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Memorandum Date: — March 5, 2019 Re: Jeff McKay_ 1 Executive Summary Prima facie evidence has been uncovered that Fairfax County Board of Supervisors Member Jeff McKay may have used his public position for private financial gain Specifically, it appears that Supervisor McKay helped push through a rezoning application and later obtained valuable residential property (the Roxann Road Property) from the applicant's principal (Warren Halle) after the property was funneled through an entity affiliated with Supervisor McKay's friend (Michael McGhan). The day before the originally scheduled vote on the re-zoning request, Michael McGhan (or people afilliated with him) created Roxann LLC, the entity that ultimately purchased the Roxann Road Property from Warren Halle's company and later transferred it to Supervisor McKay. The vote was then delayed for two weeks. The day after the final vote on the re-zoning request, Michael MeGhan began the process of obtaining permits in order to build a house on the Roxann Road Property. Efforts were made to hide the identities of the sellers and buyers in the various transactions, and Supervisor McKay never revealed his conflict of interest or potential conflict to the Board before the rezoning vote occurred. The Roxann Road Property was purchased by Supervisor McKay and his wife at a below market rate and was never publicly listed for sale, Issues relating to the above: 1. On August 24, 2015, Kingstowne LLP, a partnership controlled by prominent developer Warren Halle, asked the Fairfax County Board of Supervisors (‘Board") to rezone a valuable piece of property. The property is part of the Kingstowne Town Center Development Project (“Kingstowne”), which Halle and his companies have been developing for the past 30 years, 2. The property that Halle wanted rezoned ("the Kingstowne Property’) is located in the district served by Supervisor Jeff McKay, whose recommendation on zoning requests in his district carries great weight with the full Board 3. The Kingstowne rezoning request was scheduled for a public hearing and vote on June 7, 2016, On that day, Supervisor McKay moved to defer the public hearing and vote until June 21, 2016. McKay's recommendation was unanimously approved by the full Board 4, On June 6, 2016, one day before the deferral of the rezoning application, an entity named Roxann LLC was incorporated in Virginia by an attorney who has incorporated several other entities for McShay Communities. McShay Communities is a high end residential building company owned by Supervisor McKay's friend, Michael McGhan, 3. Atthe June 21, 2016 public hearing, Supervisor McKay recommended and voted for the Kingstowne Property rezoning application, which was approved by the full Page 2 10. "1 Board. He did not disclose any conflict of interest before recommending and voting on the rezoning, One day after the vote, on June 22, 2016, BC Consultants, a land planning and surveying company, submitted a land disturbance permit application for a vacant lot located at 7016 Roxann Road ("the Roxann Road Property’) in Alexandria, VA. The developer listed on the permit application was McShay at McDonald Estates LLC and the applying owner was listed as McShay at Pohick River LLC. But the Roxann Road Property was not owned by McShay at Pohick River LLC at this time, so this portion of the application was false. The Roxann Road Property was instead owned by Kingstowne Commercial LP, another Halle controlled entity. The lot was one of four parcels owned by Kingstowne Commercial LLP. The land disturbance permit was disapproved on August 5, 2016 and resubmitted on September 22. 2016. A building permit for a new single family dwelling at the Roxann Road Property, with a declared value of $265,000.00, was applied for on September 26, 2016 The applicant was James Mueller, with the same listed address as McShay Communities. An additional contact listed on the application was Roxann LLC. The building permit failed review on three occasions, but all issues raised in the review process were listed as corrected by December 19, 2016. On January 16, 2017, Halle-controlled Kingstowne Commercial LP transferred both the Roxanne Road Property and the property across the street, located at 7015 Roxann Road (‘the Roxann II Property"), to Roxann LLC. The names of the seller and buyer to the transaction were withheld from the public record by request. The recorded price for the transfer of both properties was $365,000.00. There is no record of any liens filed against the properties The building permit for the Roxann Road Property was approved on February 16, 2017. A permit was issued on February 24, 2017. Roxann LLC then built an upscale residential house on the Roxann Road Property. The house passed inspection on November 9, 2017. On November 14, 2017, the Roxann Road Property was transferred from Roxann LLC to Supervisor McKay and his wife Crystal for a recorded price of $850,000.00. The names of the seller and buyer to the transaction were withheld from the public record by request. That same day, the McKays obtained a deed of trust on the property in the amount of $582,515.00. The property was never listed in MLS. The assessed tax value of the property was $853,000.00. Given its size and location, the property was purchased at a below market price. McGhan lives in a house on the Roxann II Property. Ata minimum, Supervisor McKay should provide a detailed explanation for the above series of actions. There are also additional facts that should be ascertained and can probably only be developed through the vehicle of a grand jury subpoena for documents and testimony. Several important questions remain, among them: Page 3 1. What if any documents were executed by Supervisor McKay, Michael McGhan, Warren Halle and/or entities controlled by them between June 6 and June 21, 2016? 2. Was $365,000.00 actually paid for the Roxann Road Property and the Roxann I! Property when they were transferred from Kingstowne Commercial LP to Roxann LLC on January 16, 2017? If so, who made the payments and/or provided the funds used? 3. How much money, if any, did Supervisor McKay and his wife pay in total for the Roxann Road Property? If money was paid, where did it come from? 4, What were the financial arrangements between the McKays and Michael McGhan with respect to the Roxann Road Property? As detailed more fully below, these allegations do find some support in the publicly available records, and Supervisor McKay may have acted illegally, unethically, or improperly, but it is too early to say whether that is so. However, further investigation is unquestionably warranted. There is little doubt that if the facts behind these events were presented to a federal law enforcement agency, there would be a high interest in further investigation. Il. Detailed Factual and Historical Background A. Key Players + Jeff McKay: the Supervisor for the Lee District of Fairfax County, VA. + Warren Halle: a prominent developer developing the Kingstowne Town Center. Owns the Halle and Kingstowne family of companies, which includes the Halle Companies; Halle Enterprises, Inc.; Kingstowne Commercial LP; and Kingstowne Associates LP. * Michael McGhan: a residential developer and a personal friend of McKay, Owns the McShay Communities family of companies, which includes McShay Communities, MoShay at McDonald Estates LLC, McShay at Pohick River LLC, and MeShay at Madison Lane LLC. * Glenn Silver: a real estate attorney who has represented McShay Communities for years and the apparent sole member of Roxann LLC, * Roxann LLC: A shell LLC with the apparent sole purpose of facilitating the Roxann Property transaction described below. B. The Roxann Property Transaction Kingstowne is a large planned community and town center located in Fairfax County, Virginia, owned by Halle and first developed in 1985. Over the next 30 years, Halle faced significant financial constraints and opposition in developing Kingstowne Residents opposed development plans that would lead to increased traffic, resulting in the Fairfax County Planning Commission, on occasion, denying Halle's plans for more