Kids’ Medical Charity Says It Was Rolled


LAS VEGAS (CN) – A medical lien management firm defrauded a charity that provides free medical flights for children of $2.2 million, the nonprofit claims in court.
     Miracle Flights for Kids says its free medical flights for gravely ill and injured children might have to be curtailed due to fraud by one or more executives at Med Lien Management, who caused a default on a $2.2 million loan.
     The June 25 lawsuit in Clark County Court claims that Med Lien Management and its co-defendant principals, Lincoln G. Lee and Brad Esposito, “callously defrauded” the charity, “endangering its mission and the well-being of countless children.”
     All parties to the lawsuit are based in Clark County, whose seat is Las Vegas.
     Miracle Flights says it loaned $2.2 million to Med Lien in April 2013, secured by a promissory note and liens.
     Med Lien was to repay a total of $3.52 million via six interest-only payments of $220,000 every six months, followed by a lump-sum payment of $2.2 million in April 2016, according to the complaint.
     Med Lien buys medical liens at a discount from doctors, and profits when they are paid through personal injury claims. It said it would use the money to generate capital, and Esposito and Lee “expressly agreed in writing to guaranty” the loan, Miracle Flights says.
     Med Lien made its first three interest payments but missed the payment due on April 30, Miracle Flights says, and it notified Med Lien of the missed payment on May 7.
     Med Lien responded via email on May 13: “Unfortunately, it appears that our client has been the victim of a devastating fraud by a former employee. Hundreds of thousands of dollars has been removed from the company’s accounts without authorization and our client’s computer files appear to have been intentionally corrupted,” according to the complaint.
     Med Lien said it reported the fraud to Las Vegas Metropolitan Police Department, which opened a criminal investigation. But Miracle Flights is leery: “Med Lien curiously discovered it was the victim of fraud and decided to notify LVMPD … just one day before responding” to the missed payment notice, the charity says.
     Med Lien claims it is trying to restore its computer files to determine which medical liens can be collected to pay the past-due balance, but neither the company nor Lee and Esposito “provided any assurances that they intended to make good on their obligations,” Miracle Flights says.
     Without the money due from Med Lien, Miracle Flights says there will be a “grave impact … upon the many children and families in need of medical travel and care.”
     Miracle Flights has demanded copies of documents, reports and statements made to police, a summary of outstanding loan obligations and uncollected liens, an accounting of all money Med Lien paid out since getting the loan in 2013, and any transfers of liens used to secure the loan.
     Miracle Flight says Esposito and Med Lien produced only some of the documents, among them a document called “Narrative of Crime Scheme.”
     “In the Narrative, Esposito alleges that his partner, Lincoln Lee, (the other personal guarantor on the Lending Agreement and Promissory Note) intended to defraud Med Lien investors ‘from the beginning,'” according to the complaint.
     It adds: “Esposito claims Lee used investor and company money to fund his own personal lavish lifestyle, all without Esposito knowing.
     “Esposito alleges Lee spent Med Lien’s money on jewelry, home utility bills, colon cleanses and an $115,000 dune buggy.”
     Still leery, Miracle Flights says, “it bears repeating” that Esposito is the sole officer and director of two companies from which he claims Lee siphoned money, and one of those companies is the source of all the medical liens used to secure the $2.2 million loan from Miracle Flights.
     Miracle Flights says that more than a year after the medical liens were to be assigned to it, Esposito’s company collected at least one lien settlement, but never notified patients the liens had been assigned to Miracle Flights.
     “Esposito has not filed any civil legal action to regain control of the company or its assets” and only in March bothered to inform authorities that “his company was missing millions of dollars,” Miracle Flights claims.
     “By his own account, Esposito, who is equally as responsible for repaying lenders millions of dollars, inexplicably made no attempt to involve law enforcement for a period of five months after learning of the fraud and missing funds.
     “Esposito’s claimed complete lack of knowledge, if it is to be believed, is evidence of an absolute breach of his duties,” Miracle Flights says.
     Miracle Flights seeks accounting, an injunction and punitive damages for fraud, conspiracy, breach of contract, conversion, bad faith and unjust enrichment.
     It is represented by Peter Christiansen, who was not immediately available for comment. Nor were Med Lien, Esposito or Lee.

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