FEDERAL CASE: Tax probe targeting McDonald - News

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Jul. 26, 2007
Copyright © Las Vegas Review-Journal

FEDERAL CASE: Tax probe targeting McDonald

Investigators issue subpoenas related to ex-city councilman

By ADRIENNE PACKER
REVIEW-JOURNAL

Michael McDonald
Former Las Vegas City Council member mentioned in corruption trial

The federal government is ratcheting up a tax fraud investigation of former Las Vegas City Councilman Michael McDonald, sources familiar with the case said.

Last week, subpoenas were delivered in relation to allegedly questionable tax returns filed by McDonald. It was unclear when the federal grand jury will convene to hear the government's case against McDonald.

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McDonald and his lawyer, Richard Wright, declined to comment.

McDonald, a former Las Vegas police officer, is no stranger to investigations. In the mid-1990s, police scrutinized McDonald's relationships with Michael Galardi and Rick Rizzolo, former strip club owners now in federal prisons.

McDonald was cleared of any wrongdoing.

In 2003, McDonald's financial records were obtained by federal investigators as part of their investigation into local government corruption connected to Galardi, but McDonald was not indicted.

"What did they recently find out that they didn't know four years ago?" asked attorney Charles Kelly, a former federal prosecutor who has closely followed the government's political corruption case. "If they didn't recently find something out, why the hell are they going forward at this time?"

Kelly's theory: "Probably because they can."

McDonald's name was prominent during the most recent political corruption trial, of real estate consultant Donald Davidson.

Davidson was accused of attempting to bribe McDonald in 2002 and was convicted earlier this month.

In phone calls secretly intercepted by the government, Davidson and former Clark County Commissioner Lance Malone discussed whether McDonald was a "player" and planned meetings with the councilman.

Initially, McDonald seemed interested in doing business with Davidson, but McDonald soon distanced himself from the two men. Like Davidson, Malone was later prosecuted by the government.

McDonald spoke with Malone after an April 2002 luncheon with Davidson. McDonald's community liaison attended the meeting and testified that he believed Davidson attempted to offer McDonald bribe money.

After the lunch, McDonald had called Malone.

"You're going to be in the middle of this whole thing, that's the one stipulation," McDonald said during the taped phone call.

McDonald is recorded on an intercepted phone call later that month talking to his former high school football coach.

"Son of a bitch tried to bribe me," McDonald said of Davidson.

On May 17, 2002, Malone told Davidson: "He doesn't want to get involved -- at all. I guess you made him very nervous."

In the spring of 2001, McDonald's phone was wiretapped by the FBI when it launched its investigation into whether elected officials were pocketing bribe money from strip club owner Michael Galardi.

Federal authorities also bugged the phones of Galardi and Malone.

When federal agents raided Galardi's strip clubs on May 14, 2003, McDonald was believed to be a subject of the investigation.

Although McDonald was not indicted, the taint of the corruption probe helped a political novice, Janet Moncrief, defeat him in his 2003 bid for a third-term on the City Council.

The charges against Davidson were a spin-off from the Galardi probe.

During Davidson's trial, Assistant U.S. Attorney Daniel Schiess pointed out to jurors that Davidson never paid taxes on consulting fees he collected from various developers.

McDonald ran his own consulting business while he was in office.

Kelly said there are larger targets to pursue than an elected official who lost his City Council seat in June 2003. The election took place less than a month after the federal government disclosed its sweeping corruption probe.

During Davidson's trial, Schiess suggested that Eskander Ghermezian, a Canadian billionaire who owns Triple Five Nevada Development Corp., funneled money through Davidson's personal banking account to pay local politicians.

Former Clark County Commissioner Erin Kenny, the government's star witness, said that after she voted in favor of a proposed Triple Five casino in the Spring Valley neighborhood in January 2000, Ghermezian and Davidson visited her at her husband's office.

"He said he owed me a life debt," Kenny said of Ghermezian.

In April or May, Davidson began delivering Kenny $3,000 a month. The payments continued until May 2003.

"You have this Ghermezian smoking gun laying there that the government wants to ignore," Kelly said. "It's so offensive. McDonald is a toothless tiger at this point. Now they're going to kick him around.

"Make it a fair fight. Go after Ghermezian, who has the money to hire a bunch of high-powered attorneys"

Ghermezian has repeatedly denied doing anything unlawful in connection with his attempt to develop a casino and shopping center on the western edge of the county.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. scott wrote on September 12, 2007 04:43 PM: Never met him, never want to. Just looking at him, you "know" there is no good going on - all around him. What about this land deal, under value?...... Checkered Pants wrote on August 13, 2007 12:05 AM: These corrupt politicans thrive because of public apathy. Decorated cop or not, if he is proven to have been corrupt, and/or failed to pay taxes on his enormous consulting fees, he should go where another decorated officer, Duke Cunningham, went - to prison. Bob Rushing wrote on July 26, 2007 12:25 PM: McDonald has always struck me as a corrupt politician just too slick to get nailed. His fingerprints have been on too many shady dealings for him to be honest. Maybe he will finally get what he deserves. Annoyance wrote on July 26, 2007 11:51 AM: I can't believe they are after him, yet again! You can't find ANY wrong doings, let him be already. This is a witch hunt, not news. As the government continually harasses him do they not think that this hurts him.(Publicly, financially, & personally) Of all the people that were found rightfully guilty the one who is OBVIOUSLY innocent is paying the highest price. You publicly lash him at every turn. FOR WHAT... they have nothing on him and will never find anything, no matter how many times they look and with the use of extraordinary methods not used on the general public.(shame on you for doing so in the first place, he is an American citizen!) Steve Miller... you poor angry man, I have read your personal attacks on Mr. McDonald for years. Go find a new hobby, we know, you hate him!! Sal Sagev wrote on July 26, 2007 10:48 AM: Steve Miller?!?!? Are you even relevant? You purport to have help oust McDonald during the Moncrief run, but wasn't that all a scam perpetrated by you and your ilk (The Polish Prince)? Dude, go on with your life, your political career is done...you are washed up and you just sound like a bitter old coot who can't understand why people don't like him. Michael McDonald served his constituency well, and with honor. He served his community as a peace officer with pride and was a commended officer. Don't forget that friendships in Las Vegas span decades, and prior to our large population explosion, it was a small community. Because you know someone that is shady in their dealings, does not mean you take on those characteristics. Let the courts decide. If you have evidence to the contrary, put up or shut up, and become Former Loudmouth FauxPundit Steve Miller. Mike Christ wrote on July 26, 2007 09:15 AM: McDonald is just the tip of the iceberg that includes Rick Rizzolo and his band of thieves. City Hall should go down with Oscar Goodman on the roof and Jan Jones the basement. Along with them will go a platoon of other city and county officials not to mention a few sweating in Carson City and Washington DC. In the meantime, we can count on the public's usual apathy and the non-reportage in our local media both print and broadcast. Even after the exposure of corrupt Sin City judges in the LA Times the usual happened....Nothing. In the days of "Old Vegas" the politicians and crooks only wet their beaks as compared to scarfing everything in the trough...Including the trough. Don't be surprisd at some of the names you will be seeing in the news soon. Mike Former LV Councilman Steve Miler wrote on July 26, 2007 08:55 AM: While he served on the LV City Council, Mike McDonald was paid $5,000 per month by Rick Rizzolo to harass Buffalo Jim Barrier, and Crazy Horse competitors including Mike Galardi. To get McDonald and the City off his back, Galardi began paying McDonald $6,000 per month. In the meantime, McDonald was doing favors for Republic Silver State Disposal, and Billy Walters. From 1995 when he was first elected, to 2003 when we ousted him from office, he went from a $42,000 a year cop to multi-millionaire with unlimited guest privileges at Rick Rizzlo's $3 million dollar estate in Laguna Beach, and full comps at Piero's and the Newport Beach Ritz. Greg C. wrote on July 26, 2007 07:27 AM: McDonald is guilty, and is an awful human being. He was living in a huge house in Canyon Gate off the proceeds he gained from being a corrupt politician. He and his jerk friends wore fancy suits and carried concealed handguns. I applaud the government for finally doing something about him. steve wrote on July 26, 2007 07:13 AM: Who is this hack Charles Kelly and what does he know about information the govt has? Sounds like a friend of McDonald's. Is he saying since its been so long we should forget that McDonald was a crook? Has Mr. Kelly thought about govt resources? They are protecting us from terrorists and may finally have the opportunity to follow up on this issue. Short and simple, Kelly, get a life! Also for the RJ, this was a very slanted and one-sided article.