An embattled Denver developer has received a payout as part of a settlement over Amazon data center deals in Virginia.
Brian Watson, owner and CEO of Northstar Commercial Partners, received “several hundred thousand dollars” from an affiliate of Chicago-based IPI Partners as part of the settlement, according to court documents.
The settlement resolves one of multiple lawsuits initiated by Watson in Delaware Chancery Court. The cases have been something of a parallel to litigation against Watson initiated by Seattle-based Amazon in 2020.
Both cases revolve around data center buildings that Watson’s Northstar developed in northern Virginia for Amazon Web Services.
In the federal case, Amazon alleges that Watson paid kickbacks to two since-fired Amazon employees in order to secure the development deals. Watson and the ex-employees have denied wrongdoing. The case, originally set to go to trial this year, is now in appeals court after a judge dismissed the bulk of Amazon’s claims in the spring. Two claims against Watson remain.
Watson filed his first Delaware case, meanwhile, in December 2020. Defendant IPI essentially put up the bulk of the funds needed to build the data centers after Northstar won the contracts with Amazon. IPI is affiliated with Iconiq Capital, an investment firm that caters to Silicon Valley elite.
IPI terminated Northstar’s role in the joint venture in April 2020, on the same day that the FBI served a search warrant at Watson’s Cherry Hills Village home. Amazon filed its federal lawsuit weeks later. Watson and the ex-employees have not been charged criminally. A former Northstar executive and a friend of Watson’s pleaded guilty to wire fraud earlier this year, but the criminal side of the case has gotten murkier since then.
In the first Delaware lawsuit, Watson accused IPI of breach of contract, saying the firm didn’t have the right to terminate Northstar’s role in the joint venture. Northstar claimed that IPI only had the right to kick Northstar out if the company or one of its officers was found guilty of a crime, which hasn’t occurred.
That case remains unresolved. It has been on pause since 2022, court records show.
The recent settlement resolves a second, more granular, case that a Watson affiliate filed against IPI in 2021.
In that case — Sterling NCP FF LLC v NSIPI Data Center Venture LLC et al — Watson objected to the valuation that IPI gave the Sterling LLC when it terminated it from the joint venture. The agreement between the two firms required IPI to pay “fair market value” for the ownership stake. According to the lawsuit, IPI originally settled on a valuation of $3.64 million, which was less than half of the $7.43 million the Sterling entity invested in the joint venture.
The Sterling case against IPI was dismissed with prejudice in August. The Delaware court documents do not reference a settlement, which is not unusual for civil cases.
The existence of a settlement was, however, disclosed in a filing in the federal case initiated by Amazon. In a Nov. 1 report, the receiver that oversees Northstar and Watson’s finances wrote that Watson was paid “several hundred thousand dollars” in settlement proceeds during the third quarter of the year. The check was then signed over to the receiver.
The sum paid by IPI to settle the case likely goes beyond several hundred thousand dollars. The receiver’s wording suggests that sum represents just Watson’s personal share of the settlement. The Sterling lawsuit states that the entity had 39 members other than Watson.
IPI declined to comment. A lawyer for Watson did not respond to requests for comment.