Bankruptcy no bailout for figure in charity loan mess

Lincoln Lee has filed for bankruptcy, but I'm not sure that's going to make his life much easier.

Far from ending the questions surrounding Lee's once-profitable partnership with Brad Esposito and the stewardship of their company Med Lien Management, which only managed to default on a $2.2 million loan from a local children's charity, it appears to have compounded his trouble.

So far his bankruptcy filing is incomplete, but what is beginning to emerge is a picture of a fellow who not so long ago had plenty of money coming in. Whether he made prudent use of it is in question. And if he defrauded the Las Vegas-based Miracle Flights for Kids nonprofit, as is alleged in an ongoing litigation, it's possible law enforcement authorities will have questions of their own to ask him.

Through attorney Rena McDonald, Lee lists a Miracle Flights as a creditor owed $3.52 million, which includes the outstanding interest on the loan. We know from documents that already have surfaced during the litigation that while it was going out of business, Med Lien was actually seeking loans worth $5 million as part of its deal with the Miracle Flights board, which has since disbanded.

Esposito, Lee's estranged partner and the husband of Lee's sister, is also listed as a business creditor owed an unknown amount. Esposito reported fraud allegations at the company he co-founded to Metro. The status of that investigation hasn't been made public.

Lee also says he owes former Miracle Flights board member Michael McDonald money in the form of a "Business Debt" — he's just not sure how much. McDonald, who was on the board but abstained from voting when the loan was approved, denies steering his friends from Med Lien Management to the Miracle Flights money pot.

McDonald, the current chairman of the Nevada Republican Party and a former Las Vegas city councilman and Metro cop, says he did nothing wrong when he accepted employment from Med Lien shortly after the loan was approved.

Miracle Flights attorney Peter Christiansen is scheduled to interview Lee this week, according to court documents. Perhaps his efforts will gather more details about the defaulted loan than are currently available.

I know from personal experience that bankruptcy can be a painful process. The good news is, the court and its trustees are experienced professionals. They ask tough but fair questions. They are thorough, very thorough, and have seen every sleight-of-hand trick imaginable.

Miracle Flights has courted its share of controversy in recent years. Miracle Flights co-founder Ann McGee entered the headlines in March when Review-Journal columnist Jane Ann Morrison reported the charity's top official had secured a $2.3 million retirement plan. That retirement plan, one informed source says, caused plenty of turmoil on the board.

Miracle Flights was able to shower McGee with big benefits and make imprudent multimillion-dollar loans because it received a $40 million windfall in 2012 thanks to the settlement of a class-action lawsuit alleging excessive fuel surcharges against British Airways and Virgin Airlines, according to published reports.

So you might ask yourself why it needed to start making hard-money loans to suspect medical lien businesses.

But now the spotlight is on Lee, who is accused in court documents — and by his own sister — of squandering the borrowed assets of Med Lien Management on a long list of items. Although to date the accounting documents associated with the company have been sparse, the partial ledger that has surfaced reveals others, including Esposito and McDonald, also profited from Med Lien's questionable business plan. Lee's bankruptcy documents list creditors Esposito and McDonald as sharing the same business address.

With so many debts way past due, the questions for Lincoln Lee only figure to get more difficult from here.

John L. Smith's column appears Sunday, Tuesday, Wednesday, Friday, and Saturday. Contact him at 702-383-0295, or jsmith@reviewjournal.com. On Twitter: @jlnevadasmith.