SEC staff allege securities fraud by Watson’s Northstar, receiver says

Receiver says SEC probing violations by Denver's Northstar

Brian Watson is owner of Denver-based Northstar Commercial Partners. (BusinessDen file photo)

Securities and Exchange Commission staff believe that Denver-based Northstar Commercial Partners broke the law, according to the receiver overseeing the company’s operations.

Receiver Mark Roberts said in a July 29 court filing that Northstar has been informed by the SEC that its staff have made a “preliminary determination to recommend that the commission file an enforcement action” against the real estate firm, which is fully owned by CEO Brian Watson.

“This proposed action would allege violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder,” Roberts wrote.

The aforementioned sections and rules generally relate to securities fraud.

BusinessDen reported in May that Northstar was being probed by the SEC. Paul Vorndran, an attorney with Jones & Keller representing Northstar, said the firm “will vigorously defend any action that may be filed.”

“Northstar Commercial Partners denies any violations of the securities laws and has worked with the Staff of the SEC in good faith during their investigation,” Vorndran said in an email last week. “We await the Commission’s decision whether to initiate legal action.”

An SEC spokesman declined to comment.

The court filing was posted in connection with a lawsuit filed against Northstar by Seattle-based Amazon in April 2020. Amazon alleges that Northstar paid kickbacks to Amazon employees in order to secure deals to develop data centers for the company in northern Virginia. Northstar has denied wrongdoing.

A former Northstar employee named Danny Mulcahy, who resigned from the firm in 2019, said in a March deposition in the Amazon case that he believes the company engaged in improper conduct.

“Unequal treatment of investors, poor management of investments, side deals that I hadn’t been aware of,” Mulcahy said in the deposition. “That’s sort of it in a nutshell.”

Mulcahy also said that some investors “got paid differently than other investors.” He said he had been deposed separately by the SEC for about eight hours, but that he hadn’t approached the agency with his concerns.

In his role as receiver, Roberts oversees the finances of both Northstar and Watson himself. In his July 29 report, he said the two parties took in $1.97 million during the second quarter of 2022, and spent $2.03 million. As he did in his report detailing the first quarter, Roberts indicated that he and Watson have clashed over spending.

“Mr. Watson has repeatedly issued direct threats of litigation against the Receiver to persuade the Receiver to pay additional personal items, including credit cards, pre-Receivership debts, and other expenses inconsistent with the Receivership Order,” Roberts wrote.

Watson, meanwhile, is also seeking a divorce from his second wife, whom he married in September 2019, seven months before he was sued by Amazon and the FBI served a search warrant at his house.

Watson filed a petition for dissolution of his marriage to Tiffany Mai on July 27 in Grand County, where he has a home. The document states that the pair’s marriage is “irretrievably broken,” and doesn’t provide additional reasons for the filing. Watson had one child with Mai late last year; he also has children from his first marriage.

Watson was the Republican nominee for Colorado state treasurer in 2018.

Receiver says SEC probing violations by Denver's Northstar

Brian Watson is owner of Denver-based Northstar Commercial Partners. (BusinessDen file photo)

Securities and Exchange Commission staff believe that Denver-based Northstar Commercial Partners broke the law, according to the receiver overseeing the company’s operations.

Receiver Mark Roberts said in a July 29 court filing that Northstar has been informed by the SEC that its staff have made a “preliminary determination to recommend that the commission file an enforcement action” against the real estate firm, which is fully owned by CEO Brian Watson.

“This proposed action would allege violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder,” Roberts wrote.

The aforementioned sections and rules generally relate to securities fraud.

BusinessDen reported in May that Northstar was being probed by the SEC. Paul Vorndran, an attorney with Jones & Keller representing Northstar, said the firm “will vigorously defend any action that may be filed.”

“Northstar Commercial Partners denies any violations of the securities laws and has worked with the Staff of the SEC in good faith during their investigation,” Vorndran said in an email last week. “We await the Commission’s decision whether to initiate legal action.”

An SEC spokesman declined to comment.

The court filing was posted in connection with a lawsuit filed against Northstar by Seattle-based Amazon in April 2020. Amazon alleges that Northstar paid kickbacks to Amazon employees in order to secure deals to develop data centers for the company in northern Virginia. Northstar has denied wrongdoing.

A former Northstar employee named Danny Mulcahy, who resigned from the firm in 2019, said in a March deposition in the Amazon case that he believes the company engaged in improper conduct.

“Unequal treatment of investors, poor management of investments, side deals that I hadn’t been aware of,” Mulcahy said in the deposition. “That’s sort of it in a nutshell.”

Mulcahy also said that some investors “got paid differently than other investors.” He said he had been deposed separately by the SEC for about eight hours, but that he hadn’t approached the agency with his concerns.

In his role as receiver, Roberts oversees the finances of both Northstar and Watson himself. In his July 29 report, he said the two parties took in $1.97 million during the second quarter of 2022, and spent $2.03 million. As he did in his report detailing the first quarter, Roberts indicated that he and Watson have clashed over spending.

“Mr. Watson has repeatedly issued direct threats of litigation against the Receiver to persuade the Receiver to pay additional personal items, including credit cards, pre-Receivership debts, and other expenses inconsistent with the Receivership Order,” Roberts wrote.

Watson, meanwhile, is also seeking a divorce from his second wife, whom he married in September 2019, seven months before he was sued by Amazon and the FBI served a search warrant at his house.

Watson filed a petition for dissolution of his marriage to Tiffany Mai on July 27 in Grand County, where he has a home. The document states that the pair’s marriage is “irretrievably broken,” and doesn’t provide additional reasons for the filing. Watson had one child with Mai late last year; he also has children from his first marriage.

Watson was the Republican nominee for Colorado state treasurer in 2018.

Your subscription has expired. Renew now by choosing a subscription below!

For more informaiton, head over to your profile.

Profile


SUBSCRIBE NOW

 — 

 — 

 — 

TERMS OF SERVICE:

ALL MEMBERSHIPS RENEW AUTOMATICALLY. YOU WILL BE CHARGED FOR A 1 YEAR MEMBERSHIP RENEWAL AT THE RATE IN EFFECT AT THAT TIME UNLESS YOU CANCEL YOUR MEMBERSHIP BY LOGGING IN OR BY CONTACTING [email protected].

ALL CHARGES FOR MONTHLY OR ANNUAL MEMBERSHIPS ARE NONREFUNDABLE.

EACH MEMBERSHIP WILL ONLY FUNCTION ON UP TO 3 MACHINES. ACCOUNTS ABUSING THAT LIMIT WILL BE DISCONTINUED.

FOR ASSISTANCE WITH YOUR MEMBERSHIP PLEASE EMAIL [email protected]




Return to Homepage

Comments are closed.