Jurors to decide if Brian Watson defrauded investors or was only ‘less than perfect’

Brian Watson, the Denver developer whose career was upended by a 2020 FBI raid of his home and still-unresolved claims of corruption, stood before jurors for the first time Monday.

But the allegations against him in this week’s five-day trial — three civil counts of investment fraud — are unrelated to those levied by Amazon involving data centers in Virginia.

“The defendant Watson was CEO of the defendant WDC Holdings, which did business under the name Northstar Commercial Partners,” U.S. District Judge Gordon Gallagher told jurors. “The U.S. Securities and Exchange Commission alleges that Northstar and Mr. Watson made misleading statements to investors. Mr. Watson and Northstar deny those claims.”

Watson, 54, worked at Cushman & Wakefield before founding Northstar in 2000. That Denver company, wholly owned by Watson, develops and invests in distressed real estate projects. It grew to 150 properties and 40 employees by 2020, when Amazon’s allegations emerged.

In 2022, the SEC sued Watson and Northstar, claiming they had raised more than $50 million from 350 investors for 11 projects between April 2017 and August 2019 while misleading those investors about the money Watson and Northstar would be putting into the projects.

“This case is about a bait and switch that Brian Watson and Northstar used,” Jodanna Haskins, an attorney for the SEC, told jury members in downtown Denver on Monday.

“They were looking for a partner in the deal and that is why they pulled out their wallets,” she said of investors who will testify. “They will tell you that co-investment was important.”

Paul Vorndran, a lawyer for Watson and Northstar, said his clients invested earnest money in each project and investors made money from Northstar investments. He called the 11 projects in question “cherry-picked deals” that the SEC unfairly focused on in its investigation.

“Mr. Watson always intended to co-invest and almost always did. You will hear no evidence that Mr. Watson and Northstar did not purchase the properties in question. You will hear no evidence that Mr. Watson and Northstar used investor funds for anything other than these projects,” Vorndran said.

“Mr. Watson did invest real capital in each deal — indeed, his money was always the first in, as earnest money — and he had more to lose than anybody else,” Vorndran added.

Dressed in a dark gray suit and off-white tie, Watson was an active participant in his own defense, taking notes during jury selection and consulting with his lawyers on decisions. He grinned and scoffed when the SEC attorney accused him of “baiting a hook” for his investors.

“You will hear about 11 projects where the defendants told investors they had co-invested about $2.8 million … or about 5% of the total equity needed,” she told jurors, explaining that in nine of the deals they did not invest anything and in two others they made only small investments.

“They actually only invested about .0002%,” Haskins said of Watson and Northstar.

The trial’s first witness, Alan Abrams, is a retired construction manager who now lives in Florida. He invested in several projects, including 3840 S. Wadsworth in Lakewood.

“It says right there that this was an opportunity to co-invest alongside Northstar,” Abrams said as he pointed to investment documents. “I just assumed that meant they would co-invest.”

“Would you invest with Mr. Watson and Northstar today?” Haskins asked Abrams.

“No, because my investment did not turn out very well,” the former Boulder resident testified, “and because Mr. Watson is now a part of issues going on with Amazon and –”

“Objection!” said Javier Heres, a lawyer for the defendants.

Vorndran, of Jones & Keller, acknowledged that Watson and Northstar did not always co-invest in projects in the usual sense because of capital shortcoming but said their down payments for real estate were a form of co-investment and sometimes surpassed 5% of project costs.

“As you hear evidence this week, please ask yourself, ‘Is this the conduct of someone trying to commit fraud and deceive investors, or is this a company that did the right thing for 20 years before the federal government decided to look through all of its books and find the few times it was less than perfect?” Vorndran advised the jury at the end of opening arguments.