By Donald V. Watkins
©Copyrighted and Published on February 6, 2018
AL.com published an article today about my personal and business relationship with Charles Barkley. As is often the case, the article truncated the relationship and placed it in a negative light. The article tried to portray Mr. Barkley as the “victim” in a securities fraud case filed in 2016 by the Securities and Exchange Commission. In truth, Charles Barkley is still my friend and the businesses referenced in the article are doing well.
The SEC Litigation
The SEC filed suit against Masada Resource Group, LLC, Watkins Pencor, LLC, Donald V. Watkins, P.C., and me alleging that: (a) I had “duped” professional athletes in connection with the sale of Watkins Pencor economic participations to them; (b) I used the proceeds from these sales for personal expenses, without authorization; and (c) the Masada-Waste Management, Inc., transaction in 2011 and 2012 was not a real acquisition effort by Waste Management. The lawsuit was accompanied by a press release that was circulated internationally.
After taking the depositions of former Texas Lt. Governor Ben Barnes and Masada General Counsel David Minkin in 2017, and after reviewing thousands of Masada-related documents refuting these allegations, the SEC essentially abandoned these false claims.
On December 22, 2017, the SEC retooled its “fraud” case to focus only on three loans provided to Donald V. Watkins, P.C., by Charles Barkley between 2010 and 2013. The loans totaled $2,150,000. Mr. Barkley increased his economic stake in my companies by virtue of his lender status, which is why he made the loans.
Mr. Barkley is also my partner in an international oil and gas company that discovered 522 million barrels of oil and 583 billion cubic feet of methane gas in October 2015. This company is undertaking the geotechnical work program required to commercially extract this oil and gas. I own 21.5% of this company. Mr. Barkley has a 20% economic stake in my equity portion of this company.
The SEC has never claimed that Masada, or my oil and gas company, lacks value as a business enterprise. Likewise, they have never claimed that any investor in these two companies has lost money.
On November 10, 2017, Mr. Barkley gave a deposition in the case that was very favorable to Masada and the other defendants from a legal standpoint. His deposition clarified earlier statements made by Barkley in an October 2017 Declaration that was prepared by the SEC attorneys and given to Barkley to sign with no one present, except the SEC lawyers.
In writing Mr. Barkley’s Declaration, SEC attorneys cherry-picked a handful of expenses out of more than $50 million spent to develop Masada’s business growth to support their false narrative that Barkley’s money was used for my personal expenses without his authorization. In law, they call this technique “twisting” the truth. Mr. Barkley corrected this false narrative in his deposition.
On January 26, 2018, I filed my own sworn Declaration in the case, which addressed and refuted all of the allegations of “fraud” in connection with the Barkley loans. My Declaration is a publicly available court record.
As my Declaration makes clear in great detail, Mr. Barkley and Glenn Guthrie (Barkley’s financial advisor at national investment banking firm Raymond James) conferred the power and authority upon me to undertake every financial transaction that the SEC has challenged in this case. Furthermore, Mr. Barkley’s financial advisor was kept in the loop on the background, documentation, and details of the three loan transactions in question.
Interestingly, the SEC has never mentioned the prominent role of Mr. Barkley’s financial advisor at Raymond James, or my many dealings with him over the years. The SEC went out of its way to portray Barkley as a “duped” athlete who was taken advantage of by me. In truth, Mr. Barkley is a brilliant businessman, great friend, and wonderful person.
I am confident that the defendants will prevail in the scaled-downed version of the SEC’s case. The cornerstone documents that govern my business relationship with Mr. Barkley are solid.
The SEC has abused its civil enforcement authority and government resources to carry out a person vendetta in this case where: (a) the SEC does not regulate any of the private businesses involved; (b) the two identified “victims” of the alleged “fraud” have not lost any money in the businesses or in the financial transactions at issue; (c) all of the businesses named in the lawsuit are operating globally today; (d) one of the two “victims” dismissed his private “securities fraud” litigation against the same defendants; and (e) the five-year statute of limitations has run on the disgorgement claims referenced in the SEC’s complaint.
Masada’s business records are in order, and we run a great company. The company has been subjected to heightened scrutiny by multiple domestic and international government agencies and has successfully “passed” this scrutiny every time.
The Disputed FDIC Regulatory Issue
In concluding its article, AL.com referenced a long-running dispute between the Federal Deposit Insurance Company and me. Here is the truth about this matter:
The FDIC issue first arose in 2013 after I began to publicly criticize former governor Robert Bentley for his misconduct in office. Bentley, using his executive powers and influence over the State Banking Department, encouraged state and federal regulators to place Alamerica Bank and me under heightened scrutiny. For political reasons, federal regulators have taken the lead in trying to run me out of the banking business.
The FDIC made trumped-up allegations against me that have zero merit. I disputed these allegations in 2013 and they are disputed now. At some point, these allegations will be heard in an administrative proceeding.
I have already filed a formal answer to the allegations denying all of the charges and asserting my affirmative defenses. I am highly confident that we will prevail in this dispute.
In making its unfounded allegations, the FDIC has refused to recognize well-known, codified exceptions to the general regulation it seeks to enforce in my case. My conduct is expressly covered and permitted by the published exceptions to this general regulation.
Based upon what is happening in Washington, the public knows that federal regulatory agencies have become convenient tools for imposing and enforcing political agendas. My case is no different.
The FDIC has never lifted a finger to help Alamerica Bank, or me. To the contrary, the FDIC has placed Alamerica Bank and me under a level of scrutiny that it would never imposed upon my white counterparts in the banking industry. Furthermore, the FDIC has tried every regulatory trick in the book to deliberately “fail” or “collapse” Alamerica Bank. Fortunately for the banking public and me, the FDIC has been unsuccessful in these improper efforts.
While I am not on the Bank’s board, I serve on the board of directors for Alamerica Bank’s holding company. I am also the bank’s largest shareholder.
We must always remember that the combined negligence of the FDIC and SEC contributed to the collapse of several Wall Street Banks and hundreds of other banks across America during the Great Recession of 2008. Alamerica Bank made it through the Recession without seeking or receiving any federal bailout money. Today, Alamerica is profitable and enjoys one of the highest Tier 1 capital ratios of any bank in Alabama.
Comments