McDonald is focus of FBI investigation

Erin Neff

Friday, Sept. 1, 2000 | 11:32 a.m.

Federal investigators have interviewed city officials and civic leaders about Las Vegas City Councilman Michael McDonald's recent public actions and personal lifestyle, sources say.

Six different City Hall sources, all speaking on condition of anonymity, said two current Metro Police investigations helped spark increased federal interest.

Police investigations into the opening of a controversial church and McDonald's alleged attempt to broker the sale of Las Vegas Sportspark helped breathe new life into a long-standing, but quiet, federal probe, the sources said.

"We don't answer inquiries as to confirming or denying an investigation," FBI spokesman Daron Borst said.

One City Hall official who was interviewed by FBI agents believes the bureau is looking into McDonald's lifestyle.

"I sense that they've been watching him for a while and were waiting for an opportunity to pounce," said the official, who met with two agents. "They asked questions like, 'How does he afford to go on vacations?' and 'How does he afford his house and his cars?' "

Metro Deputy Chief Mike Hawkins declined to comment on the two investigations his Intelligence Division is conducting.

Another city employee familiar with the probe said law enforcement officials in Las Vegas, Southern California and Chicago are sharing information about McDonald and his friends' regular trips to those areas.

McDonald did not return repeated calls to his office and hung up when reached on his cell phone.

City Manager Virginia Valentine said she has not spoken to anyone with the FBI and is not aware of a federal investigation. She said she also has tried to stay out of the way of Metro investigators.

"I don't really know what's going on with the (Metro) investigation," Valentine said. "They've interviewed a lot of people, although I don't know exactly who they've talked to."

Valentine said the investigations, while not good public relations for the city, have not affected operations.

"I think just the whole idea that we need an investigation -- well, it's not good," Valentine said. "I don't think anybody's afraid of the investigation, and it's not affecting how we operate."

Mayor Oscar Goodman, who is out of town and could not be reached for comment this week, has previously said he believes he has taken the appropriate step by asking for the Metro investigations.

"If there's any doubt, it's important that we know what really happened," Goodman said.

Several people who have been interviewed by Metro or the FBI said they have been told McDonald's aide, Rick Henry, is a key target of the investigation.

One person said investigators are scrutinizing financial reporting documents from McDonald's 1999 re-election campaign. Henry, who is McDonald's ward liaison, took a leave from his City Hall job to run McDonald's campaign.

Metro Police have already been through the 10th floor offices of the mayor and council, although the council members reached by the Sun declined to comment on the investigations.

One probe involves allegations that McDonald attempted to broker the sale of Las Vegas Sportspark to the city or a private party to help free his boss, Larry Scheffler, and Scheffler's partner, Linda Fernandez, of a bad investment.

McDonald works for Scheffler at Las Vegas Color Graphics. Fernandez is a business partner of Scheffler's.

The other Metro investigation involves the controversial opening of a church near a building proposed as an adult club. The church was run by Annette Marie Patterson, the sister of Crazy Horse Too strip club owner Rick Rizzolo.

McDonald is a longtime friend of Rizzolo's. Several City Hall employees say McDonald and Henry had some role in helping the church find the location in an attempt to scuttle the proposed adult club that would compete with Rizzolo's business.

City code prohibits adult clubs from opening within 1,000 feet of churches or schools. The Church for Universal Life Enhancement opened just 219 feet away from the proposed club.

McDonald has walked a thin ethical line with some of his council actions and behavior in public office. The Nevada Ethics Commission cleared him of any wrongdoing in July stemming from a 1999 vote granting Republic Services of Southern Nevada an extension to its exclusive trash-hauling contract, worth an estimated $1.5 billion.

But with harsh words the commissioners made it clear that McDonald should have disclosed his friendships with Republic's president Steve Kalish and general counsel Robert Groesbeck and his romantic relationship with Republic employee Jennifer Simich.

Numerous City Hall officials interviewed by Metro think the Sportspark case contains enough evidence to find McDonald guilty of ethics violations. Local resident Robert Rose has filed complaints with both the state and city ethics boards.

On Monday police interviewed secretaries who work in the council offices at City Hall. Investigators also have been asking questions at Piero's restaurant about a fund-raiser to benefit a charity with which both McDonald and Rizzolo are involved.

Timing seems to be a key factor in both the Sportspark and church investigations, as certain information in each case appears to call McDonald's actions into question.

In the Sportspark case, McDonald was publicly accused at the Aug. 16 council meeting of attempting to broker a sale of the financially strapped recreation center.

McDonald said he, Rizzolo and Rizzolo's attorney, Dean Patti, only toured the park to scout a site for a charity softball tournament.

Don Schlesinger, the third Sportspark partner, said he found it odd that the three would tour the entire facility, including the hockey rinks. He thought they were there as potential investors, not just prospective event holders.

Days later, Schlesinger said, he was asked to sign a contract that would have sold the Sportspark to the city of Las Vegas or a third party. The contract was drafted by Patti and notarized by the notary agent Patti's firm uses.

McDonald said the Sportspark was not suitable for the tournament. Charity officials decided to scrap the tournament and instead hold a sports memorabilia auction at Piero's restaurant, McDonald said.

However, several people invited to the charity event told the Sun they knew about the planned event at Piero's even before McDonald, Rizzolo and Patti toured Sportspark.

Police also have conducted interviews at the Las Vegas Convention and Visitors Authority. Several LVCVA board members said they overheard McDonald, the board chairman, talking about the possible sale of Sportspark after one of the meetings.

Beyond the statements made about the possible sale of Sportspark, investigators have the partially executed contract, which would have sold the park to the city or a private party.

That contract specifies the amount each of the three Sportspark partners would receive from any sale.

Fernandez, a 58 percent partner, would get $1.3 million; Schlesinger, a 36 percent partner, would get $300,000; and Scheffler, a 6 percent owner, would get $164,000.

The balance from any sale -- estimated at between $7.8 million and $8.7 million -- would be used to pay off the park's debt.

If the debt was paid off and the three partners were to receive more than the $1,764,000 total, a broker named on the contract would get the difference.

The broker, Bert Cirincione, is not registered with the state as a licensed broker, but Scheffler said Cirincione has handled transactions for him in the past.

Metro detectives were in council chambers for the Aug. 16 meeting when all of that information was publicly discussed, even though Goodman only officially asked for an investigation at the end of the Sportspark discussion that day.

In the Metro investigation about the church, sources in the city's planning and attorney's offices told the Sun they had been informed of the church's presence by McDonald's office even before the church moved in.

Since both Metro probes centered around McDonald and his relationship with Rizzolo, the investigations drew interest from the FBI, which had already been keeping tabs on the councilman, sources said.

One council member's staffer said he has been aware of a federal investigation of McDonald for more than a year, when his spending habits began raising eyebrows.

In 1999, McDonald moved into a $280,000 home in the upscale Canyon Gate Country Club at a time when he was only drawing salary from his $38,000 council position.

At the time McDonald said he could afford the home because he only leases it and "gets a good deal."

In addition to the home -- now assessed at $350,000 -- McDonald has been seen driving a Lincoln Town Car, a Lincoln Navigator, a Chevrolet Suburban and Chevrolet Camaro.

McDonald began work early this year at Scheffler's Las Vegas Color Graphics, making $52,000, according to a court deposition in another matter.

He retired from Metro Police in 1999. During that time, McDonald won three separate lawsuits -- totaling $400,000 -- resulting from two injuries sustained while on duty and one from a fall in a local movie theater.

In the past McDonald has said he can afford to lease the home, take vacations and buy the vehicles because his sister has invested his settlement money wisely. McDonald also has said that he does not know how his money is invested.

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