonald’s agency for $1. The suit also alleges that the training academy was another part of their scam to take millions for the trio’s own personal use.
Developer Tran is being sued now by the economic development authority and is being investigated on both federal and state levels. McDonald is looking at 28 counts of embezzlement, money laundering, and obtaining money through false pretenses. And the sheriff McEathron is dead of a self-inflicted gunshot. 14 current and former local officials were charged with misdemeanors for knowing about the “mismanagement of funds” and doing nothing.
Not every day your “entire government is arrested”
A watchdog group comments on the scandal: “The lessons here are that there’s a need for better financial accountability. People beyond one person who is managing a project where the temptation may be too great.”
The locals have more damning commentary. “For them to be able to steal from us and look us in the face like everything’s fine, that’s offensive,” says Front Royal resident Melanie Salins. “It’s not every day that your entire government gets arrested. It’s so shameful.”
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