The chief executive of a waste-to-energy company has been charged with orchestrating a scam that defrauded professional athletes and other investors of at least $6 million, much of which he spent on personal expenses including alimony payments.
The U.S. Securities and Exchange Commission said Donald Watkins falsely told investors in Masada Resource Group that their money would be used to fund waste-to-energy projects and that Waste Management was seriously considering acquiring the firm in a multibillion dollar deal.
In fact, the SEC said in a civil complaint, Watkins used “significant portions” of the investor funds to pay off his personal expenses and “there was never any probability” of an acquisition by Waste Management.
Watkins allegedly told investors in an April 2011 email that former Texas Lt. Gov. Ben Barnes was facilitating talks between Masada and Waste Management and the final deal “will include an acquisition of all technologies owned or licensed by Masada.”
“We allege that Watkins duped investors into believing that there was a lucrative transaction on the horizon, when in fact there was none,” Walter Jospin, regional director of the SEC’s Atlanta regional office, said in a news release.
Watkins became chairman and CEO of Masada, a firm started by a friend of his, around December 2005. According to the SEC, he steered the company toward developing an international waste management business but, starting as early as 2009, had difficulty meeting his own personal obligations, including about $100,000 a year in alimony payments.
For 2009, he allegedly reported total income of $300,000 and debt and payment obligations of more than $1.35 million.
“In an effort to obtain funds to cover his financial problems, and to persuade certain existing investors [to renew] their investments, Watkins made a variety of misrepresentations” to investors, the SEC said, ultimately raising at least $6 million through sales of “economic interests” and promissory notes.
After receiving $1 million from an NFL player and his wife, Watkins allegedly transferred $25,000 of the money to his then-girlfriend, used $14,500 for alimony, and paid $20,753 to Cessna for his personal aircraft.