FARMINGTON — A federal grand jury is investigating former New Mexico Title Co. owner Bobby Willis and has subpoenaed numerous witnesses, an attorney representing Willis said Wednesday.
Mark Donatelli, a Santa Fe lawyer for Willis, revealed the existence of the federal case in an otherwise routine hearing in Farmington Magistrate Court.
Donatelli said he was concerned the federal investigation would preempt the case in Farmington Magistrate Court. He also expressed frustration that federal officials would not provide a timeline for their case.
"I'm reluctant to pour massive resources into this litigation right now," he said.
A spokeswoman for the U.S. Attorney's Office for New Mexico, Elizabeth Martinez, said she could neither confirm or deny the existence of a grand jury investigating Willis.
Frank Fisher, an FBI spokesman in Albuquerque, also said he could neither confirm nor deny the existence of an investigation.
Court documents indicate the FBI has at least been keeping tabs on a months long state investigation. The receiver in the case, Darryl W. Millet, said in a Nov. 28, 2012, report that the Albuquerque accounting firm REDW met with and provided documentation to an FBI special agent earlier that month.
Federal criminal cases tend to range wider and carry harsher penalties than state prosecutions.
In August 2012, Willis was charged with embezzlement, racketeering, fraud and securities fraud in the case in Farmington Magistrate Court. The charges relate to allegations Willis bilked a business partner, Michael Atchison, out of $1.6 million he invested in a dubious plan to build a massive hospital complex in Kirtland. Authorities also suspect Willis of embezzling more than $5 million in gemstones and jewelry from another investor, Quentin Smith.
A preliminary hearing will be set in mid-September in the case, Farmington Magistrate Judge Mark S. Hawkinson said Wednesday.
The hearing will be scheduled for two days, indicating lawyers in the case expect a prolonged hearing of the evidence.
Willis is in Branson, Mo., wearing a court-ordered ankle bracelet. He is expected to appear in court in Farmington for the first time at the September hearing.
The charges in magistrate court against Willis are not directly related to the collapse of New Mexico Title Co., which closed abruptly on Jan. 30, 2012, amid complaints by customers who said they had not received expected payments. A related business, New Mexico Title Escrow Co., operated from the same location and also closed.
While investigators say the ownership of the businesses is unclear, Willis has been linked to the title company, which authorities say had commingled operations with the escrow business. Former employees have said Willis was a frequent presence at the businesses and appeared to be in charge.
Some 900 customer accounts were affected when the title and escrow businesses collapsed.
In a sprawling New Mexico Financial Institutions Division investigation that has spanned 20 months, Millet gathered claims from aggrieved customers totaling nearly $2.4 million. That dwarfs the money found remaining in New Mexico Title accounts; Millet found $387,877 of business funds. It's unclear how or when that money could be paid to victims of the businesses' collapse.
The investigation grew so expensive that the Financial Institutions Division obtained an emergency loan of $458,000 from another state agency in June 2012 to continue its work.
Recently, the Financial Institutions Division asked a Santa Fe Court to terminate the receivership, saying its work was done. The FID said it had spent $331,111 on the receivership dating to April 2012.
Investigators in the case found cash stuffed in drawers and disorganized record keeping at the title and escrow businesses located at 650 W. Main St., Suite C, in Farmington. When investigators obtained a court order to enter locked rooms, they found an ornate wooden bar, a large pool table and refrigerated beer kegs.
Further investigation revealed a check from New Mexico Title Co. to pay for a $132,880 executive suite at the Denver Broncos' football stadium.