[Update: 5:48 p.m. - Story updated with a response from Morris Schneider Wittstadt]
PGA golfer Dustin Johnson was allegedly the victim of a theft and extortion scheme perpetrated by the title law firm of Morris Hardwick Schneider, the firm’s former managing partner, Nathan (Nat) Hardwick, the firm’s current managing partner, Mark Wittstadt, and Gerard (Rod) Wittstadt, to the tune of $3 million.
Johnson’s lawsuit, filed Tuesday in United States District Court for the Northern District of Georgia and obtained exclusively by HousingWire, alleges that the law firm of Morris Hardwick Schneider, now known as Morris Schneider Wittstadt, Hardwick and both Wittstadt’s, used their positions as Johnson’s “trusted advisors” to steal $3 million from him to cover shortages in the firm’s accounts created by Hardwick himself, who allegedly embezzled at least $30 million from the firm’s own accounts and the firm’s trust accounts.
Hardwick resigned his positions as managing partner of Morris Hardwick Schneider and its affiliated company, LandCastle Title, in August, after “substantial escrow account misappropriations” were discovered with the accounts of MHS and LandCastle.
A lawsuit filed by MHS and LandCastle Title in Georgia’s Fulton County Superior Court, alleged Hardwick of stealing at least $30 million to pay for private jets, cover real estate investment losses, cover millions in gambling debts and other investments.
Johnson’s lawsuit states that Hardwick “played a particularly unique and significant role of trust and confidence” in Johnson’s life, serving as one of his primary advisors on all matters relating to his career as a professional golfer.
Hardwick was also an officer in Johnson’s professional corporation, and was listed on Johnson’s personal website as a member of “Dustin’s Team” as Johnson’s “attorney/counselor.”
In the immediate aftermath of Hardwick’s alleged misdeeds being revealed by HousingWire, Hardwick’s name and picture were removed from Johnson’s website.
Hardwick, through an attorney, said after he was accused of embezzling the money from the firm that he is not guilty of “any improper, illegal or unethical conduct,” and said that he believes all of the money he received was “properly distributed to him as his share of the profits of the firm.”
The civil suit alleges that Hardwick used $1 million of the supposedly ill-gotten gains to pay providers of private jet services, used approximately $645,000 to cover losses in failed property investments and sent approximately $4 million to various casinos via wire transfers.
Hardwick also allegedly misappropriated funds from the firm and LandCastle to “fund a portion of his $3 million purchase of a luxury condominium unit in The Residences at The St. Regis Atlanta in February 2013.”
Johnson’s lawsuit alleges that before the allegations were made public, Hardwick approached Johnson about a “really good investment.” Hardwick allegedly advised Johnson that if he loaned the firm $3 million, the firm would pay him back $4 million in equal monthly installments over a 30-month term, beginning on Sept. 6 and secured by a promissory note.
Johnson’s lawsuit says that Hardwick concealed his alleged theft from Johnson. The lawsuit states that Hardwick, Mark Wittstadt, and Rod Wittstadt “entered into a conspiracy” to use the firm’s clients and Hardwick’s business contacts to misappropriate their money “under false pretenses” to fund the firm’s operations.
Johnson’s lawsuit also alleges that Hardwick concealed that he had told Mark and Rod Wittstadt that he would obtain a loan from Johnson to replace a portion of the firm’s depleted funds.
“Wittstadt and Wittstadt knew that Hardwick was going to do anything he could to obtain as much money as possible from Mr. Johnson and their other targets,” the lawsuit states.
“Mr. Johnson trusted his lawyers and his law firm,” the lawsuit states, and because of that trust Johnson wired $3 million into the firm’s “Equity Partners Account” on Aug. 6.
Johnson wired the money after Hardwick allegedly told Johnson that Hardwick would be investing a similar amount into the firm.
“On or around August 27, 2014, the allegations against Hardwick were made public,” the lawsuit states. “Despite the serious allegations against him, Hardwick assured Mr. Johnson that Hardwick had done nothing wrong, and that Mr. Johnson’s loan was safe. Despite these assurances, (the firm) failed to make the required monthly payments on September 6, 2014, and October 6, 2014.”
When the firm allegedly failed to make both the first and second months’ payments, Johnson gave Hardwick and the others a notice of default and demanded payment.
The lawsuit states that instead of responding to Johnson’s demand for payment, Mark and Rod Wittstadt and the firm threatened to disclose private and confidential information about Johnson they’d obtained as his attorneys if he sued them to reclaim his money.
“Wittstadt, Wittstadt and (the firm) further threatened to entangle Mr. Johnson in protracted litigation for years if he attempted to reclaim his money through a lawsuit,” the lawsuit states. “They also claimed that they were not his attorneys.”
Johnson’s lawsuit states that his attorneys violated their position of trust and confidence and “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 for their firm’s day-to-day operations,” the lawsuit states. “Mr. Johnson is stunned that the men inwhom he entrusted his career have so callously ignored his interests. Mr. Johnson’s lawyers stole his money.”
And according to Johnson’s lawsuit, his money is gone.
“(The firm) has admitted to using Johnson’s $3 million to fund its day-to-day operations,” Johnson’s lawsuit states.
The lawsuit then claims that because the firm has already used Johnson’s $3 million, the firm either is or soon will be insolvent.
“Due the financial uncertainty of (the firm), the recovery of Johnson’s $3 million likely dwindles with each day that passes without repayment or other actions taken to preserve recovery,” the lawsuit states. “As such, Johnson will suffer irreparable injury unless the injunction issues immediately.”
In a statement to HousingWire, Morris Schneider Wittstadt denies the claims made in Johnson's lawsuit.
“The Wittstadt’s recently learned of Dustin Johnson's lawsuit and vehemently deny the allegations of wrongdoing made against them," the firm said. "Although they have not yet been served, they are preparing appropriate legal motions and are confident that the misplaced claims against them will fail.”