Barton Harry Watson (October 18, 1960 – November 24, 2004) was the founder of CyberNET Engineering. He committed suicide after the company was raided by the FBI for mail fraud, unveiling nearly US$100 million in debt.
Contents |
Watson was the son of Geraldine Watson (née Johnson) and Gerald Watson. Bart, as he was known as a schoolboy, grew up in Belding, Michigan, U.S.A. Barton attended Washington Elementary and Belding High School, graduating as valedictorian in 1978. He enrolled at the University of Michigan in Ann Arbor in the fall of 1978, but completed only one semester of coursework. While in Ann Arbor, Watson also volunteered at an ambulance company. He dropped out and returned to Belding to help his mother run a small automobile service station, where he drove a tow truck.
Following the divorce of his parents and as a result of financial pressures, Watson and his mother Geraldine moved to the Washington, D.C. area in 1981, residing for a short time in an apartment in Alexandria, Virginia, and later moving to another apartment in Washington near Glover-Archbold Park. Through the use of a fraudulent résumé, Watson obtained employment as a junior account executive at the I Street branch of E. F. Hutton. Watson's boss and mentor was Perry Bacon, who figured prominently in the E. F. Hutton check-kiting scandal of the early 1980s.
While working at E. F. Hutton, Watson misappropriated client funds in excess of $300,000. Once the embezzlement was discovered, he was fired from E. F. Hutton in January 1985 and was banned for life from dealing in securities by the National Association of Securities Dealers. In May, 1987 Watson was sentenced by Judge Gerhard A. Gesell to one to three years in federal prison for mail fraud.
Upon his release from prison after more than two years, Watson returned to Belding and lived with his father for six months. Afterward, he moved to Grand Rapids, Michigan, where he worked as a waiter at a Red Lobster restaurant and as a sales clerk at a large computer store. By 1990 he had met John Straayer, and together they founded a company called WS Services, a "value added reseller" of computer systems.
After meeting his future wife, Krista Kotlarz, in 1991, Watson's relationship with John Straayer deteriorated, culminating in a lawsuit by Straayer over embezzled assets of the partnership. Once the partnership had been dissolved, Watson continued the business under the name CyberNET Engineering.
Between 1991 and 2000, CyberNET was a moderately successful reseller of Compaq computers as well as providing design and installation for clients. Starting in 2000, however, Watson began to obtain fraudulent loans from a large number of financial institutions based on faked and forged financial statements. By 2002 the Watsons were living a fabulous lifestyle, owning a million-dollar home in Ada, Michigan and driving Ferraris, BMWs, Bentleys and several Rolls Royces. This lifestyle and an ultimately unsuccessful attempt to expand the business internationally were financed by an ever-increasing number of fraudulent loans in what turned into a classic Ponzi scheme, in which new loans were used to finance the debt already incurred plus a lavish personal lifestyle.
Watson was a very active participant on the travel website FlyerTalk, where he posted numerous anecdotes and observations from his luxurious travels, which often entailed flying to cities around the world in first class. His username on FlyerTalk was "B Watson", and his posts on FlyerTalk remain viewable to this day.
In November 2004, the FBI raided the CyberNET headquarters on South Division Avenue in Grand Rapids, seizing the business and all of the Watsons' personal assets. In the early morning of November 24, Barton Watson committed suicide while barricaded in his luxury home during a standoff with police. It was determined that CyberNET and the Watsons had over $100 million in debt, with only approximately $2 million in assets.
Upon hearing the news of his suicide, many members of the FlyerTalk community in which Watson participated posted expressions of sympathy for his death and for his family, while others expressed revulsion over his acts.
On June 22, 2006, CyberNET president James Horton pleaded guilty in U.S. District Court in Grand Rapids to four counts of felony mail fraud, and was sentenced to 7½ years in prison. Paul Wright pleaded guilty on August 31, 2007 to federal charges of conspiracy to defraud banks and finance companies, money laundering and mail fraud. He was sentenced to 2½ years in prison.[1] Krista Watson pleaded guilty on September 4, 2007 to federal charges of conspiracy and tax evasion, and was sentenced to seven years in prison.[2]