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Watkins Fighting on Two Fronts

Jackson developer David Watkins is fighting to either be a part of the team that finishes renovations on Farish Street or recover the money he put into the project, while fighting allegations from the secretary of state’s office that he committed securities fraud in 2011.

Jackson developer David Watkins is fighting to either be a part of the team that finishes renovations on Farish Street or recover the money he put into the project, while fighting allegations from the secretary of state’s office that he committed securities fraud in 2011. Trip Burns

Jackson developer David Watkins is fighting his political foes on two fronts these days. On one front, he is trying to work through his differences with Jackson leadership in order to stay involved with the beleaguered Farish Street redevelopment project. On the other, he's challenging allegations that he committed securities fraud, which are currently under investigation by the Mississippi secretary of state's office, a story the Jackson Free Press broke online last week at jfp.ms.

The Jackson Redevelopment Authority has not budged on its decision to terminate the lease Watkins held on the Farish Street development from late 2008 until Sept. 25, when it abruptly cancelled the contract without notifying Watkins or asking him any questions.

Watkins' attorney charged last week that the New Orleans-based law firm that represents JRA, Jones Walker, is helping clients "attempting to steal the Farish Street project from (Watkins)" with its involvement with various lawsuits spinning around the Watkins and his various projects.

Hinds County Judge Patricia Wise recused herself Monday from ruling on the case because of a potential conflict of interest, and Judge Denise Owens is now set to hold the first hearing regarding the lawsuit on Nov. 22.

Attorney Lance Stevens also wrote in the motion for an injunction last week that inter-tangled relationships between attorneys and principals involved in the various lawsuits create a situation that is "ripe for corruption and present an unacceptable ethical scenario."

Stevens' motion seeks to prevent the New Orleans-based Jones Walker Law Firm from representing the Jackson Redevelopment Authority in its lawsuit against developer David Watkins and his firm, Farish Street Group LLC.

The filing claims that Jones Walker lawyers who are set to represent JRA in the suit against Farish Street Group have "unwaivable" conflicts of interest because they are simultaneously involved in lawsuits involving the principal members of the Farish Street Group, the firm that JRA is suing, with millions of dollars hanging in the balance.

Jones Walker is currently representing Retro Metro LLC, the group Watkins originally formed to renovate the Belk building in Metrocenter Mall, and its principals Socrates Garrett and LeRoy Walker in four suits, including at least one against Watkins. The firm is defending Retro Metro in three of those suits against contractors who say they have not been paid for performed work, and the fourth against Watkins and his firm Meridian Law Enforcement Center LLC.

Neither Garrett or Walker have returned calls for comment.

JRA attorney Zach Taylor said Tuesday that he wouldn't comment on ongoing litigation, nor would he confirm that there are ongoing talks to resolve the matter amicably.

"I know there are lawyers who feel like they need to be an advocate for their client in the media," Taylor said. "I'm not one of those attorneys."

Owens will have to grant or deny Stevens' motion to disqualify JRA's legal defense prior to the first hearing.

Watkins has placed a lien on the Farish Street property in an effort to recoup some or all of the $4.7 million of personal money he says he has sunk into the project. JRA is counter-suing in an attempt to wrest the project away from Watkins while keeping the equity he's put into, and built around, the project.

But all that could be a moot point if Secretary of State Delbert Hosemann's office determines that Watkins' June 8, 2011, wire transfer of $587,084 from the bank account for Retro Metro LLC to a real-estate closing account in Meridian constitutes securities fraud.

The Mississippi secretary of state last week opened an investigation involving Watkins and his company, Watkins Development, on allegations of securities fraud for misusing half a million dollars awarded for Metrocenter redevelopment to purchase a building in Meridian for a different project.

Secretary of state attorneys issued a "notice of intent" July 30, 2013, to impose administrative penalties and demand restitution, in the form of revenue from the other project, from Watkins for the money transfer.

In conjunction with the order, the secretary of state held an administrative hearing that began last Tuesday and concluded Wednesday to allow Watkins to address the allegations that he misused part of a $5.2 million bond to help fund his Meridian Law Enforcement Center project. Mississippi Business Finance Corp. awarded the bond April 12, 2011, for the revitalization of the first floor of the old Belk building in Metrocenter.

The secretary of state accuses Watkins of failing to disclose in the bond documents "the intent to use and or convert any portion of the proceeds to finance the activities of MLEC." Because he did not disclose that intent, secretary of state attorneys say it is "material omission" under the "General Fraud" section of the Mississippi Code of 1972.

As the second day of last week's meetings wrapped up, Watkins flatly denied the charges against him and finished his testimony by answering his attorney Brad Pigott's plainly stated query: Did he have any reason to conceal information from investors, as the state has suggested?

"Mr. Pigott, I have every reason to avoid any kind of concealment or any fraud," said Watkins, who is also the new chairman of Downtown Jackson Partners. "I've spent almost 40 years as a lawyer, and over half of those years in public finance and public bonding. Securities fraud is a career-ending disaster."

The Secretary of State's office claims that Watkins should have disclosed that he intended to use the proceeds of the bond money to purchase the building in Meridian, and that he did not disclose to bond buyers that Watkins Development had already agreed to be the developer for Metro Retro. Watkins said he's never had to disclose that information in the past.

If found guilty, Watkins faces a $25,000 fine and could be forced to forfeit proceeds from the deal in Meridian to Retro Metro.

Comments

jaytown 6 years ago

sounds to me like it's one front . . . Jones Walker law firm vs. Watkins.

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