Thursday, two men, father and son, were charged with concocting a scheme that allegedly defrauded individual investors and Alamerica Bank out of millions of dollars. 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, FBI Special Agent in Charge Johnnie Sharp of the Birmingham, Division, and IRS-Criminal Investigation Special Agent in Charge Thomas J. Holloman announced the ten count indictment.
Criminal defense attorney Donald V. Watkins Sr., age 70, of Atlanta, Georgia, and his son Donald V. Watkins Jr., age 46, of Birmingham, Alabama, were charged in a 10-count indictment filed in the Northern District of Alabama with seven counts of wire fraud, two counts of bank fraud and one count of conspiracy to commit wire fraud and bank fraud.
According to the indictment, between 2007 and 2014, the defendants induced investors to pay millions of dollars into a bank account controlled by Donald Watkins Sr. by telling the investors that their money would be used for specific purposes related to the international growth of two companies associated with the defendants. Federal authorities allege that instead of using the money for those purposes, the defendants redirected the funds for other uses, including the payment of personal tax obligations, personal loan payments, alimony, and clothing, the indictment alleges.
“Persons who defraud investors through material misrepresentations, omissions, and lies must be held accountable,” said lead prosecutor, Lloyd Peeples. “As set forth in today’s indictment, the defendants mislead numerous individual investors and used their investments for unrelated purposes.”
For example, the indictment quotes one solicitation in which Donald Watkins Sr. represented that he needed an investor’s funds to pay for investment bankers and lawyers ahead of an anticipated business transaction, when, in fact, the funds allegedly went toward the payment of unrelated expenses. The indictment also alleges that, up until 2016, the defendants sent the investors stakeholder reports and other updates that purported to keep the investors apprised of developments related to the companies involved, but were instead intended to conceal what had really happened to the investors’ money.
The defendants are also charged with conspiring to obtain loans from Alamerica Bank through an allegedly fraudulent scheme involving the use of a third party to take out the loans on their behalf. Finally, the indictment charges the defendants for fraudulently obtaining money from Alamerica Bank by convincing one of their investor victims to apply for loans under his name, when, as they had planned, the defendants ultimately took and used those funds for their own purposes.
Watkins responded to the indictments on his website:
“Federal prosecutors in Birmingham have worked for more than a year to bring an indictment containing false fraud allegations against my son Donald V. Watkins, Jr., a highly respected Birmingham businessman, and me,” Watkins said. “Today’s indictment was birthed by the Department of Justice that President Donald Trump has labeled as “corrupt.” It is the product of a system the President has described as “rigged” and run by a law enforcement agency filled with “rogue” prosecutors.”
“To secure today’s indictment, federal prosecutors in Birmingham and Washington had to: (a) present misleading and incomplete evidence to the grand jury, (b) ignore the plain language of bona fide business agreements and controlling principles of contract law, (c) “twist” important documentary evidence to support their theory, (d) present witnesses who provided scripted testimony to fit a pre-determined and distorted narrative, and (e) disregard a mountain of exculpatory evidence that favored my son and me,” Watkins continued. “Of course, none of the witness testimony or documentary evidence prosecutors presented to the grand jurors has been tested under cross-examination in a trial.”
Watkins claimed that, “The businesses referenced in the indictment are viable and valuable commercial enterprises today. They have tangible assets that are capable of valuation under generally accepted valuation methodologies. Every one of the so-called “victims” of the crimes is still my business partner. My businesses have survived the relentless efforts of prosecutors and FBI agents to “carpet bomb” them with grand jury subpoenas. They have also withstood the stress of an investigative process that is intent on destroying them and silencing my journalistic voice.”
In recent years, Watkins has been an investigative journalist on his Facebook account. He (concurrently with blogger Roger Shuler) exposed the alleged extramarital affair between then Alabama Governor Robert Bentley (R) and his married top political strategist, Rebekah Caldwell Mason.
“Throughout the criminal investigation, federal agents misled my investors into believing they had lost money in my businesses,” Watkins stated. “Some investors were also incorrectly advised that their individual money in these businesses was greater than the investment dollars I contributed. This was a patently false narrative that was never corrected, but which will be corrected at trial.”
“The allegations in the indictment represent a politically motivated and self-serving narrative to portray my son and me in the most negative light possible,” Watkins claimed. “These allegations are aimed at destroying my businesses and chilling my exercise of free speech on Facebook and on this news website. Incredibly, prosecutors actually presented evidence to the grand jury about the content of this website and my strong criticisms of state and federal public officials. Ironically, while federal prosecutors in Alabama elected to prosecute me on flimsy allegations, they forgave former Governor Robert Bentley for his many acts of public corruption in spending vast sums of tax dollars, campaign money, and dark money romancing his lover, Rebekah Caldwell Mason. As the Alabama public knows, I am the journalist who broke the “sex for power” scandal between Bentley and Ms. Mason that resulted in the governor’s resignation.”
The FBI and IRS-CI investigated the case.
Trial Attorney Kyle Hankey of the Criminal Division’s Fraud Section, First Assistant U.S. Attorney Lloyd Peeples and Special Assistant U.S. Attorney Beau Brown of the Northern District of Alabama (the latter of whom is on detail from the Alabama Securities Commission) are prosecuting the case. Former Assistant U.S. Attorney Xavier O. Carter also was instrumental in the investigation.
Watkins is being represented by Birmingham attorneys James Parkman and William White.
Watkins previously made a $150 million bid to buy the Minnesota Twins that was rejected by Major League Baseball over questions about Watkins finances. Watkins has also served on the Alabama State University (ASU) Board of Trustees, the Montgomery City Council, and he was Birmingham’s City Attorney when Richard Arrington was Mayor.
The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.