State charges ex-custodian of $100 million with crime

By Jeff German

Monday, March 2, 2009 | 2 a.m.

The Nevada attorney general’s office has filed a criminal complaint against the man behind the collapse of Southwest Exchange Inc. in 2007.

Donald K. McGhan was quietly charged in January with one count of being an “unlawful intermediary in tax-free exchanges,” a felony punishable by up to four years in prison.

At the height of its business, Southwest Exchange held nearly $100 million for about 130 clients looking to reinvest profits from the sale of real estate. The clients, under an IRS-sanctioned practice, were able to delay paying taxes on the cash deposited with the company as long as the money was withdrawn within a certain time period to buy new property.

But McGhan, who once had aspirations to make it big in the breast implant manufacturing industry, stands accused of looting much of that money to further his own lavish lifestyle and business practices.

Evidence surfaced in the massive civil litigation against McGhan suggesting he traveled the world aboard a 19-passenger luxury jet at the expense of his clients.

In a four-page affidavit attached to the attorney general’s complaint, a state investigator stated that none of the Southwest clients he interviewed knew that McGhan was unlawfully putting their money into third-party investment accounts for his own benefit.

The investigator said he traced more than $86 million to those investment funds.

One of the Southwest Exchange victims identified by the investigator was former Las Vegas entertainer Wayne Albritton.

In January Albritton, who now lives in Palm Springs, told the Sun he lost more than $433,000 he had deposited with the company, but was encouraged by just-announced court settlements with the investment firms that should end up returning a large portion of the money stolen from Southwest’s clients.

McGhan, who is expected to make an appearance on the state charge in Justice Court today , is also in trouble with federal authorities, including the FBI and IRS, which sources said are winding down their own criminal investigations.

His attorney, Dominic Gentile, declined to comment on the state complaint.

“We are trying to work out a global resolution with a number of state and federal agencies, and I don’t think it’s appropriate to comment right now,” Gentile said.

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For the second time in a month, courthouse marshals have seized a firearm from someone trying to enter the Regional Justice Center.

On Tuesday , during the morning rush of courthouse traffic, marshals arrested Tykeba R. Sterling, 19, of North Las Vegas, as she was passing through the metal detector at the main entrance.

According to the arrest report, Marshal Jason Dean took Sterling into custody after a small Derringer handgun was discovered in her purse. The chrome weapon, which was unloaded, turned out to be stolen from Colorado, the report said.

On Jan. 29, Dean also arrested Jonas Maxwell, 51, a former Las Vegas cabbie, carrying a loaded semi-automatic handgun through the metal detector. The weapon was found in his backpack.

The marshals say they intercept only a couple of weapons a year at the courthouse.

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The mystery continues over Rick Rizzolo’s federal grand jury subpoena.

Rizzolo was ordered to make an appearance before the panel last Tuesday, but word at the courthouse is that his testimony was put off a couple of weeks.

Just why federal prosecutors are hauling the former Crazy Horse Too owner before the grand jury, less than a year after he finished his prison term, isn’t known for sure.

But there’s been plenty of speculation it has something to do with a2-year-old IRS investigation of former City Councilman Michael McDonald.

At a deposition in a civil case last November, McDonald took the Fifth Amendment and refused to answer questions about his dealings with Rizzolo over the years.