Investment Fraud: Donald Watkins Sr. And Jr. Plead Guilty On Multiple Charges For Their Roles In Investment Fraud And Bank Fraud Schemes
Father And Son Conviceted of Multimillion-Dollar Investment Fraud Scheme
BIRMINGHAM – A federal jury found a father and son guilty Friday 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.
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. Donald Watkins Jr., 46, of Birmingham was convicted on one count of wire fraud and one count of conspiracy. Sentencing is set for July 16 before U.S. District Court Judge Karon O. Bowdre of the Northern District of Alabama, who presided over the trial.
“The jury’s verdict today sends a clear message: Donald Watkins Sr. and Donald Watkins Jr. are frauds, plain and simple,” said Assistant Attorney General Benczkowski. “They induced their victims to part with more than $10 million of supposed ‘investment capital’ and used it to support their lavish lifestyle. I want to thank the prosecutors and law enforcement agents for their hard work investigating and prosecuting this case.”
“This was a case about deception and greed at the expense of too many,” said U.S. Attorney Town. “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 Commission and the Department of Justice’s Fraud Section for allowing their personnel to engage in this prosecution.”
“Both of the men found guilty today are financial predators who truly represent pure greed,” said FBI Special Agent in Charge Sharp. “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. Investors 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 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 one victim on multiple occasions, when they knew that their victims trusted them to put their money to use in growing Masada. The defendants’ scheme eventually grew to include another business venture, Nabirm Global, a company that Donald Watkins Sr. claimed held mineral rights in Namibia.
Donald Watkins Sr. also defrauded 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, Donald Watkins Sr. executed a plan to use a straw borrower to take out money from Alamerica Bank and give it to them. This straw borrower—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 those funds 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.