Antitrust Law Daily Wrap Up, RICO—4th Cir.: Fourth Circuit revives Amazon RICO and fraud claims in kickback scheme dispute, (Sep 17, 2025)

By Martin A. Steinberg, J.D.

Former Amazon employees allegedly conspired with others to run a multimillion-dollar kickback scheme tied to property deals, driving up Amazon’s costs and channeling illicit payments through shell companies.

The Fourth Circuit reversed the Eastern District of Virginia’s grant of summary judgment in favor of WDC Holdings LLC (d/b/a Northstar Commercial Partners), its CEO Brian Watson, two former Amazon real estate transaction managers, and related individuals and entities, in litigation brought by Amazon.com, Inc. and Amazon Data Services, Inc. Amazon alleged a wide-ranging kickback scheme involving inflated rents and purchase prices for Northern Virginia data center projects, with millions of dollars laundered through sham trusts and entities. The district court had dismissed Amazon’s RICO, fraud, conversion, unjust enrichment, and civil conspiracy claims. Still, the appellate court held that genuine disputes of material fact existed on each, particularly as to the existence of a RICO enterprise, Amazon’s economic injury, and an attorney’s potential liability for conspiracy. The court remanded Amazon’s federal and state claims for trial (Amazon.com, Inc. v. WDC Holdings LLC, No. 23-1991 (4th Cir. Sept. 16, 2025)).

Background. Amazon develops real property for its data services, which was managed by insiders Casey Kirschner (Kirschner) and Carleton Nelson, who were responsible for site selection, due diligence, and negotiating real estate transactions. Amazon engaged in both direct-purchase transactions and build-to-suit leasing arrangements. Nelson and Kirschner worked on two types of transactions. In direct-purchase transactions, Amazon purchased land outright and then developed facilities on the sites itself. In build-to-suit leasing transactions, Amazon identified a suitable location and contracted with a real estate developer, which acquired and developed the land. The developer would build the facility’s external shell, and Amazon would lease the property and complete the interior.

In 2017, Casey Kirschner’s brother, Christian Kirschner (Christian), introduced him to Brian Watson, CEO of WDC Holdings LLC (Northstar), which soon began winning Amazon build-to-suit contracts. Between 2018 and 2020, Amazon executed nine large-scale leasing transactions with Northstar entities, allegedly influenced by Kirschner and Nelson, who presented them as competitively bid. Parallel to these deals, attorney Rodney Atherton created the Villanova Trust, through which Northstar secretly paid over $5 million in “referral fees.” Those funds were funneled to Nelson, Kirschner, and others via a web of shell entities, trusts, and sham loans, which Atherton helped set up despite acknowledging in writing that the arrangement could qualify as occupational fraud.

Amazon alleged that its costs were artificially inflated because Watson and Christian directed Northstar to embed excess fees into budgets and negotiate higher yields, which raised Amazon’s rent obligations. Additional schemes included diverting broker rebates intended for Amazon and routing them instead to Northstar and the Villanova Trust. The court noted two direct-purchase transactions: the “White Peaks” deal, where intermediaries flipped land to Amazon in a same-day transaction for a $15.5 million profit, portions of which were routed to Nelson and Kirschner; and the “Blueridge” transaction, in which an investor collected a $10 million assignment fee, $4.8 million of which was funneled through Atherton’s trust structure to the same insiders.

The alleged scheme unraveled after a whistleblower reported the conduct of Kirschner and Nelson. Amazon initiated an internal investigation and informed federal authorities. During an FBI interview, Kirschner signed a confession explicitly admitting that he had accepted money from Northstar tied to the Amazon real estate deals he oversaw. He acknowledged that Northstar paid kickbacks to the Villanova Trust, which then transferred a percentage of those funds to the 2010 Irrevocable Trust controlled by Rodney Atherton. From there, Atherton disbursed money to both Kirschner and Nelson. By the time Amazon uncovered the conduct, it alleged that at least $7,025,486 in kickbacks had been distributed: Nelson received approximately $2.46 million, Kirschner $2.52 million, and Christian $2.04 million, either directly or through their shell entities. Nelson’s and Kirschner’s companies also retained an additional $3.31 million, while Atherton and his entities collected nearly $869,000. Watson personally obtained $5 million from the White Peaks deal, in addition to Northstar’s substantial revenues from Amazon leases. To remediate the tainted transactions, Amazon partnered with private equity investor IPI Partners LLC, Northstar’s financing partner, to remove Northstar from the projects and renegotiate leases, which Amazon claims reduced its costs.

Procedural history. Following the discovery of the scheme, Amazon filed suit in the Eastern District of Virginia against the defendants, alleging RICO violations and a series of state-law claims, including detinue, fraud, tortious interference, civil conspiracy, breach of contract, unjust enrichment, and conversion. Amazon also obtained a preliminary injunction to preserve evidence and prevent dissipation of assets, which the Fourth Circuit affirmed on appeal in 2021.

After discovery, the defendants sought summary judgment. The district court allowed Amazon’s tortious interference claim because “a reasonable juror could conclude that the Watson Defendants interfered with Nelson’s and Casey Kirschner’s employment relationships by bribing them and thereby depriving Amazon of its employees’ honest services.” The court also allowed part of the civil conspiracy claim to proceed, but dismissed the civil conspiracy claims against Atherton, reasoning that he could not conspire with clients as a matter of law. The court entered summary judgment for the defendants on the RICO, fraud, breach of contract, detinue, unjust enrichment, and conversion claims. The court directed entry of final judgment on these rejected claims under Rule 54(b), allowing Amazon to appeal. Amazon then pursued an appeal on five claims: RICO, fraud, unjust enrichment, conversion, and Atherton’s liability for civil conspiracy, bringing the case before the Fourth Circuit.

RICO claim. The appellate court held that Amazon presented evidence from which a reasonable jury could find both the existence of a RICO enterprise and injury to its business or property. The district court erred by requiring proof of market value and by misapplying conspiracy law to the enterprise element. Accordingly, summary judgment for defendants on the RICO claim was reversed. The court focused on two elements: (1) whether a RICO enterprise existed, and (2) whether Amazon suffered injury to its business or property. The district court had dismissed the RICO claim on both grounds, but the Fourth Circuit concluded that genuine disputes of material fact precluded summary judgment.

RICO enterprise. The district court ruled that Amazon could not prove a RICO enterprise because the scheme resembled a “hub-and-spoke” or “rimless wheel” structure, where multiple defendants separately interacted with a common party (the “hub”) but lacked interconnected relationships. Relying on conspiracy principles, the district court held this structure was insufficient to establish a RICO association-in-fact enterprise.

The Fourth Circuit rejected this reasoning on both legal and factual grounds. It emphasized that RICO’s “enterprise” definition is deliberately broad, covering “any group of individuals associated in fact.” The Supreme Court in Boyle v. United States, 556 U.S. 938 (2009) held that an enterprise requires only three structural features: a purpose, relationships among associates, and sufficient longevity to pursue the purpose. The appellate court stressed that RICO was designed to address organized schemes broader than traditional conspiracies, making “hub-and-spoke” limitations inapposite.

Factually, the record showed extensive connections among the defendants across multiple transactions. A jury could find a common purpose in that all participants sought to profit from Amazon’s real estate projects through concealed kickbacks. In the nine leasing transactions, Nelson and Kirschner acted as Amazon insiders who pushed deals with Northstar; Christian served as intermediary; Watson and Northstar provided the counterparty and routed kickbacks; and Atherton created sham entities and laundered proceeds.

The White Peaks deal overlapped significantly because Northstar employees flipped property to Amazon at a significant profit, funneled kickbacks through Atherton’s entities. At the same time, Nelson and Kirschner supported the deal internally. Watson also shared in the profits and agreed to keep the arrangement secret. Although the Blueridge deal involved a different outside investor, it still followed the same pattern, with Nelson structuring the deal, Kirschner supporting it, the kickback going through Atherton’s trust, and funds being distributed to Nelson and Kirschner.

Finally, the scheme ran from 2017 through early 2020, spanning eleven transactions, sufficient to meet RICO’s continuity requirement. On this evidence, the court found a genuine factual dispute as to whether the defendants formed an association-in-fact enterprise.

Injury to Amazon. The district court also found that Amazon had not shown injury because it had not proven the market value of the properties involved. The Fourth Circuit disagreed, holding that Amazon produced sufficient expert testimony and documentary evidence to create a triable issue of injury.

Amazon’s expert opined that Northstar embedded inflated development and leasing fees into project budgets to fund kickbacks. Because rent was calculated as expenses multiplied by yield, these inflated fees directly increased Amazon’s monthly rent. The expert concluded that, absent the scheme, Amazon would have negotiated lower lease rates and paid less overall. The expert also found that Amazon overpaid for properties in the White Peaks and Blueridge transactions. For example, the assignment fee paid in Blueridge and the profit margin in White Peaks were partially routed to insiders, meaning Amazon paid inflated amounts it would not otherwise have paid.

Amazon also alleged injury from diverted broker commission rebates that were supposed to be returned to it but were rerouted to Northstar and Villanova Trust. The district court excluded this claim because Amazon had not disclosed it early enough. The appellate court reversed, noting that Amazon disclosed the rebates in its expert report, the defendants had discovery on the issue, and any omission was harmless.

The Fourth Circuit clarified that proving Amazon paid above “market value” was not required; it was enough to show that Amazon paid more than it would have absent the kickback scheme. Expert testimony and evidence of diverted funds sufficed to establish a genuine dispute.

Fraud claim. Next, the Fourth Circuit held that the district court erred in requiring proof of market value and improperly granted summary judgment on the Virginia state law fraud claim. Under Virginia law, fraud requires proof of “resulting damage to the party misled.” The proper measure in this case was whether Amazon was financially worse off because of the alleged fraud.

The district court had dismissed the claim, holding it was “fatal” that Amazon did not prove the market value of the properties at the time of the lease and purchase transactions. It relied on Virginia cases involving misrepresentations about undisclosed defects in property, where damages are measured by the difference between the property’s actual value and its represented value.

The Fourth Circuit disagreed, finding those cases inapplicable. Amazon was not alleging physical defects in the properties but rather that undisclosed kickbacks and sham fees artificially increased its costs. The injury claimed was that Amazon paid more for leases and purchases than it would have absent the fraud. Amazon had introduced evidence, particularly expert testimony, that it paid inflated amounts due to kickback-inflated budgets, excess lease rates, and overpriced property purchases. That was enough to create a genuine factual dispute.

Conversion and unjust enrichment claims. The Fourth Circuit next reviewed the district court’s dismissal of Amazon’s conversion and unjust enrichment claims. The lower court had reasoned that these equitable claims were barred because Amazon had adequate legal remedies and because Amazon had “affirmed” the contracts at issue. The appellate court disagreed.

The appellate court explained that the plaintiffs may pursue legal and equitable remedies in the alternative, even to late stages of litigation, and the possibility of damages at trial does not eliminate equitable claims. Regarding unjust enrichment, the court emphasized that Amazon’s claims were not confined to the lease contracts themselves but targeted the broader kickback scheme. Moreover, the “Lease Continuity Agreement” Amazon signed was with IPI (a private equity partner), not with the defendants, so it did not preclude unjust enrichment claims. The court also noted that unjust enrichment and conversion claims applied equally to the direct-purchase transactions, which were unaffected by any lease affirmations. Accordingly, the appellate court reversed summary judgment on both conversion and unjust enrichment, allowing Amazon to pursue these claims alongside its legal claims.

Civil conspiracy claim. The lower court had allowed the claim to proceed against most defendants but granted summary judgment to attorney Rodney Atherton, reasoning he could not legally conspire with his clients since he acted only in a representative capacity. The appellate court reversed by holding that while a principal and agent generally cannot conspire with one another, this rule applies only when the agent acts within the scope of the attorney–client relationship.

Evidence showed that Atherton set up the Villanova Trust before representing Nelson and Kirschner, and he worked with Watson and Northstar, who were not his clients. Additionally, Atherton’s creation of sham entities and transfer of funds could be found to fall outside legitimate legal representation, particularly since he acknowledged in writing that the scheme might constitute “occupational fraud.” A lawyer who knowingly assists fraud, the court noted, “turns himself into a coconspirator.” Because disputes of fact existed over whether Atherton conspired with third parties and whether his actions exceeded the scope of legal services, the Fourth Circuit held that summary judgment was improper. Thus, it reinstated the conspiracy claim against Atherton.

The Case is No. 23-1991.

Judge: Rushing, A.

Attorneys: Claudia M. Barrett (Gibson, Dunn & Crutcher LLP) for Amazon.com, Inc. George Calhoun (IFRAH PLLC) for WDC Holdings LLC.

Companies: Amazon.com, Inc.; WDC Holdings LLC

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