Michael Atchison contends he gave Willis $1.56 million in three separate checks that Willis deposited into escrow accounts at his business, New Mexico Title Escrow Co.
Willis promised Atchison a 10-15 percent interest in companies related to the project and said he had several government grants lined up, according to the lawsuit.
Atchison says the money was instead used to purchase a luxury suite at the Denver Broncos football stadium, real estate for a business entity registered to Willis and to pay off mortgages on two properties owned by Kyle Finch and Jennifer Olson, both Farmington lawyers.
Farmington police issued an arrest warrant for Willis on Aug. 10 on suspicion of racketeering, fraud, embezzlement and securities fraud. Willis has not been arrested.
His attorney, John W. Day of Santa Fe, said Willis would respond to the allegations in the "appropriate forum" and intends to plead not guilty. Day declined to comment on Willis' whereabouts.
The criminal and civil proceedings facing Willis raise questions of how he was able to allegedly draw substantial payments from investors with little more than outlandish claims and persuasion.
Willis appears to have had no formal business plan, institutional backing or experience building major projects when he pushed the project in early 2010.
The proposal was publicly unveiled in a March 12, 2010, San Juan County Commission special meeting called to discuss it.
Local attorney Gary Risley, representing Willis, described an enormous development.
Facilities were to include a hospital, rehabilitation centers, assisted living, low-cost housing, retirement housing, retail services and a "gated community with security."
The "multibillion-dollar project" would create 8,000 jobs in San Juan County, Risley said according to minutes from the meeting.
The project was to be located near Kirtland Elementary School on 640 acres owned by Willis.
Risley also suggested the U.S. Department of Veterans Affairs would take over the medical buildings.
"While no official documentation can be signed until after building completion, there is a high degree of confidence that the Veterans Administration will lease or sub-lease substantial portions of the medical facilities to be built," the minutes say.
Risley "also mentioned that the Veterans Administration has funding in this year's budget to earmark for this particular project."
However, the Department of Veterans Affairs later said the agency had no link to the project, nor did it intend to build or lease a hospital in the sparsely populated Four Corners.
Risley further said project backers intended to obtain industrial revenue bonds in the amount of $6 billion.
That's an astonishing amount of money for any project and is perhaps unprecedented in New Mexico history. 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, according to the minutes. There is no indication commissioners questioned the project's bona fides, and it never progressed to a formal planning process where it would have been vetted.
Too good to be true'
On Friday, Risley said he believed in the project at the time. The idea was to draw veterans to Kirtland, a town of 7,875 residents on the edge of the Navajo Nation. There 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."
Atchison's payments to Willis sandwiched the County Commission meeting. Atchison said he wrote a $1 million check and a $90,000 check on or about Feb. 23, 2010, to New Mexico Title, and another check a month later for $473,000.
A message left with Atchison's lawyer was not returned.
Atchison charges in the suit that Willis claimed he had commitments for several government grants that could be used for the project, and had lined up investors willing to purchase the bonds upon their issuance.
Finch and Olson, who are named as defendants in Atchison's lawsuit, formerly represented Willis.
"Jennifer and I certainly deny having done anything wrong, and we'll be responding to the lawsuit," Finch said Friday. "Any money we received from Mr. Willis was the result of a separate transaction with him that didn't have anything to do with Mr. Atchison to our knowledge."
A retired Albuquerque physician, Dr. Ronnie Garner, publicly pushed the project. He declined to comment last week.
Tommy Bolack, owner of B-Square Ranch, was a friend of Willis who also partnered with him in a local Fuddruckers burger restaurant. Bolack said he had the opportunity to invest in the Kirtland property but declined. Willis' offers often "seemed to me too good to be true," Bolack said.
"I never saw anything tangible, but he was talking about billions of dollars, and billions is a lot of money to drop in this area," Bolack said.
The two shared similar personalities.
"He's a little rough on the edges. There's no doubt about it," Bolack said. "I just kind of liked him, because I'm a little bit rough on the edges, too."
New Mexico Title Co. and New Mexico Title Escrow Co. unraveled in late 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, which shared a building at 650 W. Main St., Suite C.
Court-appointed receiver Darryl W. Millet is working to reconcile accounts for about 1,000 customers. Many of them say they are owed payments.
Several employees lost their jobs when the businesses closed. One of them was Wendy Leonard of Aztec, who worked as an escrow assistant for New Mexico Title Co.
Willis would come in, always wearing sunglasses, and meet behind closed doors, Leonard said. Employees' desks were frequently searched. One night shortly before the end, Leonard said she put a piece of tape on a desk drawer to see if it would be opened.
"Sure enough, the next morning the tape had been broke," she said.
Leonard said she never tried to speak with Willis.
"I was afraid of him," she said, adding that Willis was known to carry guns.
Leonard said she is owed a final paycheck from New Mexico Title. Millet said at a recent public meeting that some former employees had not been paid, and pledged to try to fix the situation.
That would be welcome news to Leonard.
"I have not been able to find another job," she said. "I have had a difficult time."