BIRMINGHAM – A federal jury today found a father and son 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.
The trial featured testimony from Condoleezza Rice, Martin Luther King III, former Birmingham Mayor Richard Arrington, Charles Barkley and several other professional athletes.
Donald 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.
Donald 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 Assistant Attorney General 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,” U.S. Attorney Town said. “The findings of guilt for these two individuals should forewarn anyone who would seek to defraud investors so brazenly.”
“Both of the men found guilty today are financial predators who truly represent pure greed,” SAC 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 to Barkley, Takeo Spikes and others. Watkins was the manager and CEO of Masada.
Purchasers of these investments paid millions of dollars after Donald Watkins Sr. and Donald Watkins Jr. falsely represented that the money would be used to grow Masada, which Donald 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, Donald Watkins Sr. and Donald Watkins Jr. 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 Donald Watkins Sr.’s alimony, hundreds of thousands of dollars in back taxes, personal loan payments, a private jet and clothing purchased by Donald 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 Barkley 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 Donald Watkins Sr. falsely claimed held mineral rights in Namibia.
Donald Watkins Sr. and Donald Watkins Jr. also conspired to defraud Alamerica Bank, an entity in which Donald Watkins Sr. was the largest shareholder, the evidence showed.
In order to pay hundreds of thousands in litigation expenses associated with another one of Donald Watkins Sr.’s business ventures, former Birmingham executed a plan to use Richard Arrington as a straw borrower to take out money from Alamerica Bank and give it to them.
Arrington — Donald Watkins Sr.’s long-time mentor and a prominent figure in the Birmingham community — took over $900,000 in loans from Alamerica Bank and then immediately permitted Donald Watkins Sr. and Donald Watkins Jr. to use it for their personal benefit.
The investigation was conducted by the FBI’s Birmingham Field Office. Trial Attorney Kyle C. Hankey of the Criminal Division’s Fraud Section and First Assistant U.S. Attorney Lloyd C. Peeples III, Special Assistant U.S. Attorney Beau Brown (on detail from the Alabama Securities Commission) and Special Assistant U.S. Attorney Xavier O. Carter Sr. of the Northern District of Alabama prosecuted the case. The Securities and Exchange Commission also provided substantial assistance in this matter.