Brian Watson, a Denver developer and former Republican candidate for Colorado treasurer, is facing charges from the Securities and Exchange Commission that he lied about his level of investment to 350 investors before collecting $49.5 million for 10 real estate projects, court documents show.
The “false and misleading” statements Watson made about his “skin in the game” in the projects were critical to investors and encouraged them to invest, according to the civil complaint filed by the SEC in federal court in Denver.
The SEC accused Watson and his business Northstar Commercial Partners of violating federal antifraud laws over a roughly two-year period, including when he ran unsuccessfully as the Republican nominee for Colorado treasurer in 2018.
The commission is seeking civil penalties against Watson and his business as well as permanent injunctions to prevent them from continuing. They also want him to forfeit any ill-gotten proceeds.
Messages from The Colorado Sun left for Northstar requesting comment were not immediately returned.
Watson, of Englewood, is the sole owner of Denver-based Northstar.
According to the complaint, Watson told investors that he would personally invest 4% to 5% of the equity needed for the commercial real estate projects, or $2.8 million, when he invested only a small fraction of the promised amount in just two projects. Watson and his business did not make investments in the other eight.
Through at least 2018, Watson sent marketing emails to potential investors inviting them to be “co-capital partners, alongside of my personal funds” and during phone calls, he said he put his personal funds into each project, the complaint said.
Investors collected “substantial losses” in many of the projects, which the complaint alleges Watson avoided because he did not invest the money he said he would invest.
During the two-year period, Watson collected money from Northstar accrued from management and debt guarantee fees, the complaint stated. Watson bought a private jet, a multimillion-dollar house on a ranch and another multimillion-dollar mansion.
Northstar was “consistently” short of cash and Watson contributed money back to his business to cover payroll and other operating expenses, the complaint said.
The SEC’s accusations are not the first targeting Watson’s finances.
His financial history was scrutinized during his 2018 campaign, when he ran against Democrat Dave Young. At the time, Watson said his past, including tax liens, gave him a unique experience that would make him better suited to handle the state’s assets. His opponents said Watson’s troubles with personal finances underscored why he should not be trusted with money.
Watson defeated two other candidates in the 2018 Republican primary, getting 38% of the vote, despite concerns raised about his past finances. Young won the general election with 52% of the vote to Watson’s 45%. Watson put $1.3 million of his own money into his campaign.