Investor Sues Promoter of Failed New Mexico Hospital Project

August 21, 2012

A man who says he invested more than $1.5 million in a failed northwestern New Mexico hospital project is suing the project’s promoter for fraud.

Michael Atchison’s lawsuit claims promoter Bobby Willis spent the money on a luxury suite at the Denver Broncos football stadium, real estate and to pay off mortgages on properties owned by two Farmington attorneys, according to the Farmington Daily Times.

The suit says Willis solicited Atchison’s financial interest in the project with false claims of government backing and a promised stake in companies Willis intended to form.

Willis proposed a multi-billion dollar hospital, assisted living and housing development in Kirtland during a specially convened 2010 meeting of the San Juan County Commission. But he apparently had no business plan, no experience in developing large projects or institutional backing.

Farmington police issued an arrest warrant for Willis on Aug. 10 on suspicion of racketeering, fraud, embezzlement and securities fraud. Willis hasn’t been arrested.

Santa Fe lawyer John W. Day represents Willis and said he would respond to the allegations in the “appropriate forum” and intends to plead not guilty in the criminal case. Day declined to comment on Willis’ whereabouts.

The legal wrangling brings added focus on how Willis was able to draw investors and political support for a project that seemed outlandishly out of proportion for the region.

Proposed for a 640-acre site owned by Willis, it was to include a hospital, rehabilitation centers, assisted living, low-cost housing, retirement housing, retail services and a “gated community with security.”

The County Commission was told by Willis attorney Gary Risley in 2010 that the “multibillion-dollar project” would create 8,000 jobs in San Juan County. Kirtland itself has less than 8,000 residents.

Meeting minutes also show that Risley suggested the U.S. Department of Veterans Affairs would take over the medical buildings when they were complete and said it had money earmarked for the project.

The agency later said it had no link to the project, nor did it intend to build or lease a hospital in the sparsely populated Four Corners region.

Risley said project backers intended to obtain $6 billion in industrial revenue bonds.

That’s an astonishing amount of money for any project. In comparison, Cowboys Stadium in Dallas cost an estimated $1.2 billion to build, according to a Vanderbilt University study. Project backers gave other cost estimates, including one for $3.3 billion in a presentation to state officials.

County commissioners directed Risley to submit an application for the bond, but there’s no indication commissioners questioned the project’s bona fides, and it never progressed to a formal planning process where it would have been vetted.

The idea collapsed completely when two Willis-associated firms, New Mexico Title Co. and New Mexico Title Escrow Co. in Farmington, unraveled in January amid press reports of customers who were missing money from their accounts and payments that had disappeared.

State regulatory agencies and the Farmington Police Department soon launched investigations into the businesses. A court-appointed receiver is working to reconcile accounts for about 1,000 customers. Many of them say they are owed payments.

On Friday, Risley said he believed in the project at the time. The idea was to draw veterans to Kirtland, where they would have access to hospital services, rehabilitation facilities and even vocational training.

“The concept was not to provide this service for just local people,” Risley said. “The concept would be to build a community that would draw them here.”

Risley said he did substantial research into the project, including possibly getting the V.A. involved. “It was a big dream,” Risley said. “But it was not an unrealistic or an inconceivable dream.”

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