Saturday, March 4, 2017

Supreme Court rules against Watkins

Mississippi Secretary of State Englebert Hosemann issued the following press release:


Ruling Against Watkins and Watkins Development in Securities Fraud Case

“The Secretary of State’s Office has the statutory authority to protect Mississippians’ investments by enforcing our State’s securities laws. The Mississippi Supreme Court has affirmed unanimously our 2014 determination of securities fraud in this case as did the Hinds County Chancery Court and the Mississippi Court of Appeals.”

###

Case Background

The Mississippi Supreme Court on Thursday, March 2, 2017, upheld a 2014 final order by the Secretary of State finding David Watkins and Watkins Development in violation of Mississippi Code Section 75-71-501, Article 5 Fraud and Liabilities of the Mississippi Securities Act of 2009.  The full text of the decision is accessible here:

The litigation stems from Watkins’ August 2010 formation of Retro Metro, LLC, to revitalize the former “Belk Building” in Metrocenter Mall.  As manager of Retro Metro, LLC, Watkins entered into a development agreement with Watkins Development to undertake the project. The agreement provided Watkins Development with a $500,000 fee plus 25 percent of the “project costs” (a minimum of $ 1.125 Million).  Construction costs were estimated at $2.5 Million.  Watkins secured bond financing, and the bond documents represented that 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.  Financing finalized on April 12, 2011.  On the same day, Watkins wrote distribution checks totaling $400,000 to the six 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, the purchase of land in Meridian, owned by Watkins Development.  The wired funds were supposed to be for Retro Metro construction costs.  The bond repayment for the “Belk Building” revitalization project defaulted in April 2012. 

In 2014, the Secretary of State issued a final order finding Watkins and Watkins Development failed to disclose the substantial financial liabilities of Retro Metro and had removed $587,000 of Retro Metro, LLC funds designated to renovate the “Belk Building” in violation of Mississippi securities laws.

The Secretary of State alleged four securities violations against Watkins and the Chancery Court of Hinds County affirmed three violations.  Watkins appealed.  The Court of Appeals affirmed all four violations in the Secretary of State’s final order.

The Supreme Court on Thursday, March 2, 2017, affirmed three Securities laws violations against Watkins personally and Watkins Development relating to Watkins’ failure to disclose bond proceeds would be used for another project owned by Watkins and not used for the “Belk Building”. The Court also affirmed a $50,000 penalty levied against Watkins personally and Watkins Development, $587,084.34 plus interest in restitution owed, and $18,047.39 for the cost of the State’s investigation and proceeding.  The Court also imposed the cost of appeal.

20 comments:

Anonymous said...

So will we have 70+ "civic leaders" writing the judge to give him a break because he's a good guy and it was just "lousy record keeping" (Jeff Good's words), and he has the area's best interests at heart?

He broke the law...so what? He's a good ol' boy, judge! Give him a break.

Anonymous said...

Does the 12:46 poster refer to David Watkins? Sounds familiar with the Allen case. is 12:46 referring to Watkins having written a letter of support for Ben Allen? Just failing to see the comment in context with this article.

Anonymous said...

Who cares! Our state is falling apart while our legislators fund shopping centers and museums with our bond money! They should have been funding roads and bridges! Infrastructure and economic development will change the direction of our state.

Anonymous said...

been leaning to republican since got over Carter and early Ronald. thought if we put them in complete power everything would be fine. wrong. pig headed idiots won't fix the damn roads or fund mental health to ward off the feds. cuts to law enforcement and prisons.

i'm retired. thinking of moving to costa rica...

Anonymous said...

@ 6:00 PM we won't miss you.

Anonymous said...

@ 4:19 , you are a little off. The 2011 Legislature (2 elections ago) did fund two history museums through a big chunk of bond money. Since then, the only museum that I know of is a significantly lesser amount for the Grammy Museum. The outlet mall was a boondoggle, but was a tax abatement, not bond money.

Anonymous said...

@9:54. Maybe I know too much. The legislatures have funded not one but two shopping centers. The bond bill passed by the legislature and signed by the gov is 90 percent junk. It is full of funding for aquariums (40 million) junky economic development projects like the failed car plant in tunica. I can go on and on. We are paying debt on junk!! Not on long term assests that last and build our state. I'm sorry man, but the truth hurts. I want smarter spending!

Anonymous said...

Do we have anyone with a brain who is not tied to a political bent?

Anonymous said...

Talks out of both sides of his face. And talks and talks and talks. A legend in his own mind.

Anonymous said...

Missing the good part of this story. The COA upheld SOS on the three things he appealed and the fourth which the all-knowing, never wrong and always sure Hosemann didn't bother to raise. Supreme upheld COA except for the fourth claim because Filbert didn't raise it on appeal.

What happened Dilbert - thought you were the smartest person in the room --no, the state! How did you screw up and miss raising #4 in your appeal? Legal mind slipping in your advancong age?

And don't feed me the argument that someone representing Gilbert wrote the appeal. Anyone that has ever dealt with that sanctimonious SOB, oops, meant SOS knows that he went thru the appeal not word by word but letter by letter before it left his new offices to the Gartin Bldg and decided every minor detail that was to be included and how.

Anonymous said...

Davey's notorious cash flow problems just went exponential.

Anonymous said...

Watkins is lucky the SOS enforcement powers are limited to civil remedies and not criminal. He's also lucky that the people with criminal enforcement powers for the last eight years (RSS, Hood, Davis) have all been partisan Democrats.

Delbert made a small fortune doing real estate development deals before running for SOS. The man knows how to spot a fraud.

Anonymous said...

I'm sincerely sorry to learn this. David is a "good guy". Many thought he was Jackson's hero when he stepped up to attempt to better Jackson through risky projects. When some did not come to fruition, the project accounts ran dry, and someone made a bad decision to rob Peter to pay Paul. Would have been ok in privately funded projects with a planned payback to the appropriate account. He is not a criminal.

Anonymous said...


10:08,

This is a case of a typical "DUMBASS", David was to arrogant to know that he did not know how to develop anything---he is a lawyer. It's like Ben Allen---he is a salesman not a city planner, to arrogant to know he did not know. It takes a set of BRASS BALLS to be a true real estate developer---a true developer has to put it all on the line everyday. I did it for 28 years and went broke three times but always got up and went at it again and I finally made it. I have a degree in construction management and a degree in hard knocks---hard knocks taught me more than 4 years in college. David needs to stick to being a lawyer. GRASS IS NOT GREENER !!!!!!!!!!!!!!!!!!!!!!!!!

Anonymous said...

Watkins continual chasing of one tax credit scheme after another left too many of his "projects" appearing to be funding Ponzis. This bond fiasco was too cute and too far.

Anonymous said...

10:52, several points . . .
Why do you keep comparing to Ben Allen?
Why is it ok for you to go broke three times, yet Mr. Watkins is not entitled to these same learning opportunities before making it? You are a mighty angry successful true real estate developer. You were given 4 chances, yet you don't allow the same for your fellow man.
For your future reference, the word that you've misused twice in your tirade should be "too", rather than "to". You are "too" angry or ignorant "to" know that you did not know.

Anonymous said...


Thanks 1:51---another lesson learned. I'm not angry about anything just frustrated at your lack of right and wrong---I never took money that did not belong to me and move it around. If all you can get out of this is correcting me for using to instead too----you are very f----d up !!!!!! Do you want to correct me again ?????????

Anonymous said...

Sure, 2:18, since you asked. It's not necessary to use 10 exclamation points and question marks all over your comments on this post and the post on this page about Ben Allen. That is, unless you really are too angry to know that you did not know. Seriously, be happy for your good fortune, and don't wish ill on others.

Anonymous said...

Bye David.

Anonymous said...

5:52. She "does not know what she does not know", but will know loud and clear soon.

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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

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