Watson defends against SEC claims, admits not investing in some projects

Receiver says SEC probing violations by Denver's Northstar

Brian Watson is CEO and owner of Northstar Commercial Partners. (BusinessDen file photo)

Brian Watson, a local real estate developer who stands accused of duping investors while running for state treasurer in 2018, denied those allegations this week, saying investors knew the risks when they bankrolled projects he suggested he would invest in but didn’t.

Watson was sued by the U.S. Securities and Exchange Commission in August. It accused him and his company, Northstar Commercial Partners in Denver, of securities fraud.

According to the SEC, Watson raised nearly $50 million from 350 investors to fund 10 real estate projects between 2017 and 2019. In each case, he falsely told investors that he and Northstar were investing 4 to 5 percent in each project, the SEC claims. In eight of the projects, they invested nothing; in the others, they invested less than 4 percent.

On Monday, Watson formally responded to those allegations in a court filing.

It’s true that he and Northstar did not invest in five projects, including the construction of a medical office building in Lafayette in 2017, Watson wrote. For two of the projects, Watson and Northstar initially said they would invest but then didn’t tell investors when their plans changed and they decided not to, the developer acknowledged.

But Watson flatly denied that he and Northstar ever used false or misleading statements to deceive investors. Investors knew Watson weighed several factors when deciding whether to invest in a project and he didn’t owe it to investors to tell them when he and Northstar had decided not to, according to him.

Watson relied on several legal arguments in defending against the SEC’s accusations of fraud. One, known as the “bespeaks caution doctrine,” holds that statements to investors are not misleading when accompanied by risk disclosures. Watson also wrote that his pitches to investors were “statements of corporate optimism,” not falsehoods.

Watson asked U.S. District Court Judge Regina Rodriguez to dismiss the claims against him and Northstar and force the SEC to pay their attorney fees. The judge has not yet ruled.

Watson previously lived in Cherry Hills Village but now stays in Grand County, according to the court filing Monday. The Republican lost that treasurer race in 2018 to Democrat Dave Young.

Watson is represented by attorneys Carrie Johnson and David Meschke in the Denver office of Brownstein Hyatt Farber Schreck. Northstar is represented by Paul Vorndran with the Denver law firm Jones & Keller.

Watson is also battling a lawsuit filed by Seattle-based Amazon related to data centers that Northstar developed in northern Virginia for the company. Those data centers are not among the projects cited in the SEC allegations.

Receiver says SEC probing violations by Denver's Northstar

Brian Watson is CEO and owner of Northstar Commercial Partners. (BusinessDen file photo)

Brian Watson, a local real estate developer who stands accused of duping investors while running for state treasurer in 2018, denied those allegations this week, saying investors knew the risks when they bankrolled projects he suggested he would invest in but didn’t.

Watson was sued by the U.S. Securities and Exchange Commission in August. It accused him and his company, Northstar Commercial Partners in Denver, of securities fraud.

According to the SEC, Watson raised nearly $50 million from 350 investors to fund 10 real estate projects between 2017 and 2019. In each case, he falsely told investors that he and Northstar were investing 4 to 5 percent in each project, the SEC claims. In eight of the projects, they invested nothing; in the others, they invested less than 4 percent.

On Monday, Watson formally responded to those allegations in a court filing.

It’s true that he and Northstar did not invest in five projects, including the construction of a medical office building in Lafayette in 2017, Watson wrote. For two of the projects, Watson and Northstar initially said they would invest but then didn’t tell investors when their plans changed and they decided not to, the developer acknowledged.

But Watson flatly denied that he and Northstar ever used false or misleading statements to deceive investors. Investors knew Watson weighed several factors when deciding whether to invest in a project and he didn’t owe it to investors to tell them when he and Northstar had decided not to, according to him.

Watson relied on several legal arguments in defending against the SEC’s accusations of fraud. One, known as the “bespeaks caution doctrine,” holds that statements to investors are not misleading when accompanied by risk disclosures. Watson also wrote that his pitches to investors were “statements of corporate optimism,” not falsehoods.

Watson asked U.S. District Court Judge Regina Rodriguez to dismiss the claims against him and Northstar and force the SEC to pay their attorney fees. The judge has not yet ruled.

Watson previously lived in Cherry Hills Village but now stays in Grand County, according to the court filing Monday. The Republican lost that treasurer race in 2018 to Democrat Dave Young.

Watson is represented by attorneys Carrie Johnson and David Meschke in the Denver office of Brownstein Hyatt Farber Schreck. Northstar is represented by Paul Vorndran with the Denver law firm Jones & Keller.

Watson is also battling a lawsuit filed by Seattle-based Amazon related to data centers that Northstar developed in northern Virginia for the company. Those data centers are not among the projects cited in the SEC allegations.

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