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Oct. 1, 2023

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After 3 years, Seattle’s Amy Nelson still fighting Amazon and DOJ

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SEATTLE — After three years working to get her business off the ground, Amy Nelson didn’t get a chance to say goodbye to the co-working spaces that first made her dream of helping working women a reality.

Nelson started The Riveter in 2017, hoping to create a co-working space for women that countered the male-dominated culture of kegs and table tennis she saw in the business world. Then came 2020, when the COVID-19 pandemic redefined offices and The Riveter had to close its locations.

Nelson, who rose to national prominence along with The Riveter, didn’t help with the closures because she and her family were ensnared in a still-ongoing legal case with Amazon, her husband’s former employer.

Amazon claims Carl Nelson participated in an elaborate kickback scheme, accusing him and others of lining their pockets when negotiating data center deals. Amazon tipped off federal prosecutors, who have since secured guilty pleas from two people involved in the scheme.

While Carl Nelson has not been publicly charged with a crime, he and others have been fighting a sprawling federal lawsuit brought by Amazon in 2020. On Thursday, a federal judge threw out most of Amazon’s claims against Nelson, noting that some of Amazon’s arguments had “fundamental” flaws.

Only one of Amazon’s seven claims against Nelson will be allowed to proceed to trial. The civil lawsuit is set to reach a Virginia jury next month.

In April 2020, right as the pandemic altered Amy Nelson’s business, the FBI arrived at the Nelsons’ West Seattle home and later froze most of the family’s money. Unable to afford their home, the Nelsons left Seattle months later.

After three years, three moves, one Riveter relaunch and millions of dollars spent on legal costs, Amy Nelson said the allegations against her husband and the ongoing lawsuit put much of her life on hold, personally and professionally.

As The Riveter took off in the late 2010s, Amy was featured by CNBC and Fast Company. Refinery 29 ran an article with the headline “Amy Nelson … scales the maternal wall,” while Bustle posed the question “Can Amy Nelson’s Riveter make work saner for all?”

Now, instead of articles focused on how the startup founder is making a name for herself in Seattle’s tech sector, Amy’s public persona is dedicated to lambasting Amazon and the Justice Department that, as she sees it, did Amazon’s dirty work.

She’s appeared on Tucker Carlson’s and Glenn Beck’s programs as an outspoken critic of the legal process — civil forfeiture — that allowed prosecutors to seize her family’s bank accounts without charging her husband with a crime. She’s taken to TikTok, where her videos about Amazon, DOJ and the FBI garner thousands of views.

“It’s really hard to hope when your life is so uncertain,” Amy said in a recent interview. “I just believe that this chapter will come to an end, and it will be a chapter of our lives and not the whole book.”

“I’m a lawyer, entrepreneur, mother, wife. … And now we are just these people battling Amazon,” she continued.

Amazon alleges Carl Nelson and a colleague worked with a real estate developer to direct land deals to the developer in exchange for millions of dollars in kickbacks.

Carl Nelson doesn’t deny profiting from the real estate deals, but contends those payments came from outside work allowed under his contract with Amazon. Amazon’s attorneys contend the payments were clearly barred by his contract.

On Thursday, U.S. District Judge Rossie Alston Jr. ruled that Nelson and another Amazon employee did not breach their contract with Amazon. A “reasonable reading” of that contract “undermines Amazon’s argument,” Alston wrote.

Two of the at least six men who are subjects of the investigation, including the brother of one of Nelson’s Amazon colleagues, pleaded guilty in March to fraud charges stemming from the purported conspiracy. Doing so, the two men agreed to cooperate with prosecutors and alleged the Denver-based data center developer at the center of the controversy paid $5.1 million into a trust account used to pay an unspecified amount in kickbacks to Carl Nelson and others.

“This case concerns a multimillion-dollar fraud and kickback conspiracy engaged in by former Amazon employees and their co-conspirators (two of whom have admitted to these crimes) to profit illegally from Amazon real estate development projects,” an Amazon spokesperson said in a statement on Thursday.

“We remain confident in pursuing the case given the extensive amount of evidence,” they continued.

The criminal investigation into Carl Nelson’s activities appears to be ongoing, though the Department of Justice declined to comment on the matter.

Kickbacks and noncompetes

The legal saga began back in 2017, when Carl Nelson and another Amazon employee, Casey Kirschner, met Colorado developer Brian Watson.

Carl Nelson and Kirschner worked on real estate deals for Amazon Web Services, the company’s cloud computing division. AWS wanted to acquire data centers to keep up with customer demand and had its eye on properties in Northern Virginia.

After that first meeting, Carl Nelson and Kirschner represented Amazon in at least 10 land deals with Watson and his company, Northstar Commercial Partners, according to court documents.

In December 2019, those deals were called into question when an anonymous email landed in the inbox of Amazon founder and then-CEO Jeff Bezos.

“Would you care to hear about a couple of your employees who have taken kickbacks … and in my opinion represent a threat to the security of AWS?” the email read.

Amazon opened an investigation and later accused Carl Nelson, Kirschner and Watson of fraud. The two Amazon employees had duped the company into doing business with Northstar, in exchange for kickbacks, Amazon alleges. Carl Nelson, Kirschner, Watson and Northstar, Amazon argued, engaged in an elaborate scheme to defraud Amazon and co-opt its business for their own personal gain.

In one deal, two Northstar employees bought an 89-acre swath of land outside Washington, D.C., for $98.7 million in July 2019. They then sold it to Amazon the same day for $116.4 million. In its lawsuit, Amazon alleges Kirschner supported that deal from inside the company in exchange for a kickback, which he then shared with Carl Nelson. Nelson had left Amazon a month earlier for unrelated reasons.

Watson and Northstar “obtained all of their business with us by fraud, and specifically by paying bribes and kickbacks to corrupt insiders within our company,” Elizabeth Papez, an attorney for Amazon, said at a 2021 hearing.

Amazon maintains that there is “overwhelming” evidence that indicates Nelson and Kirschner did illegally profit off Amazon real estate development projects.

Attorneys for Watson, Kirschner and two other people allegedly involved in the kickback scheme did not respond to requests for comment.

Kirschner signed a statement to the FBI confessing to participating in a kickback scheme, Amazon wrote in a February court filing. His brother Christian Kirschner pleaded guilty in March to a fraud charge.

“There is more than enough evidence for a jury to find in Amazon’s favor,” attorneys for the tech giant wrote. “Overall,” they continued, “the record in this case is clear: Defendants orchestrated and participated in a long running kickback scheme that caused significant harm to Amazon.”

Watson and Northstar argue it’s the other way around: Amazon worked with Northstar’s capital partner, IPI, to cut Watson and Northstar out of the profits, according to Watson’s attorneys. Amazon is relying on “demonstrably incorrect facts and misleading insinuations,” Watson’s attorneys argued in court documents.

Amazon hasn’t shown it suffered any harm as a result of the deals and has maintained the leases in question even after raising allegations of fraud, Judge Alston ruled Thursday.

With respect to the nearly $18 million markup on the $116 million sale, the history of the property was public record, so Amazon decision-makers were aware the company was buying it after a steep price increase, attorneys for Watson argued. While Amazon may feel foolish about that decision, it was not duped, the attorneys wrote.

The company has not specified how Nelson and Kirschner were able to steer deals toward Northstar, attorneys for both men argued. The former real estate transaction managers wouldn’t have been able to do so without others knowing because “dozens of other individuals within and outside Amazon helped negotiate the transactions at issue,” Kirschner’s attorney wrote.

Meanwhile, Carl Nelson sued Amazon in Washington state, claiming the company violated his employment contract by filing the lawsuit against him in Virginia, rather than Washington as he contends the contract requires.

Carl Nelson argues his contract with Amazon made broad allowances for outside work and that it was well-known among his colleagues that he was working on other commercial real estate deals. Nelson also accused Amazon of violating Washington’s ban on noncompete agreements. Nelson’s Washington state lawsuit has been paused while the Virginia case is pending.

In his Thursday order, Alston ruled in favor of Nelson and the other defendants and summarily dismissed most of the claims made by Amazon.

Alston found Amazon had offered no evidence to show it suffered financial losses from the alleged kickbacks. Alston faulted Amazon for lumping all the defendants together in an effort to assert that there was a long-running enterprise with two Amazon employees at the center of the scheme.

But Alston’s ruling did not dismiss all of Amazon’s claims. With regard to Nelson, Amazon may still argue that he conspired with Watson and others to facilitate a bribery scheme that “interfered with Nelson’s and Casey Kirschner’s employment relationships … thereby depriving Amazon of its employees’ honest services,” Alston ruled.

Living with uncertainty

During the April 2020 search, FBI agents took Carl Nelson’s laptop. Federal prosecutors later froze the family’s bank accounts and seized more than $634,000 in a civil forfeiture action.

After spending six months expecting the FBI to return, the Nelsons packed up their car and drove to California to stay with Amy’s sister. They had sold one of their cars, liquidated their retirement savings and, struggling to make ends meet and cover legal fees, sold their home in West Seattle.

The family spent a month living with her sister before moving to Hawaii to stay with Carl’s parents and then to Columbus, Ohio, to be close to Amy’s. Now, their daughters go to the same school Amy attended and where her mother taught for more than 30 years.

Amy never expected to raise her children in the same suburb where she grew up, and she gets tearful and angry when she talks about how she got there. She blames Amazon and the Justice Department, accusing prosecutors of acting too quickly to freeze her family’s assets before proving a crime had been committed. She stands by her husband and maintains that he did nothing wrong.

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“We wouldn’t have left Seattle,” she said. “So much of the past three years have not been about choices, but just about how do we react to the circumstances.”

In February 2022, about two years after this all began, the Nelsons got back most of the money seized by federal prosecutors in that civil forfeiture action. Following a settlement agreement, the Nelsons forfeited roughly $109,000 and the government returned $525,000. The settlement included a clause that it did not equal an admission of guilt by the Nelsons.

Most of that money went to legal fees, Amy said.

Amy still runs The Riveter, which has been remade as a platform for professional women.

The Riveter struggled as entrepreneurs that had filled the coworking spaces set up shop at home because of COVID. In 2020, the company had already carved out plans to open 100 spaces but ended up closing its existing nine locations that year.

Amy didn’t help her team with the closures because her family was just starting to deal with the fallout from Amazon’s accusations, she said. Now, she regrets she didn’t get to say goodbye to the spaces she helped to build.

The ongoing dispute with Amazon has made it hard for her to find other work. Now, she and Carl face questions about Amazon’s allegations. Some people Amy used to work with won’t return her emails.

“Every single day, the financial stress of this eats at me,” Amy said.

The Nelson’s oldest, who is 8, is able to understand the details of what’s happening with her dad but the other three girls — 6, 5 and 3 — can’t make sense of it, Amy said. When Amy is upset about the legal abyss she’s found herself in, she tells her children it’s because she misses Seattle. One of her daughters recently drew a picture of Amy sitting on a mountain, instructing her to look at it whenever she is sad.

The Nelsons’ youngest was only 8 months old when the FBI searched their home. Two birthdays have passed since but Amy said she hasn’t been fully present for any of them.

“This isn’t my life some hours or some days,” Amy said. “This is our life all day, every single day.”

After Thursday’s ruling, Amy said she still doesn’t feel fully relieved. It’s not clear what Amazon will do next and she’s unsettled about how her family got here in the first place.

“It’s a lot to take in,” Amy said. “I don’t really remember who I was not on this battlefield.”

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