Usdoj.gov.
A federal jury today found Donald Watkins Sr. and his son Donald Watkins, Jr. guilty of multiple charges for their roles in investment fraud and bank fraud schemes in which they stole over $10 million from individual investors—including multiple former professional athletes—and Alamerica Bank of Birmingham, Alabama.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Jay E. Town of the Northern District of Alabama and Special Agent in Charge Johnnie Sharp Jr. of the FBI Birmingham Field Office made the announcement.
Watkins Sr., 70, of Atlanta, Georgia, was convicted on seven counts of wire fraud, two counts of bank fraud and one count of conspiracy to commit wire fraud and bank fraud.
Watkins Jr., 46, of Birmingham, was convicted on one count of wire fraud and one count of conspiracy to commit wire fraud and bank fraud.
“Donald Watkins Sr. and Donald Watkins Jr. orchestrated a brazen scheme in which they scammed their victims out of more than $10 million,” said Benczkowski. “These convictions demonstrate that the Department of Justice remains committed to aggressively investigating and bringing to justice individuals who exploit others for personal gain.”
“This was a case about deception and greed at the expense of too many,” Town said. “The findings of guilt for these two individuals should forewarn anyone who would seek to defraud investors so brazenly. We appreciate the labor of the jurors whose role as citizens in this process is so critical to our system of justice. We are also grateful to the Alabama Securities and Exchange Commission and the Department of Justice’s Fraud Section for allowing their personnel to engage in this investigation and prosecution.”
“Both of the men found guilty today are financial predators who truly represent pure greed,” Sharp said. “We are pleased that the defendants in this case are being held accountable for their crimes and we will continue to work with our law enforcement partners to investigate and prosecute those who commit these types of financial crimes.”
According to evidence presented at trial, between approximately 2007 and 2013, Donald Watkins Sr. sold “economic participations” and promissory notes connected with Masada Resource Group, a company that he ran as manager and CEO. Purchasers of these investments paid millions of dollars after Watkins Sr. and Watkins Jr. falsely represented that the money would be used to grow Masada, which Watkins Sr. described as a “pre-revenue” company that supposedly had technology that could convert garbage into ethanol.
Instead of investing the money into Masada, however, the Watkins’ diverted the funds to pay personal bills and the debts of their other business ventures. The evidence showed that victim money was used to pay for Watkins Sr.’s alimony, hundreds of thousands of dollars in back taxes, personal loan payments, a private jet and clothing purchased by Watkins Jr. and his wife.
Emails introduced at trial also showed that Donald Watkins Jr. and Donald Watkins Sr. planned to obtain millions of dollars for these purposes from one victim on multiple occasions, when they knew that this victim trusted them to put his money to use in growing Masada. The defendants’ scheme eventually grew to include another business venture, Nabirm Global, a company that Watkins Sr. falsely claimed held mineral rights in Namibia.
Watkins Sr. and Watkins Jr. also conspired to defraud Alamerica Bank, an entity in which Watkins Sr. was the largest shareholder, the evidence showed. In order to pay hundreds of thousands in litigation expenses associated with another one of Watkins Sr.’s business ventures, the defendants executed a plan to use a straw borrower, identified at trial as former Birmingham Mayor Richard Arrington, to take out money from Alamerica Bank and give it to them.
Arrington—Donald Watkins Sr.’s long-time mentor—took over $900,000 in loans from Alamerica Bank and then immediately permitted Watkins Sr. and Watkins Jr. to use it for their personal benefit.
This post was updated at 6:53 p.m. on 3/8/2019 to correct the number of counts Donald Watkins Jr. was found guilty.
