A federal judge has dismissed most of the claims in a long-running lawsuit brought by Amazon against two of its former real estate managers and others whom the tech giant alleges defrauded the company of millions of dollars in development deals for Amazon Web Services data centers.
The April 6 summary judgment ruling, by U.S. District Judge Rossie D. Alston Jr. in the Eastern District of Virginia, significantly narrows Amazon’s civil case against Carl Nelson and Casey Kirschner, the former AWS real estate managers, and other defendants in the nearly 3-year-old case.
However, the ruling leaves unresolved the core question of whether money paid to Nelson and Kirschner by real estate development firms were part of “a massive fraud and kickback scheme,” as Amazon alleges, or permissible business activities under their employment contracts, as the former real estate managers assert.
Out of the eight claims in Amazon’s suit, the judge allowed one claim, for civil conspiracy, to proceed to trial against Nelson, Kirschner, real estate developer Brian Watson and related entities; and another, for tortious interference, to proceed to trial against Watson and related entities.
In addition to dismissing the majority of Amazon’s claims, the ruling reveals one of the techniques that Amazon used in an attempt to gather information about the case from Kirschner’s company-issued computer.
“To obtain physical possession of Casey Kirschner’s laptop without alerting him to its investigation into the alleged kickback scheme at issue here, Amazon sent a malware alert to Casey Kirschner’s work laptop, directing him to take the laptop to the IT department of his local Amazon office,” Judge Alston writes.
This detail, which the ruling describes as not disputed by Amazon, was previously filed under seal in the case. GeekWire has asked Amazon for comment on this technique and how commonly it is used by the company.
In a statement after the ruling, Amazon said it plans to continue pursuing the case.
“As the public court filings explain, this case concerns a multi-million dollar kickback conspiracy engaged in by former Amazon employees and their co-conspirators — two of whom have pleaded guilty in federal court — to profit illegally from Amazon real estate development projects,” an Amazon spokesperson said in a statement.
The statement added, “When we learned of the scheme, we reported it to law enforcement and, since filing our lawsuit in 2020, have followed the standard process of only communicating with the defendants through their attorneys. We remain confident in pursuing the case given the extensive amount of evidence.”
Nelson contends in court filings that his arrangements with the real estate firms were part of normal consulting relationships made after his Amazon employment was terminated by the company for unrelated reasons.
Amazon CEO Andy Jassy, who was then the head of Amazon Web Services, personally approved one of the biggest deals, the ruling notes. Amazon was tipped off to the alleged fraud by an anonymous email to then-CEO Jeff Bezos.
Amazon alleges that it suffered damages through the inflation of the prices it paid for real estate leases and purchases. However, a running theme throughout the summary judgment ruling was that the company hadn’t shown evidence of financial damages, which would be necessary to proceed to trial on most claims.
The lawsuit has been kept in the public eye through regular social media posts and media appearances by Amy Sterner Nelson, the wife of Carl Nelson. Amy Nelson is a lawyer and entrepreneur best known in the Seattle tech community as the founder of The Riveter women’s union and membership network.
Amy Nelson asserts that Amazon has wielded its power unfairly in a variety of ways, saying that the company has sought to unlawfully enforce its employment agreements, and wrongly influence a criminal investigation into the case.
Last year, the Nelsons won the return of most of their personal funds seized by the FBI under civil forfeiture laws, but she says the case has cost her family more than $2 million so far, and forced them to move from Seattle.
The ruling was “very fair, very well thought-out,” Amy Nelson said in an interview Friday. “I thought it was right. And it feels good, after three years of these really sensational allegations, that the very first time Amazon had to prove a single thing, the judge said, you don’t even get to go to trial [on seven of the eight claims].”
Two people have pleaded guilty to criminal charges related to the case, including Christian Kirschner, the brother of Casey Kirschner. No criminal charges have been brought against Carl Nelson or Casey Kirschner.
Correction: This story was updated on Tuesday, April 11, to correct the details of which claims were denied and which were allowed to proceed to trial in the judge’s summary judgment ruling.
