Nov
2
2014
Dustin Johnson files lawsuit for alleged embezzlement
By Stephanie Wei under General
Dustin Johnson sues

Dustin Johnson conned by his attorneys

Dustin Johnson filed a lawsuit with the United States District Court for the Northern District of Georgia last week against the firm of Morris Hardwick Schneider, which formerly represented the golfer. Johnson is allegedly the victim of a theft and extortion scheme carried out by the firm’s former managing partner Nathan Hardwick, the firm’s current managing partner Mark Wittstadt, and Gerard (Rod) Wittstadt, who are the named defendants in the complaint.

The suit claims that Hardwick, who “played a particularly unique and significant role of trust and confidence, serving as one of Mr. Johnson’s primary advisors on all matters relating to his career as a professional golfer, as well as an officer in Mr. Johnson’s professional corporation,” and the Wittstadts used their positions to steal $3 million from him — while claiming they’d pay him back $4 million for his “investment.” Then, when the first two payments were missed in September and October and Johnson created a stir about getting paid, the defendants threatened to expose confidential information they learned in the course of representing and advising him.

WUP obtained a copy of the complaint via Reader David before it was partially sealed by a judge  — never mind, here’s the full suit if you’d like to read all 56 pages.

Johnson’s complaint is part of a larger scheme executed by Hardwick, who is accused of embezzling $30 million from the firm now known as Morris Schneider Wittstadt (the Morris firm). Before the accusations were made public, Hardwick conspired with both Wittstadts to use the “firm’s clients and Hardwick’s business contacts to misappropriate their money under false pretenses to fund the Morris firm’s operations.”

The intended purpose of the scheme and conspiracy was to replace money of the firm’s deficient accounts to directly benefit Hardwick, who was formerly a board member for the Dustin Johnson Foundation, and both Wittstadts. It was also to cover up the fact that they and the firm had misappropriated and mismanaged clients’ funds, with Johnson as a direct target of this “ill-conceived” scheme.

Hardwick, a trusted confidante of Johnson’s, approached Dustin regarding a “really good investment.” He advised Johnson that if he loaned the Morris firm $3 million, the Morris firm would pay back Johnson $4 million in equal monthly installments over a 30-month period, starting on September 6, 2014, secured by a Promissory Note. As a further form of persuasion to induce Johnson to invest, Hardwick promised Johnson that his firm, along with the owners (the Wittstadts) would guarantee the loan with a Written Guaranty.

However, Hardwick concealed from Johnson two things: 1) that he had misappropriated the firm’s funds; and 2) that he told both Wittstadts he would obtain a loan from Johnson to replace a portion of the depleted funds and use Johnson’s money to pay for the firm’s ongoing activities. The suit alleges that both Wittstadts knew that Hardwick “was going to do anything he could to obtain as much money as possible from Mr. Johnson and their other targets.”

Hardwick represented to Johnson that he had sent the Guaranty and the Promissory Note to his financial advisor, Roy Adams. So, on August 6, 2014, Johnson wired $3 million to one of the Morris Firm’s accounts. When allegations against Hardwick became public at the end of August, he assured Johnson that he had done nothing wrong and that Johnson’s loan was safe. But despite these assurances, the first payment due on September 6, 2014, was missed. Same with the one due on October 6.

This is where it becomes even more shady. When Johnson’s people sent the notice of default and demand for payment, the Morris Firm “threatened to disclose private and confidential information about Mr. Johnson, which they learned in the course of their representation of Mr. Johnson as attorneys, should he commence a lawsuit to seek repayment of the money.”

Oh, but that’s not all! Both Wittstadts and the Morris Firm blackmailed Johnson that they would entangle him in “protracted litigation for years if he attempted to reclaim his money through a lawsuit. They also claimed that they were not his attorneys.”

The lawsuit states that Johnson’s attorneys violated their position of “trust and confidence,” not to mention stole $3 million from their client.

“Mr. Johnson’s lawyers placed their interests before his and fraudulently induced him to give them his hard earned money to pay their firm’s day-to-day operations,” the suit reads. “Mr. Johnson is stunned that the men in whom he entrusted his career have so callously ignored his interests. Mr. Johnson’s lawyers stole his money.”

According to the suit, Johnson’s money has already been spent by the firm.

“(The firm) has admitted to using Johnson’s $3 million to fund its day-to-day operations,” Johnson’s lawsuit states.

Sounds like an extremely unfortunate situation with a group of people that Dustin had considered close and trusted advisors. YOU CAN’T TRUST ANYONE!

Dustin’s manager David Winkle was contacted about this issue and he had no comment on behalf of Johnson.

Dustin hasn’t played competitively since July 31, due to a “leave of absence” from the PGA Tour. His fiancee Paulina Gretzky, daughter of “The Great One’ Wayne, is pregnant with the couple’s first child. Dustin is expected to return to competition sometime after the baby arrives, but the couple has yet to publicly announce the due date.