Sentencing of Denver developer Brian Watson to follow fraud trial verdict
Quiet End to Brian Watson’s Civil Fraud Trial
Despite the drama of tearful testimonies and corporate conspiracy theories, Brian Watson’s civil fraud trial came to a quiet end last month. The trial concluded with the government securing a victorious verdict.
“The next phase will now happen on paper,” stated U.S. Securities and Exchange Commission attorney Terry Miller to U.S. District Judge Gordon Gallagher in a downtown courtroom.
Watson, the former prominent Denver developer associated with Northstar Commercial Partners, and his firm were found guilty by a jury of defrauding investors in 11 real estate projects in Colorado and beyond. They had promised to invest 5% of their own equity but failed to do so.
Since the allegations against Watson were civil, the potential punishment may involve fines or restitution, as well as a ban on selling securities in the future, but not imprisonment. The process for determining these penalties is complex.
In 2024, the U.S. Supreme Court ruled that defendants in civil SEC enforcement actions have the right to a trial by jury, leading to laypeople making decisions in cases like Watson’s instead of administrative judges.
“I am just so thankful to be in front of a nine-person jury today instead of the federal government,” Watson expressed to jurors during the trial.
Unlike in a typical civil trial, jurors were not responsible for determining the amount of money the defendant must pay. This responsibility lies with the judge, as in a criminal case.
However, before the judge makes a sentencing decision, SEC commissioners must vote on Watson’s punishment. With two vacancies on the five-person board, three commissioners, all Republicans like Watson, will decide on fines and the possibility of a ban on selling investments.
The board’s decision is anticipated in late March or April, followed by Gallagher’s sentencing decision, which Watson could appeal to a higher court.
Watson’s attorney, Paul Vorndran at Jones & Keller, chose not to comment on the process.
Meg Ryan, the SEC’s enforcement director, stated in a news release: “We are pleased with the jury’s verdict holding Mr. Watson and Northstar liable for fraud for making material misrepresentations to investors in multiple real estate projects. This case showcases the SEC’s ongoing dedication to safeguarding investors and holding accountable those who attempt to deceive and defraud them. I commend the trial team for their hard work and professionalism.”
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