Thursday, June 30, 2016

Appeals Court rules against Watkins (Updated w/video)

Secretary of State Dibbert Hosemann issued the following press release:


Final Order Reinstated in the Matter of Watkins Development, LLC and David Watkins

Jackson, MS—On June 28, 2016, the Mississippi Court of Appeals handed down a decision reinstating a Secretary of State 2014 final order in the matter of Watkins Development, LLC and David Watkins, individually.  The Court found Watkins committed four (4) violations of the Mississippi Securities Act and also imposed penalties and remedies as a result of these violations. 



“We are pleased the Mississippi Court of Appeals reinstated the original order issued by our Agency,” says Secretary Hosemann.  “Yet again, this is another example of how the Secretary of State’s Office protects Mississippians, their investments and enforces Mississippi’s securities laws.”

In August 2010, David Watkins formed Retro Metro, LLC for the purpose of revitalizing the former “Belk Building” of the Metrocenter shopping center.  David Watkins, as manager of Retro Metro, LLC, entered into a Development Agreement with Watkins Development to undertake the design-build project.  The Development Agreement provided Watkins Development be paid a flat fee of $500,000 plus twenty-five percent (25%) of the “project costs” (a minimum of $1.125 million). The construction costs for the project were estimated to be $2.5 million.  Watkins worked to secure bond financing, and the Bond documents representing the proceeds of the Bonds were to be used to revitalize the first floor of the “Belk Building.”  The Bond documents did not disclose the $1.125 million financial liability of Retro Metro to Watkins Development. 

On April 12, 2011, the financing was finalized and on the same day, Watkins wrote distribution checks totaling $400,000 (40 times initial contributions) to the six (6) members of Retro Metro.
On June 8, 2011, Watkins wired $587,084.34 from the Retro Metro checking account to a real estate closing account for an unrelated project of Watkins Development.  The Bond repayment for the project defaulted in April 2012 and has remained one payment in default since said time.

“I am very pleased with the Court’s decision to affirm the Secretary of State’s final order,” says Leroy Walker, partner of RetroMetro, LLC.  “The Secretary of State’s Office has been extremely professional in their due diligence in this matter and I am very appreciative.  The three remaining partners were committed to fulfilling their obligation to finish the build-out for the City of Jackson borrowing $1.5 Million dollars to complete the project.  This is a very good day for the partnership.  This ruling further assists us in completing our goal for revitalizing the Metrocenter Mall.”  

The Secretary of State’s 2014 final order found Watkins and Watkins Development failed to disclose the substantial financial liabilities of Retro Metro and had taken $587,000 of Retro Metro, LLC funds designated to renovate the “Belk Building”.   These funds were used to purchase property in Meridian for an unrelated project of Watkins Development, in violation of Miss. Code Ann. § 75-71-501, Article 5 Fraud and Liabilities, of the Mississippi Securities Act of 2009.
 

Original post: The Mississippi Court of  Appeals dealt a blow to David Watkins' fight against Secretary of State Gibbert Hosemann yesterday.  The Secretary of State fined Mr. Watkins $587,084.34* in 2014 for spending bond proceeds for the Metrocenter renovation project on another project in Meridian and violating Mississippi securities laws.   Earlier post.


Mr. Hosemann stated back in 2014:

After a two-day hearing in October, Watkins was found to have taken funds designated to renovate the "Belk Building" in the Metrocenter shopping center in Jackson, and instead, used the funds to purchase property in Meridian.  The failure to disclose their intentions to use the bond proceeds for any other purpose other than renovating the space at the Metrocenter violates the general fraud statutes of the Mississippi Securities Act.

Mr. Watkins appealed the decision to Hinds County Chancery Court.  The Chancellor upheld the fine and Mr. Watkins sought relief from the Court of Appeals.   The Court ruled yesterday:

We therefore affirm the chancellor’s determination that Watkins engaged in three violations of the Mississippi Securities Act as set forth in subsections (b), (c), and (d) of the Secretary of State’s Final Order. We find substantial and competent evidence in the record supporting these findings of violations of the Mississippi Securities Act.23 We further find that these the findings of violations were not arbitrary and capricious, and they were made within the Secretary of State’s regulatory authority, and violated no constitutional or statutory right.

The Court also overruled the Chancellor on the fourth violation and reinstated it:

Based upon the foregoing, we find that the chancellor abused his discretion in reversing the Secretary of State’s finding, and penalties related thereto, that Watkins violated section 75-71-501(2) of the Mississippi Securities Act by failing to disclose in the bond documents that Retro Metro possessed significant and material financial obligations to Watkins Development, as set forth in the Development Agreement.

 We find that the record indeed contains substantial and competent evidence and statutory authority supporting the Secretary of State’s finding that Watkins’s failure to disclose the Development Agreement resulted in an omission of a significant and material liability of Retro Metro in violation of section 75-71-501(2). As a result, we reinstate the Secretary of State’s finding as to this
violation, as well as the following related penalty imposed by the Secretary of State as a result of this finding: “Twenty-Five Thousand Dollars ($25.000.00) for violating [s]ection 75-71-501(2) [of the Act] by omissions and untrue statements in the bond offering and sale."

 However, as discussed, we join the chancellor in affirming the Secretary of State’s Final Order as to the other three violations of the Mississippi Securities Act and related penalties. We therefore reinstate the findings of violations of the Mississippi Securities Act, and related penalties imposed as a result of these violations
Mr. Hosemann will hold a press conference to discuss this ruling at 11:00 today.

*Plus interests and other costs.


46 comments:

Anonymous said...

Just read the comment on the June 27, 6:15 post of Downtown Jackson Partners board backs Ben Allen. Is Mr Watkins one of those "good, honest, civic minded" board members? Wasn't he Chairman of the Board when all the "stuff" was going on?

Anonymous said...

Watkin's "bad". He should have known better. Surprised his license hasn't been suspended, and maybe some jail time. Where was his bookkeeper and lawyer? He got bold, and out of line. Playing around with city of Jackson, got him screwed too.

Anonymous said...

Another DJP leader.

C-L Jackson Jambalaya Monitoring Desk said...

Thanks Kingfish! Have notified Sam R Hall and we'll be ripping you off w/o attribution shortly.

Anonymous said...

Welcome back Linda Brune @11:19 and 12:28!

Anonymous said...

@1:08. Thanks for chiming in. KF will be sending you your check tomorrow,

Delbert put out a press release yesterday. The COA handed down their opinion Tuesday afternoon.

Jane Tucker had it on her blog site yesterday. Does JJ get kicked this time because he wasn't ahead of her?

Sorry, but all this ass kissing is getting old. Some of us enjoy reading JJ even though in this case we have already read all 50 pages of the COA opinion (and the dissent written by Wilson and joined by two other) two days ago.

Just because Dilbert decided to blow his horn today and say to the world 'look, see, I was right again' doesn't mean that JJ has trumped anyone. (and yes, that pun was intentional since you seem to think that claiming superiority is your only purpose is life.)

Anonymous said...

Please read the dissent written by Judge Wilson.It exonerates Watkins.

Anonymous said...


The CBD property owners have been ripped off for years by the DJP's Board and Ben Allen. Every Chairman and Board member used their position to enhance their personal portfolio. Many on the Board members were developers or thought they were (Watkins). They knew (most of the time) when tenants were going to move or if a company was moving into the CBD. They took in millions of dollars and used it for entertainment such as lavish Board meetings and travel. NOW YOU KNOW !!!!!! Ben Allen hired people to do marketing for the CBD and never took bids from other agencies. CBD property owners need to come together and control their own destiny.

Anonymous said...

A dissenting opinion cannot exonerate. It demonstrates that reasonable minds may differ when looking at the same set of operative facts. The majority opinion is the only one that matters.

Anonymous said...

Calm down Linda Brune @ 3:21. You will have plenty of time to vent. Trust me. You never did explain why almost 90% of the PROPERY OWNERS voted to reauthorize DJP and gladly pay their assessment a short 2 years ago???

Anonymous said...

Oh. I forgot to mention. 3:27 here. All that venting will be under oath needing EVIDENCE, which there is NONE. READ the story re: DJP resolution and memorandum. You need help.

Anonymous said...

I just watched the 15 minute tape. Mississippi needs more Delbert Hosemanns and fewer David Watkins and the other "investors" mentioned in the last few seconds of the video.

Anonymous said...

3:42 yeah, yeah, yeah. Hosemann paid political announcement. did you post that from his office.

Anonymous said...


3:27, This is not Linda. You have no clue what is going on. Ben and his group of thieves did a perfect selling job on the property owners and I bet they won't vote it in again. What has Ben and DJP done to enhance our city. Not one damn thing---No Farrish Street, no Capitol Green, no completed Capitol Street, no revitalization of the CBD buildings NO NEW NOTHING !!!! You still can't walk the streets at night---DO YOU GET IT NOW !!!!!! Building values have dropped by 80% and there are virtually no new tenants moving into the CBD. The property owners have been taken and they know it now !!!!!

Anonymous said...

@3:42.

I watched as much of the 15 minute video as I could and it made me want to puke. The problem is there are too many demagogic politicians like Delbert Hosemann and not event citizens like David Watkins. This ruling is pure politics.

Anonymous said...

Five judges ruled to affirm the administrative order, three voted to reverse and rule for Watkins (finding no securities violation), two did not participate. Watkins ought to seek a rehearing or petition the Supremes to hear the case.

Anonymous said...

I wish Delbert would run for Governor.

Anonymous said...

3:27 and 4:01. Your nose is growing, Pinocchio.

Anonymous said...

3:27 AND 3:40 Response was submitted by not posted. Soooo, Captain Bullshit, you just enjoy while you can because you will never get reauthorized by the present property owners. BTW it appears that you are the only one HYPERventing.....watch that blood pressure now. Would hate to see that Howdy Doody head explode.

Anonymous said...

Wby no jail time ???

Anonymous said...

I wondered that as well but am glad it is not on the table. Not on a 5-3-2.

Anonymous said...

Wonder what happens if Watkins files chapter 7. Will he be off the hook?

Anonymous said...

And, with all that money floating around, the City of Jackson could not move into the space because someone neglected to install computer cables or fiber, whatever was supposed to be used. This omission caused the water department to be unable to move for a couple of years or so. The City wound up having to spend over a million to cover this omission. Who in the world would think an office did not need cabling as much as it needs electricity. Never did understand this whole thing.

Anonymous said...

No doubt about it. June 30, 2016 at 2:14 PM is Linda Brune.

Anonymous said...

Is this the same group involved in Farish Street?

Anonymous said...

I keep reading about Linda Brune. So I googled her. She is like 75 years old. No way a woman that age is actually bogging all this shit.

Anonymous said...

Watkins' liability was based on fraud. As a result, the judgment cannot be discharged in bankruptcy.

Anonymous said...

Of course she's not @6:54 PM. That is just Ben, Matt and Ben's Krishnas shooting the messengers. Doing so has been Ben's M.O. for decades.

Anonymous said...

7:03. So what if he goes bankrupt? Based on fraud or not, 100% of nothing is nothing. What then happens?

Anonymous said...

This is going to get messy. I hate it for David. People forget the King and the Standard Life. He also is instrumental, or was, with the hotel development in my neighborhood, Fondren. The whole thing sucks.

Anonymous said...

David Watkins' massive cash flow problems have been previously documented here. Please catch up.

Anonymous said...

Somebody, please explain how jail time is not required for four felony fraud convictions.

Anonymous said...

6:54, you have no idea what you're talking about. She's quite capable.

Anonymous said...

6:54 and 7:18 Ben just cannot fathom the number of people in this city who despise him in spite of his phony boy wonder demeanor. That's why he's trying to blame Ms. Brune for all those blogs....so he can believe there's only one person who finds him nauseating.

Anonymous said...

9:20

and your point is what?

Kingfish said...

What felony violations?

Anonymous said...

Here comes the David Watkins walks on water crowd. Oh boy.

Anonymous said...

3:40 The "board and memo" and those who support it do not get to determine the guilt or innocence of BA. Read the evidence and there is enough to go around for the whole motley crew. YOU get some help.

Anonymous said...

Is this thread about Watkins situation or sand box fights by children?

Keep DJP Real said...

I don't give a rat's ass whether it's Linda Brune posting or not. Somebody needs to keep us reminded of Watkins (and others) relationship to DJP.

The yapper (Hello Ben) who keeps pissing his leg and posting about Brune's posts (if indeed they are hers) needs to get a life.

Anonymous said...

Judge Wilson dissents:
"The only issue before us is whether the Secretary’s findings support the legal conclusion that Watkins violated the Securities Act by using bond proceeds for a purpose other than the Metrocenter renovation project, i.e., by diverting proceeds to the Meridian project. For at least one logical reason, the Secretary’s remaining findings do not add up to a violation of the Act. In the absence of a finding that the funds were not owed to Watkins, the Secretary’s conclusion that Watkins diverted the funds for an improper purpose cannot stand. If Watkins was owed this money, then the money was simply compensation for services rendered—consistent with the purpose designated in the PPM. Even assuming that Watkins did violate the loan agreement’s requirements for requisitioning funds, without something more, that is a contractual issue, not a violation of the Securities Act. Contractually insufficient requisitions or inadequate paperwork would not render false or misleading the statements in the PPM regarding the purpose of the bond proceeds. Based on the evidence and findings in the administrative proceeding, we should reverse and render judgment in favor of Watkins. Accordingly, I respectfully dissent."

Anonymous said...

There will not be any jail time because too many people in high places are involved. He will be making deals again and those who were involved will be right there with him just like before.
Too much money available to those who will steal from their grand mother.

Anonymous said...

Haven't studied the ops, but Wilson's "You owed me money for X, so I dipped the money out of Y" theory sounds ....

Regardless, Watkins 99% likely to seek cert, given a 5-3 split like that.

Anonymous said...

OK dumbasses. There will not be any jail time because these were civil charges, not criminal. Watkins was found guilty of violating securities statutes - he screwed the bond investors. If someone wanted to bring criminal charges, you would have a criminal trial with a jury, not an administrative hearing by the Secretary of State's appointed AJ.

And while Watkins will probably seek cert, I wouldnt bet on it being granted. The whole 'appeal' issue is not whether or not what Watkins did was ok; it was on whether SOS had authority to do as he did and if the AJ followed 'procedure'. Any cert by Supremes would have to do the same thing - and that does not include their opinion of the facts of the case.

Anonymous said...

Sure hope Davey has gotten better over time paying all his Hinds property taxes on-time. I'm guessing he hasn't.

Anonymous said...

Must be tied to racism.

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