Two years into a lawsuit with Amazon, Brian Watson is pushing back against a pivotal ruling in the case’s earliest days. Meanwhile, the man overseeing his finances says Watson is emailing him “threats and demands.”
In late April, Watson, the CEO and owner of Denver-based real estate firm Northstar Commercial Partners, asked a federal judge in Virginia to vacate a preliminary injunction dating to June 2020.
The injunction was issued about five weeks after Seattle-based Amazon accused Watson of paying kickbacks to Amazon employees to land deals developing company data centers in northern Virginia. Watson has maintained that Amazon is misunderstanding arrangements that are common in commercial real estate.
In issuing the injunction, the judge overseeing the case at the time, who later recused himself over his wife’s Amazon stock holdings, essentially said that the company appeared to have a strong case. Judge Liam O’Grady ordered Watson and related companies to deposit about $25 million in escrow accounts.
Watson never did, saying he didn’t have the money. Last fall, O’Grady found Watson in contempt of court, and ordered a receiver be appointed to oversee Watson’s professional and personal finances.
Brownstein Hyatt attorney Stan Garnett told BusinessDen that the injunction has meant that, unlike most civil lawsuits, Watson hasn’t been able to defend himself on a “level playing field.”
“The injunction has really impacted every aspect of Northstar, Brian Watson’s business,” Garnett said Monday.
In asking that the injunction be vacated last month, Watson’s attorneys argue that the case has “dramatically shifted” since it was granted. They note that, in early April, a judge granted a motion by Amazon to withdraw “key declarations” the company’s lawyers submitted in support of the injunction and early version of the lawsuit, which Amazon recently amended for a third time.
In those documents, the lawyers claimed to have “personal knowledge” of the facts to which they attested; Amazon later said this was from language that was mistakenly included in the filings.
Watson’s attorneys also highlight the fact that, although the FBI is known to have been investigating the matter by April 2020, no one has been charged criminally.
“In fact, the Department of Justice has recently settled two civil forfeiture actions stemming from the alleged fraud scheme and returned hundreds of thousands of dollars originally seized as proceeds of the alleged fraudulent scheme,” they write.
Watson’s attorneys also argue that the court-appointed receiver has essentially vindicated his claim that he didn’t have the cash to comply with the injunction.
“The extensive and thorough report submitted by the court-appointed receiver confirms what the Watson Defendants have asserted all along — that the Watson Defendants are not in possession of millions in fraudulent proceeds, and do not have funds anywhere near adequate to satisfy the injunction,” they state.
The report recently submitted by Receiver Mark Roberts does bear that out to a degree — although he chooses much more muted language.
“As of today, Defendants have insufficient cash or other liquid assets to begin satisfying the Court’s Injunction while also paying the costs of the receivership and the essential personal and business expenses of Defendants,” he wrote.
Roberts wrote that he has given Watson a budget of $12,000 a month, and approved various other requested spending above that amount. But he said Watson has emailed him an average of 12 times each business day for months, often with “threats and demands.”
“Mr. Watson asserts that the $12,000/month allocation covers less than 30% of his personal monthly expenses (reflecting annual cash needs of approximately $500,000), and has routinely asserted that the Receiver’s refusal to fund additional amounts constitutes a malicious and deliberate effort by the Receiver to destroy Mr. Watson’s reputation and personal financial affairs,” Roberts wrote.
Specifically, Roberts wrote, Watson believes that the $8.8 million asking price for Watson’s C Lazy U Ranch property in Grand County is too low. Watson has already sold his small private plane, according to court records, and a buyer paid $8.5 million in December for his mansion backing up to Cherry Hills Country Club.
Roberts wrote that Watson has had income of about $3 million since the injunction period began in June 2020, and has spent the same amount, including $214,000 for luxury travel and shopping, $199,000 on artwork and furnishings for his homes and $76,000 on luxury car leases.
In a subsequent filing, Watson disputed the receiver’s framing, saying that much of his $3 million in income “was immediately paid to creditors and never actually received by Mr. Watson.”
Garnett, Watson’s attorney, said the receiver has a difficult job.
“When you look at what Brian’s been through, his frustration is pretty understandable,” Garnett said.
On Friday, a judge granted Amazon’s recent request to amend its lawsuit for a third time, adding Arvada attorney Rod Atherton as a defendant. The move likely further delays a final ruling on the case’s merits.
“We’re anxious to get this case to trial, because Brian wants his day in court,” Garnett told BusinessDen.
Watson was the Republican nominee for Colorado state treasurer in 2018.