Riveter CEO and husband dispute FBI’s seizure of their bank accounts in AWS kickback investigation
In a new court filing, lawyers for Seattle entrepreneur Amy Nelson and her husband contend that her salary and earnings are being unfairly held by the government as part of the FBI’s seizure last year of more than $892,000 from their bank accounts.
The case is one of several disputes stemming from
allegations that Nelson’s husband, former Amazon real estate transaction
manager Carl Nelson, conspired with a colleague and others to receive millions
of dollars in kickbacks in exchange for directing Amazon Web Services data
center deals to a Colorado real estate developer, as detailed in a GeekWire
story last week.
Carl Nelson denies claims that he and a coworker duped
Amazon into working with the developer in exchange for bribes. His lawyers say
broad allowances for outside work in his Amazon employment contract gave him
leeway to do business with Amazon clients and customers.
In addition to being a defendant in a civil suit filed by
Amazon, Carl Nelson is one of the subjects of an FBI criminal investigation,
court records show.
Amy Nelson is CEO and founder of The Riveter co-working
startup and women’s network, which raised nearly $20 million in funding with
plans to open as many as 100 locations by 2022. That was before the pandemic,
which forced the company to close all nine of its locations last year.
She is not named in Amazon’s civil suit. The Riveter itself
is not involved or mentioned by name in any of the legal proceedings. Lawyers
for the Nelsons say the government has not identified Amy Nelson as a target or
subject of the FBI investigation.
The Feb. 17 filing formally opposes a motion by the federal
government to delay, for six months, court proceedings related to the seizure
of the Nelsons’ bank accounts. Those seizures now amount to $633,916 after
deducting money set aside for lawyers’ fees in the case.
“Based on the Government’s own representations, $475,892 of
that money are not even purported fraud proceeds, but were seized because of
potential commingling with money that the Nelsons earned from their jobs or
investments,” lawyers for the Nelsons say in the filing.
Citing a delay in grand jury proceedings due to the COVID-19
pandemic, the Department of Justice asked the court on Feb. 3 to pause the
civil forfeiture case. Justice Department attorneys referenced a sealed
declaration in which an FBI special agent indicated that the normal process of
discovery in the forfeiture case “would have an adverse impact on a pending
criminal investigation,” as the DOJ filing explained it, by publicly disclosing
sensitive information.
“No indictment has been issued at this point, but the case
is actively proceeding,” lawyers for the government wrote in the filing,”
adding that “not all who may be implicated are aware that they are subjects of
the investigation.”
In response, lawyers for Amy and Carl Nelson say in the
filing that key details of the case have already been made public through
Amazon’s lawsuit and news reports, citing reporting for GeekWire by journalist
Levi Pulkkinen. The volume of publicly available information renders the
government’s concerns largely moot or easily handled with customary redactions,
they assert.
“We look forward to the opportunity to litigate the case and
seek the return of the Nelsons’ money,” said Suneeta Hazra, a lawyer for the
Nelsons, a partner at law firm Arnold & Porter in Denver and former chief
of the Criminal Division in the U.S. Attorney’s Office for the District of
Colorado.
In the meantime, the filing says, the seizure of the funds
is having “a profound effect” on the Nelsons. They sold their Seattle home for
$1.3 million in January, according to King County property records. They have
been unable to pay their 2019 income tax bill, because the $125,000 they set
aside for the purpose has been seized, according to the court filing.
In addition, the filing notes that “the extensive publicity
regarding the proceedings involving Amazon and this forfeiture complaint has
compromised the ability of both Mr. and Mrs. Nelson to earn a living and care
for their large, young family.”
Rather than requesting a stay after starting the forfeiture
case, they say, the government could have originally asked for a continuance,
giving it more time to file the case in the first place.
“Here, it chose not to do so despite the incredibly harmful
effect its naming of Amy Nelson in the caption of the complaint would have on
her business and reputation,” the filing says. “Having made that choice,
without consulting with the Nelsons’ attorneys or Mr. Nelson, the relief the
Government seeks would give Mrs. Nelson no avenue to obtain even a scintilla of
information to which she is entitled to under the discovery rules.”
The filing also provides details on how the criminal
investigation has unfolded. It says Carl Nelson first learned about it on April
2, 2020, “when FBI agents arrived unannounced at his house in Seattle, in the
middle of the pandemic, and informed him that he is the target of a federal
investigation in the Eastern District of Virginia.”
The funds were seized on May 22, 2020, from six of the Nelsons’
bank accounts, the filing says.
“On June 5, the FBI again showed up unannounced to search
the Nelsons’ home in the presence of Mr. Nelson, his wife, and their four
daughters — then ages 5, 3, 2, and 9 months,” the filing says. “They stayed for
less than an hour, during which they seized Mr. Nelson’s mobile phone, laptop,
and various paper documents.”
For friends of Amy Nelson and members of the Seattle tech
community who have closely followed her entrepreneurial journey, details of the
investigation and suit against her husband have shed new light on what she has
been experiencing in the past year, helping to fill in the gaps left by social
media posts in which she alluded to the legal entanglements.
“There is no advice I could have given myself a year ago
because, like, you couldn’t make this year up,” she wrote in an Instagram post
in December. “Your business has an amazing team of 100 and is growing 20% month
over month? You own the home you worked years to buy? Your husband has a
successful consulting business? Your kids go to school? You are not currently
mired in legal hell? It’s going to look really different in 12 months. Buckle
up.”
Amazon alleges in court filings that Carl Nelson and his
former Amazon real estate colleague, Casey Kirschner, engaged in outright
fraud, not a side business, in receiving millions in payments from the real
estate developer, Northstar Commercial Partners.
Northstar and its CEO Brian Watson “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 for
Amazon, during a court hearing in January.
Carl Nelson has filed his own suit against Amazon in King
County Superior Court in Seattle, alleging in part that the company has run
afoul of Washington state’s new law restricting non-competition agreements. His
attorneys claim Amazon violated his contract by suing him in federal court in
Virginia rather than in Washington state court, the venue set in the agreement.
The latest filing by the Nelsons’ lawyers says that Amazon
initially based its civil suit on an employment agreement signed by another
Amazon employee, not Nelson, with “an entirely different employment contract
with different terms regarding outside income.”
Amazon has since updated its complaint with the correct
contract, but lawyers for the Nelsons assert in the filing that the company
nonetheless “predicated a substantial portion of those initial allegations
against Mr. Nelson — and presumably all of its initial discussions with the
Government — on an employment contract that had nothing to (do) with him.”
The filing also offers a glimpse of Carl Nelson’s legal
defense, noting that “Amazon has suggested Mr. Nelson’s actions constituted an
undisclosed conflict of interest, which the Supreme Court has explicitly held
does not qualify as honest services fraud,” which federal law defines as “a
scheme or artifice to deprive another of the intangible right of honest
services.”
In its earlier filing in the forfeiture case, the government
said that the seized funds represented proceeds not just from alleged
honest-services wire fraud or a conspiracy to commit fraud, but also from
alleged money laundering or unlawful monetary transactions.
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