Watkins company files for bankruptcy to stop foreclosure

Attorney Donald Watkins arrives for the closing arguments for the Richard Scrushy trial at the Hugo Black Federal Courthouse in Birmingham, Ala, Wednesday, May 18,2005. Tamika Moore

(TAMIKA MOORE)

The Securities and Exchange Commission today charged Alabama attorney Donald Watkins and companies he controls with defrauding professional athletes and other investors out of millions of dollars, much of which he spent on his girlfriend and to cover personal expenses like alimony, past due taxes and credit card bills, according to an SEC press release issued this afternoon. Here is the complaint.

Watkins denied the allegations.

According to the complaint, filed in federal district court in Atlanta, Watkins and his companies, Watkins Pencor LLC and Masada Resource Group LLC, falsely told investors that their funds would be used to support waste-to-energy ventures.

The complaint -- which contains civil charges, not criminal -- doesn't name the players.

The complaint also claims that the defendants falsely said that Waste Management Inc., a large, international waste treatment company, was seriously considering acquiring Watkins Pencor, Masada, and its affiliated companies in a multi-billion-dollar transaction. According to the complaint, Waste Management's "interest" in Masada never advanced past a brief initial meeting in August 2012, more than a year after the defendants began telling investors that negotiations were progressing and that the acquisition was imminent.

"We allege that Watkins duped investors into believing that there was a lucrative transaction on the horizon, when in fact there was none," said Walter Jospin, Regional Director of the SEC's Atlanta Regional Office, said in a prepared statement.

Watkins said the charges are part of an effort to smear him after he sued the SEC last year, in a matter which dealt with the issues for which he is charged.

"It smacks of personal retaliation to my lawsuit," he said.

The lawsuit argued the SEC had no jurisdiction in the case, and that the "factual allegations are totally off base," Watkins said.

He said he offered to provide hundreds of thousands of documents in response to an SEC subpoena, but the SEC never showed up to collect them "because they didn't want to see any evidence refuting the allegations."

Watkins, a former Montgomery city councilman and lawyer to former Birmingham Mayor Richard Arrington, has also become a Facebook personality and self-styled internet journalist. He has been highly critical of Gov. Robert Bentley.

"It is all an attempt to discredit me, and it won't work," he said.

The SEC charges the group violated the antifraud provisions of the federal securities laws and a related SEC antifraud rule. The SEC's complaint seeks permanent injunctions, penalties and return of allegedly ill-gotten gains with prejudgment interest. The SEC's complaint alleges that Watkins' law firm, Donald V. Watkins, P.C., received investor monies and charged the firm as a relief defendant for purposes of recovering the allegedly ill-gotten gains it received.

The Investigation was carried out by the Atlanta Regional Office, under the supervision of William Hicks and Walter Jospin.

Below is the complaint Watkins filed against the SEC last year.