McDonald pulls state GOP into Med Lien fiasco

Nevada Republican Party Chairman Michael McDonald just slipped a little deeper into the morass surrounding Med Lien Management's default on a $2.2 million loan from a local children's charity.

And he's taking the state party with him.

McDonald, individually and in his role as leader of the state GOP, was added Saturday as a defendant in a lawsuit filed on behalf of the Miracle Flights for Kids nonprofit, which alleges it was swindled out of the loan it made to Med Lien's management. McDonald is accused civilly of participating in a fraud scheme and betraying his fiduciary duty to the charity.

A former Metro cop and Las Vegas City Councilman whose career is riddled with questionable ethical decisions, McDonald was named as part of an amended complaint by attorney Peter Christiansen.

It should come as no surprise.

In recent weeks we've learned that, McDonald's denials aside, he apparently played a much larger role in securing the loan to the slippery medical lien collection outfit than he's admitted. Company documents show McDonald received a $200,000 payment from Med Lien in May 2013 just days after the Miracle Flights loan funded. The money smacks of a finder's fee, and the lien company rapidly ran through the $2.2 million.

The addition to the lawsuit of McDonald's role as state party chairman wasn't a gratuitous political move. McDonald and Med Lien co-owner Brad Esposito were asking for it. Esposito informed investors in a January 2014 letter written on company letterhead that he had "moved the physical office to the Nevada Republican Party Headquarters in an effort to help the Party. I am the Fundraising Director and Senior Advisor to the Chairman." A deposition taken of a former co-owner of the company confirmed the move was part of a strategy to use the party office, and Med Lien emails also mention the plan.

For their part, McDonald and Esposito have placed the blame for the company's financial woes on former co-owner Lincoln Lee, Esposito's brother in law. But in a deposition, Lee has responded that the troubles at Med Lien continued for months after he no longer was involved.

In an interview, McDonald denied introducing the loan deal and Med Lien's owners of record in the spring of 2013 to the Miracle Flights board at a time he was one of the charity's five voting members. Company emails contradict him and indicate he was part of the plan from the start.

McDonald denied having ownership influence at the company during the time he served on the board. Med Lien's 2013 IRS filing shows otherwise. Although McDonald abstained from the actual vote to approve the first part of what was planned to eventually be a $5 million package, Med Lien's 2013 tax documents show he was a 33-percent owner shareholder in the lien company. He resigned from the Miracle Flights board in June 2014.

Whether any responsible adults are on duty these days at the state GOP remains uncertain. But what is clear is the Med Lien loan debacle is raising serious issues of honest services fraud, and that can only hurt the increasingly isolated political outpost's flagging credibility.

Maintaining direct connections to a $2.2 million hustle of a local children's charity can't help the Republican brand entering the 2016 campaign.

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