https://www.facebook.com/donald.v.watkins/posts/10210470412338750
Marital Discord Leads to SEC Fraud Charges
By: Donald V. Watkins
©Copyrighted and Published (via Facebook) on September 16, 2016
©Copyrighted and Published (via Facebook) on September 16, 2016
I first met Bryan Thomas, a Birmingham native and the owner of Thomas Global Group, LLC ("TGG"), while Bryan was a student-athlete at the University of Alabama at Birmingham. Bryan was part of a group of student-athletes mentored by me in business and finance at the request of his college football coach.
The New York Jets of the National Football League drafted Bryan in 2002. Bryan would play professional football for the Jets and enjoy success in the League until his retirement in 2013.
In early 2009, Bryan's college coach asked me to meet with Bryan and his wife Danielle to mentor them on Bryan's business affairs and other quality of life matters. He specifically wanted me to help Bryan prepare for life after football. I agreed to do so.
For the record, I currently have two highly intelligent, well-educated, award-winning former professional athletes working as senior management executives in my global business ventures. One will be representing my company in Vietnam next month, and the other one is responsible for our strategic partnerships in South America.
Shortly after the contact by Bryan's coach, Danielle, who was the authorized representative of TGG, contacted me by phone. She asked me to review a deal to acquire an Arby's store in Peoria, Arizona, for $1.7 million. The store was reportedly grossing $1 million per year. I informed Danielle that he personally would not go forward with this type of investment because the Arby's transaction represented a low-return investment opportunity that required a high capital investment.
TGG Engages in Extensive Due Diligence Before Signing the Irrevocable Watkins Pencor-TGG Purchase Agreement at Issue
Danielle then inquired about the nature and scope Masada's business activities, its capital structure and ownership, its business plans, and the company's anticipated exit strategies. Armed with a wealth of answers to these questions, Danielle requested an unsolicited opportunity for TGG to participate in Watkins Pencor, an equity member in the Masada family of companies. She involved Bryan directly in these economic participation discussions. She also requested and received (a) additional due diligence information about Masada and (b) a proposed Watkins Pencor economic participation agreement, dated March 17, 2009.
Danielle, who is a close relative of American Express CEO Kenneth Chenault, thoroughly reviewed the terms and conditions of the purchase agreement with me. After reviewing the Masada-related information, Danielle reiterated TGG's request to join Watkins Pencor as an economic participant.
At no time was TGG, or anyone else, invited to become a "member" or "shareholder" in any Masada-related limited liability entity. I was selling TGG a one percent economic participation interest in my equity stake in every Masada company existing as of March 17, 2009, and to be formed in the future. In effect, I was diluting my economic position in the Masada entities by one percent and awarded this one percent interest to TGG. The purchase and assignment were irrevocable.
Danielle's request for TGG to join Watkins Pencor intensified after she learned that: (a) I was attempting to purchase the St. Louis Rams NFL football team at the time; (b) I intended to liquidate certain Masada-related assets owned by me to fund this acquisition transaction; and (c) the small group of existing Watkins Pencor stakeholders would automatically benefit as economic participants in my Rams ownership entity on a basis proportionate to their economic interest in my block of Masada equity.
Thereafter, Danielle requested additional due diligence information on Masada. She also requested a personal meeting in New Jersey between Bryan, herself and me to discuss the purchase transaction. Daniel and Bryan also visited Masada's massive data room located at Masada/Watkins Pencor headquarters in Birmingham, Alabama.
Bryan and Danielle engaged in even more due diligence when they arranged an interview session between me and Noah Doyle, TGG's lead financial advisor in the Cushman Group at Morgan Stanley Smith Barney. During the conference call, I explained to Mr. Doyle the history of Masada, its business plan, ownership structure, its asset portfolio, diversification initiatives, exit strategies, the nature of the interest conveyed to TGG, and the terms and conditions of the economic participation agreement. Doyle asked many questions about the nature and scope of the economic participation transaction.
TGG and its financial advisors knew at the time of the purchase transaction that the assignment of economic interests was irrevocable for both parties to the agreement and that the pathway to liquidation for the Masada entities was a sale, merger and acquisition, initial public offering (via a reverse merger into a listed company), and/or global licensing transaction.
They specifically understood and acknowledged that the Watkins Pencor economic participation purchase was a high-risk transaction and was suitable only for individuals and persons who had no liquidity issues. This caution is stated in plain language on the first page of the purchase agreement signed by TGG.
Bryan is one of the athletes the SEC says I "duped". A top Wall Street financial advisory firm vetted this purchase transaction for TGG. Yet, TGG was "duped"? Furthermore, Bryan and Danielle Thomas are highly intelligent individuals in their own right.
Several days after the Cushman Group/Morgan Stanley concluded its due diligence, TGG executed its "Purchase Agreement and Irrevocable Assignment of Economic interests" with Watkins Pencor and the Cushman Group wired the $1 million in purchase money to me, as specified in the agreement. The money was reported on my personal income tax returns, rather than Masada's corporate tax returns, because I sold a portion of my block of equity in the Masada family of companies to TGG. The money was mine, to be used as I saw fit.
Martial Discord Leads to a Refund Request By TGG
After TGG joined Watkins Pencor as an economic participant in 2009, Danielle began confiding in me about the couple's growing marital problems. According to Danielle, Bryan was a serial cheater; he had fathered children outside of their marriage; he was a substance abuser; and he was subjecting her to spousal abuse. I tried to counsel Danielle as best I could, but the Thomases' marital situation appeared to be deteriorating rapidly.
By August of 2010, the Thomases' marriage was in shambles and it was evident that Stan Kroenke, the 40% Limited Partner in the St. Louis Rams, would become the 100% owner of the team. These two events prompted Danielle to have buyer's remorse and to request a premature divestiture of the Watkins Pencor economic interests TGG purchased in 2009, as well as a return of the non-refundable $1 million purchase money.
According to Danielle, the request for a refund had nothing to do with any performance issues relating to Watkins Pencor or Masada, but rather, it was an after-the-fact change of heart and mind by the Thomases that has been fueled by (a) Danielle's desire to exit her marriage with a large cash award and (b) the advice of Thomas' New York financial advisors and accountants who, according to Danielle, never supported TGG's purchase transaction because of my ethnicity.
Danielle flip-flopped with her refund request for the next two years. In late 2012, Danielle told me Bryan had lost all of his money due to (a) bad business deals and (b) relentless womanizing. Danielle stated that she needed money to take with her after she divorced Bryan.
I refused the refund request because the purchase agreement was clear, concise, fully transparent, properly vetted, and irrevocable for both sides. In June 2013, I initiated arbitration proceedings with the American Arbitration Association to decide the refund issue. TGG sued me in New Jersey federal court in August 2013 to block the arbitration proceedings. The case is still pending with no trial date scheduled.
During this period, TGG's New York City attorney, Robert Heim, used his influence within the SEC to get me investigated and sued by the agency for "duping" athletes. Heim is a former Assistant Director of the SEC's New York City Office. The collaboration between Heim and his SEC colleagues in Atlanta has been ongoing since 2014. If the SEC succeeds in its lawsuit, Heim will get paid legal fees from TGG for any amounts the SEC collects from me for the benefit of TGG.
At the end of the day, this is a case of one set of SEC friends helping a former SEC colleague get a payday, and using taxpayer resources at the SEC to do so.
Stay tuned. We are going to report the whole story exclusively on this Facebook page.
Donald V Watkins
