Donald Watkins, son sentenced for federal fraud convictions

Donald Watkins Sr., a well-known Birmingham attorney and businessman, was sentenced to five years in prison on Tuesday after being convicted of running a years-long and multi-million dollar fraud scheme, defrauding people like former NBA star and sports television personality Charles Barkley.

Watkins Sr., 70, and his son, 46-year-old Donald Watkins Jr., were each charged last year with a total of 10 crimes each-- seven counts of wire fraud, two counts of bank fraud and one count of conspiracy to commit wire fraud and bank fraud relating to a conspiracy the government claims lasted for nearly a decade. The convictions came in March, when the elder Watkins was found guilty on all charges and Watkins Jr. was convicted on two of the charges-- conspiracy to commit wire and bank fraud and wire fraud.

Following the elder Watkins’ sentencing hearing, Watkins Jr. was sentenced to two years and three months in prison. Following his release from prison, the judge ordered Watkins Jr. to serve three years of supervised release.

The Watkinses were tried at the same time, and each man represented himself. Watkins Sr.'s sentencing hearing began at 9 a.m. before U.S. Chief District Judge Karon O Bowdre. Watkins Jr.'s sentencing began around 2 p.m.

After announcing the five-year prison sentence for the elder Watkins, Bowdre also ordered Watkins Sr. pay $14,000,100 in restitution and serve five years of supervised release after his prison term. He is to report for prison on August 28.

The judge also ordered Watkins Jr. to pay $13,850,000 jointly with his father in restitution, and the younger Watkins must report to prison on September 17.

Watkins Sr. and his son’s hearings both began with the judge ruling on several of their objections mentioned in court filings.

Watkins Sr. argued about the victim count and the loss amounts claimed by the government, but the judge overruled the elder Watkins’ objections regarding the number of victims as it relates to a married couple. Bowdre also ruled that several victims who were mentioned in the government’s sentencing memorandum should also be taken into consideration for sentencing, even though those victims did not testify and some were outside the case’s time frame.

Watkins Jr., who is being represented during the sentencing by attorney Anthony Joseph, also argued about the victim count, but the judge overruled and kept the number of victims over 10. The son also argued for a further reduction of his sentence, which the judge overruled saying that evidence presented at trial convinced her that Watkins Jr. also had a role in misrepresentation and took initiative in the scheme. The judge also ruled that the loss calculations in the government’s sentencing memorandum will remain unchanged.

The judge told Watkins Sr. that sentencing was not a time to re-litigate the facts of the case, because the jury convicted him of all counts after a weeks-long trial. “They testified they would have never invested that money at all but for your misrepresentations," Bowdre said about the victims who testified.

Watkins Sr. said he didn’t use sophisticated means to carry out his scheme, or serve as a lawyer or financial adviser to any of the victims, but the judge ruled Watkins Sr. did use complex means to dupe investors and also breached his position of trust.

Watkins Sr. also spoke before the judge announced his sentence. He said the investors-- or who the government and judge calls victims-- still own their shares in the company and will financially benefit from those shares one day.

“I still consider them my friends even though they don’t view me the same way,” Watkins Sr. said. “The very people who are victims today, they will benefit…I still serve them all day, every day. From the time the sun rises… no one has to make me do that, I just do.”

“There will be a day when all of them will be in really, really good shape. And I’m proud to have done that for them,” the elder Watkins said. “There is no dispute that when it came down to choosing my interest over theirs, their interest came first every time.”

The elder Watkins also talked about his decades-long legal career in the state, calling the cases he worked on a “service to humanity” and that “all of them impacted the landscape of Alabama.” He said, “Those are the kinds of things that define my character.”

Watkins Sr. said thinking back, he doesn’t know what he could have done differently. He said he wrote emails to investors based on what he believed would happen, and he truly tried to recruit the big names he talked to investors about.

The elder Watkins added that he has no criminal history and at almost 71 years old, the sentence assistant U.S. attorneys have asked for would be the rest of his life. He also said he worked hard to deliver to his investors, even when that work put him in physical danger in places like Sierra Leone.

First Asst. U.S. Attorney Lloyd Peeples, who prosecuted the case, spoke after Watkins Sr. He said that because of Watkins Sr.’s position as a well-known lawyer and banker, he should be held to a higher standard. Peeples said the elder Watkins has expressed no remorse or contrition, or even an acknowledgement that what he did was wrong.

Peeples also called Watkins Sr.’s proposed 24 month home confinement sentence “absurd.”

Peeples read a letter from Bryan Thomas and his wife Danielle--two of the investors who testified at trial about the money they gave to Watkins Sr. for investments. The couple said the million-dollar loss has “greatly affected” their lives and caused trouble in their marriage. Bryan Thomas, a former NFL player, said Watkins Sr. “conned [him] out of [his] hard-earned money.”

The Thomases said they do not live an extravagant lifestyle and are sick to know the Watkinses used the football family’s money to afford their lavish lives. Danielle Thomas has been depressed and even suicidal over the fraud, the letter stated.

“I was manipulated by a master con artist,” Bryan Thomas said. “I work hard to provide for my family… [He] didn’t see any of us as human beings. We were all dollar signs to bankroll him.”

Former NBA player Damon Stoudamire’s wife Natasha Taylor-Stoudamire also spoke at both sentencings, repeating that she was astounded by both Watkinses actions. “I can’t even comprehend how Donald Watkins Sr. and Jr. can take money from me or the rest the victims that were trying to have generational wealth for our children’s children,” she said. “How could you ever do this, period? How could you even say you would want to mentor somebody and take my money?”

She continued, “How could you ever do this to any of us and call us your friend? It’s gut-wrenching. You’re someone we all trusted and admired.”

“You are someone who has fallen so far from grace,” Taylor-Stoudamire said about the elder Watkins. “You need to sit somewhere, separately, and think about how it’s wrong. I don’t even know what else to say… You should be ashamed. Your son should be ashamed.”

Taylor-Stoudamire said during Watkins Jr.'s sentencing, “Right is right and wrong is wrong and just because you’re mannerful and considerate doesn’t mean it’s okay to take things for your own."

“We have children, but we don’t take from other people to give to our children," she said.

She told Watkins Jr., “You are somebody’s role model and it’s hurtful for your role model to do the wrong things and lead you astray.”

During Watkins Jr.'s sentencing, his mother, wife and brother talked about his character and Watkins Sr.'s influence on his son.

The younger Watkins’ wife of more than a decade, Chay Watkins, testified about her husband’s “heart of gold.” She said Watkins Jr. and his three brothers, and one sister, are incredibly close. “I’ve never seen a family stand so united,” she said. “If anyone needs anything, he’s there for them.”

Chay Watkins said her husband is in this situation because of how loyal Watkins Jr. is to his family.

“From the family standpoint, my husband in fact could be labeled as a victim,” she said, adding that Watkins Jr. would always do what was needed to protect his family.

Watkins Jr.'s brother, Light Watkins said any of his brothers could be in Watkins Jr.'s position right now.

“That’s the impact our father had on all of us,” Light Watkins said. “We’d never think in a million years he’d ever put us in a position even bending the law.”

Chay Watkins said, “He is remorseful. We’ve accepted this is where we’re supposed to be.” She also talked about their six-year-old daughter and how close Watkins Jr. is with the little girl. “They’re inseparable.”

“He’s lost a lot. And we’ve lost a lot. And we’ve learned a lot,” Chay Watkins said.

Watkins Jr. also spoke on his own behalf. “I have a hard time just thinking about me,” Watkins Jr. said. “I’ve lived a blessed life, I’ve tried to have a positive impact on the community...I can’t help but think about other folks. I think about the victims in this case.”

The younger Watkins apologized to his victims, adding that he worked with certain people and tried to follow their guidance and direction.

"I think about my father and the next five years of his life. I’m 47, I like to think I have plenty of life left to live… despite everything….he’s still my dad and I still love him.”

Watkins Jr. said, "I don’t think he would ever intentionally do anything to me or my family to put us in harm’s way.”

Asst. U.S. attorney Kyle Hankey said Watkins Jr.'s "intelligence made it really hard to believe he didn’t know what was going on.”

Hankey said Watkins Jr. was more motivated by greed than he was simply being a loyal son.

According to court records and information presented at trial, Watkins Sr. and Jr. stole over $15 million from investors and an FDIC-insured bank between 2007 to at least 2014 by telling investors their money would be used for specific purposes related to the international growth of two companies associated with Watkins Sr. Instead of using the money for those purposes, the indictment states, the two men redirected the funds for other uses, including the payment of personal tax obligations, personal loan payments, alimony, and clothing.

Before pronouncing the sentence, Bowdre told Watkins Sr. he should have known what was right and what was wrong. "When you decided what to tell [investors] and what not to tell them, those were decisions you made -- not mistakes,” she said.

“I’ve noted your ability to use words to your advantage on many occasions. That’s part of the underlying situation here," Bowdre said.

The trial marked the fall of Watkins Sr., who portrayed himself as a billionaire to his friends and the community. Watkins Sr., a lawyer who now lives in Atlanta and was certified to practice in multiple states, is best known for representing former Birmingham Mayor Richard Arrington and former HealthSouth CEO Richard Scrushy. Watkins Sr. also founded Birmingham-based Alamerica Bank.

Throughout the trial, investors like former NFL and NBA stars testified Watkins Sr. sold them what they believed to be shares of Masada, a biofuels company geared toward converting waste to ethanol. Investors believed the elder Watkins owned at least 50 percent of the company; but, a part owner of Masada testified that Watkins Sr. didn’t own half of the company like investors thought. Evidence showed Watkins Sr. did not own any substantial portion of the company.

Full coverage of the Donald Watkins case

Former NFL players Takeo Spikes, Bryan Thomas, Carlos Emmons, and Gibril Wilson testified, along with Barkley. Alabama native and former U.S. Secretary of State Condoleezza Rice and Martin Luther King III also testified at the trial.

Arrington Jr., who was once a client of Watkins Sr., took the stand during the trial to talk about the four loans he obtained through Alamerica Bank—which Watkins Sr. owned a portion of—and then gave to the elder Watkins. Arrington was offered immunity in the case in exchange for his truthful testimony.

The U.S. Attorney’s Office for the Northern District of Alabama recommended 17 and a half years in prison for Watkins Sr. and six and a half years for Watkins Jr. Each man objected to those recommendations in court records.

While the government is seeking millions in restitution, prosecutors claim in court records Watkins Sr. is worth just $22,903.01. The elder Watkins objected to that estimation, stating that number “represented the amount of cash on hand on the date of submission.”

Watkins Jr. asked in court records filed last week for a sentence no greater than 18 months, saying that “Watkins, Jr. was substantially less culpable... there is no evidence that shows that Watkins, Jr. clearly understood the scope and structure of the relevant enterprises.”