Fall guy’s testimony keeps heat on McDonald

Lincoln Lee appeared made to order as a patsy.

He was a partner in Med Lien Management, had his name on the paperwork, and was apparently willing to help cook up a plan to score a $2.2 million loan in 2013 from the Miracle Flights for Kids children's charity in concert with partners Brian Esposito and Nevada Republican Party Chairman Michael McDonald.

But when the loan defaulted in 2014, and Miracle Flights began to pursue a lawsuit against Med Lien Management, Lee found himself cut out of the partnership and named by Esposito as the culprit in a loan fraud. To that end, Esposito assembled a notebook full of potentially damning evidence, and McDonald contacted his former employer Metro to press the matter.

Lee must have felt like a real rube. One month he was flying high, the next he was accused of being a criminal mastermind by his own brother-in-law, Esposito, and the head of the Republican Party.

Lee declared Chapter 7 bankruptcy this year and listed the $3.52 million debt to Miracle Flights (the loan with interest). As part of the lawsuit associated with the loan, and what Miracle Flights attorney Peter Christiansen in court filings has called a fraud scheme, Lee recently gave a deposition under oath.

Under penalty of perjury and the possibility of incurring bankruptcy fraud, and represented by attorney Rena McDonald, Lee shed a decidedly different light on Michael McDonald's role in securing the loan and with the medical lien company. (The attorney and the political party boss are not related.)

Although he's been accused of profligate spending and finagling a fraud, Lee denies he misspent Med Lien assets following the loan from Miracle Flights. He's no high roller now, that's certain. When asked how he's paying his bills these days, he replied, "I mean, it's embarrassing for me to say. But mostly — mostly my mom right now."

Speaking of embarrassing, Lee's deposition sheds further critical light on the actions McDonald is suspected of taking to procure the loan from the charity and transfer it to a company in which he held a secret ownership interest.

"Mike was brought on to Med Lien Management in order to help procure loans," Lee said during the Aug. 13 examination. "Because that was a condition of why he is getting 33 percent of the company — in order — you know, because — that's what he was bringing to the table."

Lee said he discovered after the fact that McDonald had received a $200,000 finder's fee for procuring the loan from the charity, where he served as a member and was among friends. That directly contradicts McDonald's public statements that he didn't know who introduced Med Lien to Miracle Flights, didn't benefit from the loan, received no finder's fee and wasn't an owner of the company.

When Esposito and Lee made Med Lien's pitch before the Miracle Flights board in April 2013 meetings, Lee recently swore under oath, McDonald already was a part owner of the company.

Then Lee was asked, "Did you ever hear Michael McDonald tell anybody on the board in either meeting that he had an ownership interest in the company that was obtaining the loan?"

"I don't think so," Lee said.

As for the finder's fee, Lee said he was concerned it would tilt the company's fragile profit margin: "It was devastating because when that happened, I knew then that, you know, you can't take that — you know, to make the business model work, you can't take that kind of chunk out of it."

Lee said McDonald and Esposito were directly responsible for removing him from the company in December 2014. To his knowledge, he said, McDonald still owns part of Med Lien.

Lee signed what he called a "partner buyout agreement" drafted by attorney David Gardner, who juggles his busy legal career with duties as a Republican member of the state Assembly. Who knows, perhaps Gardner was doing the chairman of the state GOP a professional favor.

In the deposition, Lee said he initially was reluctant to go along with the idea of handing an equity position to McDonald.

"But, you know, I did it," Lee said. "I agreed to it because I — he was chairman of the republic — Nevada Republican Party and has a lot of connections and said raising as much money as I could ever need wouldn't be a problem in order to, you know, kind of make Med Lien a big company."

That's unlikely to happen now.

His own credibility challenges notwithstanding, Lee's deposition makes a strong argument that McDonald betrayed his fiduciary duty as a board member of a local children's charity and abused his status as the head of the state GOP.

It also makes clear that the patsy Lincoln Lee isn't going away quietly.

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