Some lost, others won with Miracle Flights loan

On the way to defaulting on its $2.2 million loan from a local charity, Med Lien Management brought in Lisa Esposito to help organize the office.

Esposito is the wife of lien company co-owner Brad Esposito and the sister of co-owner Lincoln Lee. What she describes in her signed affidavit is a tale of mismanagement and malfeasance on the part of her brother and others associated with the company.

To hear her tell it, she spent many hours trying to keep the ship from sinking as its investors benefited from the loan it received from the Miracle Flights for Kids charity.

"I was not able to receive any compensation for months of working at Med Lien Management because the company was not collecting nearly enough money to cover all the expenses and payroll," she wrote.

She may not have made money, but some people did.

A single ledger for July 2014 showed hundreds of thousands of dollars going off the books in what was described as loans to shareholders. Among the recipients: former Miracle Flights board member and Med Lien new-hire Michael McDonald, the chairman of the Nevada Republican Party and a former Las Vegas city councilman. One ledger entry notes $200,000 going to "McDonald Nevada."

In a recent interview, McDonald denied receiving a loan, or committing an ethical breach, noting that he paid taxes on his income as a Med Lien government affairs consultant. He found nothing inappropriate about the timing of the business relationship. Although he was on the board at the time the loan was approved, and was a close friend of Brad Esposito, McDonald didn't vote on the contract.

McDonald's longtime friends on the five-member board did vote to approve the loan. That includes Richard Henry and Las Vegas Color Graphics owner Larry Scheffler, who was then the board's chairman and had been associated with Miracle Flights in an unpaid capacity for more than two decades.

Reached Tuesday, Scheffler declined to comment. Peopole close to the charity say Scheffler and other former board members are bound by a confidentiality agreement.

McDonald in an interview denied connecting Med Lien with Miracle Flights for the loan, which according to documents filed with the court in a civil case was actually intended to go as high as $5 million.

Eventually, Scheffler will need to tell his side of the story. He signed the loan agreement with Brad Esposito and Lee. It's not speculation to surmise that Scheffler knows more about the inner workings of Miracle Flights than anyone outside the charity's founders, Ann and William McGee.

Scheffler's name may sound familiar. Back in 2000, he was in the middle of then-Councilman McDonald's ethics imbroglio. McDonald was nailed for lobbying city officials to buy the financially troubled Las Vegas Sportspark. It was a project in which Scheffler held a minority ownership. He also employed McDonald at the time in his printing business as the vice president of corporate development at a $52,000 annual salary.

Sportspark, in Summerlin, struggled financially and in a short time defaulted on its loan. McDonald encouraged members of the council to consider having the city buy Sportspark but initially neglected to inform them he was on the payroll of one of its owners. His advocacy violated state statute.

Nevada Commission on Ethics Chairman Pete Berhard wrote in a July 13, 2001, opinion that although there was no evidence the councilman had directly benefited from the lobbying, "By his conduct relating to the Sportspark issue, Councilman McDonald used his position as a Las Vegas City Councilman to secure or grant unwarranted privilege, preference, or advantage for himself by attempting to benefit and please his employer (and thereby curry favor for himself so that his primary source of outside income would be protected), contrary to his duty to avoid conflicts and serve the public trust."

That was written more than a decade ago.

If McDonald isn't careful, people are going to start to wonder whether history has repeated itself.

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.