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OutFoxed

Fred Harper

On April 20, a number of people in the broadcast and public-relations fields received a succinct e-mail from Scott McDonald, managing editor of news for Channel 31: "I wanted to let you all know that I had made the decision to resign my position at KDVR Fox 31 in Denver. The decision comes for a variety of personal reasons."

But lurking behind these two benign sentences is a much more intriguing story -- one built upon murky motivations and questionable investments between McDonald and a surprising number of high-profile locals who may now be at risk of losing huge chunks of change.

The most prominent of these individuals -- self-proclaimed "troubleshooter" Tom Martino, who specializes in exposing scams on Channel 31 and a nationally syndicated radio show heard locally on KHOW -- isn't taking the passive approach to the potential loss of his investment with McDonald: a whopping $50,000. With the help of his lawyer, Jody Reuler, Martino has drafted a lawsuit naming both McDonald and his own station, which he feels bears some responsibility for allowing a management-level employee to brazenly lure co-workers into what he views as dubious financial schemes. "The attorneys I consulted said I really had to involve Fox since it was such a blatant example of workplace harassment and lack of supervision," Martino says. As a concession to the station, Martino is allowing Fox representatives to examine portions of the suit before it's been filed, but he says he'll officially place it before the courts by week's end unless he receives a satisfactory settlement. In addition, Denver District Attorney Bill Ritter confirms that an investigation has been initiated into McDonald's dealings.

A spokesman for Channel 31, noting that it's against station policy to publicly discuss personnel issues, refused to comment about the specifics of McDonald's departure, as did McDonald himself -- and a later call to Fox requesting a response to Martino's looming lawsuit went unreturned. However, McDonald was eager to weigh in regarding the suit -- "If Tom decides to file, that's his prerogative, but I don't think that involving Fox is productive or justified" -- as well as to talk in general terms about what he describes as "private business opportunities." Just as willing to chat were several people who say they loaned McDonald money or invested with him on losing or aborted propositions during the past year-plus, and more than a dozen others who confirm that McDonald approached them with similar offers that they rejected. Many of these people -- mostly staff members at either Channel 31 or Channel 9, where McDonald had previously worked, plus business types and public-relations pros with reputations for being smart and savvy -- are withholding their names, because they're embarrassed to find themselves in this situation.

Nevertheless, the anger and frustration felt by a number of these sources is mingled with genuine concern for McDonald, who's in his late twenties and universally described as bright and likable. Even Martino is only looking for his money back: His suit doesn't seek any punitive damages against either McDonald, whom he describes as a former supervisor, or Channel 31 -- unless, that is, he suffers additional injury to his status in the future. "My reputation could be tarnished as a result of this," he says. "It could seriously affect my credibility as a consumer advocate if people thought I'd fallen for something like this. Because we're not talking about lunch money.

"Maybe I was stupid," he admits, "but you've got to understand that this guy was my boss. He was somebody in authority who I worked with and who you assume had been checked out. If I'd met him anywhere else, he would never have gotten a dime from me. But he was presented as a young man with a lot of credentials -- as a newsroom leader."

McDonald, meanwhile, disputes Martino's characterization of his position at Fox: "I handled the logistics of the newsroom, but I had very minimal contact with Tom in regard to his stories." Moreover, he insists that there's nothing hinky in the deals, about which the media grapevine has been humming for weeks, and pledges that everyone who gave him cash will be reimbursed, with many set to receive a 10 percent fee above and beyond their investment to compensate them for their trouble. "Every person that was involved in any investment deal that I helped run made that decision willingly, after being provided with complete information on the deal itself," he says. "And I also made it clear to everyone that there was a risk involved. But I'm making Herculean efforts to repay people who are involved, sheerly to prove my good faith and to maintain my reputation."

In an effort to prove that these aren't merely empty promises, McDonald provided Westword with the names of two investors in a previous deal gone wrong -- an Internet radio operation that folded before it could go public -- who had gotten money back. But after supporting this portion of McDonald's story, the pair in question, both of whom gave McDonald comparatively small sums, noted that there remain several other investors in the defunct company who have not been repaid after well over a year. Furthermore, none of the investors in more recent transactions who spoke to Westword had received reimbursement by press time.

The willingness of these people to go into business with McDonald is explained in part by his sparkling resumé. Prior to joining Channel 31 in February 2000, he worked as a sports producer and news assignment editor at Channel 9, earning an Emmy nomination along the way. He's a well-known member of the community as well, with his name appearing regularly in the gossip and society sections of the local daily papers, thanks to his frequent attendance at glitzy soirees and charity functions.

Yet McDonald also has a fondness for gambling that was mentioned repeatedly by multiple sources who spoke to Westword and is documented in a January 9, 1999, piece written by Denver Post columnist Diane Carman. In the article, which sported the now-ironic headline "$50,000 Goes a Long Way," McDonald talked in detail about winning that amount, after taxes, playing the slots at Fitzgerald's casino in Black Hawk, a town he claimed in print to visit "five or six times a year." He told Carman that the most he'd lost at a gambling session was around $150, and the previous year he'd won "a few thousand dollars on a trip to Las Vegas." By way of explaining his windfall, he said, "I seem to have phenomenal luck, but this was amazing."

Did his luck run out? McDonald refuses to talk about gambling, but for whatever reason, sources say he began asking colleagues, associates and acquaintances to invest four- and five-figure amounts in assorted business opportunities beginning shortly after his big score in Black Hawk, and he continued to do so at a steady clip until resigning from Channel 31. These sources, including six individuals other than Martino who handed over big bucks, detail a series of pitches, many revolving around allegedly impending IPOs (initial public offerings) into which McDonald said he could get people at the ground-floor level with the help of a "rich uncle" in California who had special access to the firms in question. (One person says McDonald told him that the deals involved Jeffrey Verdon, an attorney in the California community of Irvine. But Verdon says he's only met McDonald "once or twice" and isn't in business with him.) The sources add that McDonald generally had professional-looking paperwork that appeared to back up his assertions and guaranteed that he would repay their investments if things didn't work out.

Later, toward the end of McDonald's Channel 31 tenure, many of these sources say, he phoned them requesting wads of cash to put into a Krispy Kreme doughnut franchise, assuring them that the advances would be repaid the following week. And that's not to mention personal loans apparently unrelated to any deals.

According to McDonald, such offers weren't entirely altruistic: "I hoped to gain some rewards from them." But, he says, "I also wanted to assist people I know in making money. I gained access through acquaintances to what appeared to be lucrative investment opportunities, and the only people I pursued to bring into those deals were people I had personal relationships with."

Not that all of these relationships were necessarily close -- especially in the case of Martino. He says he first met McDonald in the spring of 2000, when he joined Channel 31 in preparation for the July debut of the station's nightly newscast -- and his first impressions were good. But a couple weeks later, when they were still relative strangers, Martino says McDonald "started approaching me, saying he was a pretty successful investor, and since he knew I was successful financially, he wanted to share some things with me. And he said everyone at Fox was in on it."

At first, Martino says, he wasn't interested in the wares McDonald was peddling: "I pretty much only invest in my own endeavors and my own real estate, and I've done quite well." But McDonald was tough to dissuade, especially with regard to an IPO linked to Las Vegas-based National Airlines (which never actually went public). As Martino tells it, "I was hoping that if I told him 'no' enough times, he would stop asking -- and I was wrong. It got to the point where he was calling me relentlessly morning, noon and night, as many as thirty times a day. He called me in my car, at my radio show, at home." Worse, from Martino's perspective, was what he interpreted as McDonald's use of his position to subtly apply pressure. "He would say things like, 'If you need a photographer tomorrow, I can get you one all day -- and by the way, did you give any thought to that money you were going to let me borrow?'"

This allegation prompts a passionate denial from McDonald: "I never used my position or my title as a means to bring people into deals -- never." But Martino saw things differently. "I'm not saying I was intimidated," he says. "But it was uncomfortable. Here was a young guy, my boss, asking me for money every time I walked into the building. I was actually avoiding coming to the station because I didn't want to see him. So finally, I figured that if I gave him some money, he'd get off my back."

Rather than directly investing in the proposed National Airlines IPO, Martino says he loaned McDonald $50,000, receiving a promissory note in return. (McDonald counters by claiming that Martino's agreement is indeed part of the National Airlines deal and not a personal loan.) Martino adds that the entire transaction took place at Channel 31 headquarters and was so out in the open that upper management should have seen what was happening and taken steps to squelch it. "McDonald typed up the note, printed it out in his office and carried it out to me. Later I found out that blank promissory notes turned up around the assignment desks, which really pissed me off. Here's this guy who's working for a respectable company, and he's doing this stuff every single day, and nothing is done about it until it's too late."

Once the transaction was completed, Martino says McDonald gave him some breathing room -- but then, in December 2000, National Airlines filed for Chapter 11 bankruptcy protection. Martino responded by asking McDonald to pay off the note, which was set to expire December 31. But he says he received only reassurances and platitudes that were followed the next month by calls to sink additional money into another IPO, this one revolving around Verizon Wireless, which delayed a projected sale of public stock last October and now hopes to determine the feasibility of such an offer sometime this summer. The final straw for Martino took place in February: "This guy calls me at home on a Saturday morning, wakes me up and says he needs me to Fed Ex a check for $20,000 to his uncle, and he'll pay me back in three days. I said, 'That doesn't sound like a business deal. I want your uncle's name and phone number.' He told me he'd get back to me, but he never did."

Even more heated was a conversation Martino had with McDonald on the day of McDonald's resignation. "I said, 'You're a liar and a fraud. You pay me back or I'll sue you and get a judgment that you can't go bankrupt on, because fraud can't be dismissed in bankruptcy -- and I will haunt you the rest of my life." McDonald responded, according to Martino, by swearing he would return the money in two weeks. But that didn't reassure the Troubleshooter. "I make a living busting ripoffs, liars and cheats. I've heard it before."

To date, Martino hasn't received any reimbursement, and even insiders don't know how many others like him there might be. (A handful of Channel 31 personalities, identified as investors by several sources, did not return calls or declined comment.) But McDonald vows to put everything right within the next few days.

"I'm going above and beyond my own individual requirements in these deals to satisfy friendships and personal relationships -- and frankly, it's disappointing to me that these deals have been cast in a negative light," declares McDonald, who says he wants to remain in Denver. "But unfortunately, television is a rumor business. And once a rumor is started, it never stops."

Up in the air: Since 1992, Al Verley, the helicopter pilot and traffic reporter for Clear Channel-owned KOA, has guided innumerable Denverites through traffic jams, construction nightmares and weather of every description with efficiency and affability. But unless things change soon (and that seems unlikely), locals will have to get along without him. Verley recently told Clear Channel that he'll be moving on; his last day of scheduled flying is May 15.

Verley confirms that "maintenance was not being handled as quickly as I would have liked" on the Bell 407 airship he handles. But he says the primary basis for his decision to leave is his salary. "We just couldn't come to a contract agreement," he says. "We differ as far as the pay scale -- and the price has to be right."

Despite these differences, Verley doesn't skimp on compliments for "the Clear Channel family," and Lee Larsen, vice president and general manager for Clear Channel-Denver, returns the favor. But Larsen believes that, deep down, Verley is looking for a lifestyle change. "He's been flying early in the morning and late in the afternoon and is on call other times, too, which is hard on family life. We did make him an offer that wasn't good enough for him, but what he seemed to be saying was, 'I'm really tired of doing this job, it's really messing with my life, but if you double my pay, I'll stay.' That told me the real issue is that Al wants to do something else."

Larsen plans to replace Verley with two people: a full-time pilot and a reporter charged with voicing traffic updates. He hopes to have both of these hires on board around the time Verley splits, which also roughly corresponds with the return of KOA's helicopter, now in St. Louis receiving its 2,500-hour maintenance check and a new wiring job intended to correct problems with one of two radios used to communicate with air traffic controllers -- the difficulty that most troubled Verley. "Safety is the number-one issue for us," Larsen says, "and we've never had an incident in the fifteen or sixteen years that we've been flying. We want to have the safest bird in the sky."

As for Verley, he says, "I'm not planning to say anything about leaving on the air. I want to go out with class. But I do want to say how much I've loved flying in Denver."

The feeling is mutual. Many of us would have been lost without him.