Brian Watson, who placed faith in nine jurors to see that he had been railroaded by federal investigators working in cahoots with Amazon, found that faith to be misplaced Friday.
After five hours of deliberation, the jury instead determined that Watson and his real estate firm, Northstar Capital Partners, committed civil securities fraud when they lied to investors between 2017 and 2019 by telling them that Watson and Northstar would be coinvesting.
Watson remained stoic as the decisions were read shortly after 3:30 p.m. and left the courtroom without comment. His son Chase, the sole supporter to appear at the trial each day last week, shook his head and looked down. Through a spokesman, prosecutors declined to comment.
Jurors sided entirely with the government, finding Watson and Northstar liable on each of two claims of securities fraud. Watson’s punishment will be decided later. The charges against Watson were civil rather than criminal, so his sentence will be financial in nature.
‘The federal government was weaponized by Amazon,’ Watson says in SEC trial
“As an American citizen, to be able to sit in a room and answer questions to a jury -- I have never been afforded that opportunity until this week,” Watson said Thursday. “I am just so thankful to be in front of a nine-person jury today instead of the federal government.”
The five-day civil trial that pitted Watson against the U.S. Securities and Exchange Commission was an airing of grievances for the Denver developer, who once lived in a 20,000-square-foot mansion and traveled on a private jet. He had a net worth north of $60 million before allegations that he paid kickbacks to Amazon executives sent his firm into a tailspin in 2020.
“He has been waiting a long time for this,” Watson attorney Javier Heres told jurors Friday.
Watson testified during three of the five days of trial, far longer than any other witness, and relished the opportunity to tell his life story to jurors: growing up on a farm in Olathe -- “His story begins not in a boardroom but in a barn,” as Heres put it — putting himself through the University of Colorado, learning real estate while driving a limo for Stephen Tebo.
Then came work as a broker for Cushman & Wakefield, hustling clients in Denver’s downtown office towers and living scantily, with only a mattress on the floor for furniture and one meal a day. He founded Northstar in 2000 and bought 166 properties before 2020’s troubles.
“You did make a lot of money off these real estate deals over the years, right?” SEC attorney Jodanna Haskins asked him Thursday, after noting an extravagant lifestyle.
“Yes. You’re in business to make money, so I made money,” Watson responded.
“A lot of money, right?”
“Yes, I was very blessed after working my tail off.”
The SEC spent its time telling jurors about 11 real estate deals that Northstar did between 2017 and 2019, when it raised roughly $50 million from 350 investors. A company brochure and other investor documents stated that investors would be investing “alongside” Watson and Northstar, who would inject 5% of equity and therefore share in the risk of the developments.
But in the 11 projects in question, Watson and Northstar did not invest 5% of the equity.
“Without telling the truth, defendants robbed investors of an informed choice,” SEC attorney Terry Miller said in closing arguments. “It was fraud and it happened over and over.
“Mr. Watson was able to use his own money however he wanted while investors had their money tied up in a deal, all while believing Mr. Watson was right there alongside them.”
Watson and his lawyers, meanwhile, repeatedly accused the SEC of “cherry-picking” 11 projects from the nearly 170 deals that Northstar has done going back to 2000. They said the investor materials were not binding contracts, and only the operating agreements mattered.
“No reasonable investor cares about statements in marketing materials,” Heres, one of two lawyers for Watson, told jurors in closing arguments. “They care about track record.”
“That’s insane,” Miller of the SEC countered, “the idea that marketing materials don’t matter because of a legal document -- the idea that a legal document is a license to lie in marketing materials.”
While the SEC tried to keep the focus narrowly on 2017 to 2019, Watson and his attorneys did what they could to expand the time frame, arguing that Northstar’s full body of work should be displayed. So, too, should the investigations and Amazon accusations of 2020.
“This is an entrepreneur who accomplished the American dream,” Heres said Friday, pointing at his client, “and is still fighting before you for that same dream: to build his baby, Northstar.”
Calling himself “that small little entrepreneur from Colorado,” Watson portrayed himself as a humble and self-made man brought to his knees by Amazon and its “cronies” within the federal government, who investigated him and then accused him of fraud.
“It is obvious Mr. Watson wants you to believe everybody is out to get him,” Miller scoffed.
In addition to Watson, jurors heard from two Northstar employees friendly to him: Jaime Jones, the firm’s former manager of transactions, and Kristi Fisher, its last remaining employee.
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The SEC, meanwhile, had former higher-ups at Northstar in its corner: Brent Gray, who was chief financial officer, and Scott Gibler, its chief investment officer. Gray, the premier witness for the government, relayed how he had to repeatedly remind Watson to fulfill the coinvestment promises he made to investors. Gray’s warnings sometimes went unheeded, he said.
Two investors also testified for the SEC. Alan Abrams and Brian Cleveland said on the opening day of the trial that they had been led to believe Watson was investing alongside them, that they may not have invested otherwise, and that they would never invest with him again.
“They are talking heads for the SEC, that is what the evidence shows,” Heres, the defense attorney, said dismissively on Friday. “You should weigh their testimony accordingly.”
In the end, both sides agreed on one thing: The trial was all about Robert Brian Watson.
“This has been absolutely devastating,” he said Thursday, “and I think that was by design.”
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