Amazon's weirdest court battle

[Bloomberg]( Follow Us [Get the newsletter]( Hi folks, it’s Brad. A dense thicket of legal cases emanating from the real estate division of Amazon.com Inc.’s profitable and fast-growing cloud services unit seems pulled right from the pages of a John Grisham novel. The saga includes FBI visits to the homes of former Amazon employees, a whistleblowing email to the world’s richest man, competing lawsuits in Washington state court, Virginia federal court and Delaware Chancery Court—and as the unfortunate collateral damage, a popular Seattle-based co-working space for female professionals. Here’s a brief summary of the convoluted drama, as well as a reason to watch it unfold. You might want to buckle in. The story begins around 2017. Amazon Web Services was opening new data centers in Northern Virginia at a rapid clip to handle the growing needs of its customers in the U.S. government, including the Central Intelligence Agency. Amazon often doesn’t buy such facilities outright; it leases them, in part to be able to move quickly and preserve flexibility in case its needs to change. At the time, two Amazon employees, Carl Nelson and Casey Kirschner, were helping to identify real estate for the buildout. They were dealing with a Colorado-based real estate developer named Brian Watson, the founder of a Denver company called Northstar Commercial Partners, which was acquiring the properties. One of the Amazon employees’ brothers, Christian Kirschner, was also advising Watson. Got all that? On Dec. 2, 2019, an anonymous message was sent to Jeff Bezos’s public email address. “Mr. Bezo’s,” it started inauspiciously. “I never considered myself a rat and I am actually on good terms with everyone involved.” It went on to allege that the Amazon employees and real estate developers were taking kickbacks worth millions of dollars for securing and leasing the properties to Amazon. According to court documents, Amazon investigated and concluded that Northstar had charged it exorbitant leasing fees and then secretly funneled some of those ill-gotten gains back to the Amazon employees. 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, a former justice department official and lawyer for Gibson Dunn & Crutcher LLP, one of the law firms representing Amazon, during a courtroom appearance. On the morning of April 2, 2020, amid the early peak of the Covid-19 pandemic, Federal Bureau of Investigation agents showed up at the homes of Carl Nelson in Seattle and Casey Kirschner in Minneapolis. Over the next few months, agents reappeared several times, interviewing the men, confiscating their phones and computer equipment and freezing their families’ financial assets. Amazon also filed a civil lawsuit against the pair in Virginia federal court, accusing the former employees of racketeering and—irony alert—breaking antitrust law by depriving Amazon of its “faithful work and honest services.” (All parties denied wrongdoing and an Amazon spokesperson declined to comment on the matter.) Nearly a year later, there are reasons to wonder about this narrative. The FBI has yet to bring a criminal case against the former employees or real estate developers. Amazon also never broke or tried to renegotiate the supposedly fraudulent leases for its data centers in Virginia—the ones it allegedly obtained at hyper-inflated prices. Nor has it produced any evidence that Northstar was unfairly favored over other potential developers. Meanwhile, Brian Watson countersued Amazon in Delaware, claiming he is due more than $66 million in lost compensation. Carl Nelson countersued in Washington state and won an early round in the skirmish, in part by pointing out that Amazon broke his employment contract by suing him in Virginia and not in his home state. Nelson’s involvement has also generated plenty of extra attention, particularly in the close-knit city of Seattle. His wife, Amy Nelson, was the founder of a female-focused co-working startup called [the Riveter](, which [closed in May](, decked by the one-two punch of the pandemic and her family’s deepening legal troubles. Legal documents accused the government of improperly including her income from the Riveter in its financial seizures. The Seattle tech site GeekWire has written two in-depth pieces ([here]( and [here]() on the saga if you want to go deeper. But the story is nowhere near finished and raises some fascinating questions—and not just whether Amazon employees and contractors tried to improperly profit from the company’s breakneck growth. How did Amazon get the Justice Department and FBI to move so swiftly on its behalf against former employees and contractors? How is all of this involved with Amazon’s relentless pursuit of the Pentagon’s $10 billion JEDI contract, which was initially awarded to Microsoft but [may soon be getting rebooted](. And what does the whole mess say about the stewardship of AWS by Andy Jassy, the executive who will soon replace Jeff Bezos as chief executive officer? It was Jassy’s division that the company said was defrauded and then went after its former staffers. If Amazon watchers were looking for a signal his tenure might be less contentious than Bezos’s, this surely isn’t it. —[Brad Stone](mailto:bstone12@bloomberg.net) If you read one thing What should have been a routine patch for Microsoft went [terribly wrong](. At least 10 cyber-espionage gangs are currently working to exploit the vulnerabilities. Paid Post [Willow Creek Estancia]( is a luxury equestrian estate for sale in Rancho Santa Fe, Ca. Over 77 acres, the private estate features a variety of facilities including a main residence of 15,000+ sf, state of the art barns, sand arenas, private lake, tennis court & much more. [Discover your next adventure](. Sotheby's International Realty And here’s what you need to know in global technology news Elizabeth Holmes is pregnant, which could [delay the Theranos co-founder's trial]( by six weeks. Tech stocks have had a [rocky month](. Google said Microsoft was engaged in “[naked corporate opportunism](,” when Microsoft backed a proposal that would give publishers more power in their negotiations with tech companies.  Metakovan, the anonymous founder of NFT investment fund Metapurse, bought the [$69 million digital artwork by Beeple](. 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