Judge Tosses Bulk Of Amazon's Fraud Claims Against Developer, 2 Former Employees
A federal judge has dismissed all but one of the claims made by Amazon in its lawsuit against a pair of former employees and a developer who the tech giant alleges skimmed millions of dollars from Northern Virginia real estate deals.
In a complaint filed in 2020, Amazon alleged that two former employees in its own real estate division, Carl Nelson and Casey Kirschner, took kickbacks from developer Brian Watson in exchange for awarding him data center projects in Loudoun and Prince William counties. In an April 6 ruling, a U.S. District Court of Eastern Virginia dismissed seven of the eight claims against Nelson and all but two for both Kirschner and Watson. The remaining claim, for civil conspiracy and “tortious interference” in a business deal, is scheduled to head to trial May 1.
The decision by Judge Rossie D. Alston Jr., first reported by GeekWire, is just the latest development in a tangled web of legal action among Amazon, its former data center development partners and federal investigators.
The $500M deal at the heart of the dispute occurred in 2017, when Amazon selected Watson’s Northstar Commercial Partners to build nine data centers in Northern Virginia. Denver-based Northstar would build and own the data centers, leasing them to Amazon. To finance the projects, Northstar created a joint venture with IPI Partners, a financial firm with significant involvement in the data center industry. Northstar built a handful of data centers for Amazon over the next two years.
Yet in 2020, Amazon concluded that Northstar had only been awarded the development contract after paying a series of kickbacks worth millions to Carl Nelson and Casey Kirschner, the Amazon employees evaluating their bid. Amazon and IPI liquidated their agreements with Northstar, while the FBI opened an investigation into the deal and raided Watson’s home. Amazon then initiated civil actions against Watson, Kirschner and Nelson.
“[Northstar] obtained all of their business with us by fraud, and specifically by paying bribes and kickbacks to corrupt insiders within our company,” said Elizabeth Papez, an attorney representing Amazon during a 2020 courtroom appearance, Bloomberg reported.
Nelson, Kirschner and Watson have all strenuously denied any wrongdoing in the case and insist that any payments made to the former Amazon employees were legitimate fees permitted in their contracts. In a suit filed in June, Watson alleged that Amazon and IPI conspired to level false allegations of fraud against Northstar in order to effectively squeeze the developer out of what had been a lucrative data center deal. Nelson has also filed a suit against Amazon alleging breach of contract. Both cases are pending.
"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," an Amazon spokesperson told GeekWire in a statement. "We remain confident in pursuing the case given the extensive amount of evidence."
The U.S. Department of Justice settled its criminal case against Nelson, Kirschner and Watson last year, with no charges brought against any of the three. In August, the Securities and Exchange Commission charged Watson with securities fraud, although the case wasn't directly connected to the dispute with Amazon.
