At 5:40 p.m. on Dec. 2, 2019, Amazon CEO Jeff Bezos got an email from a self-described “whistleblower,” claiming employees at his company had accepted kickback payments totaling millions of dollars from Denver-based real estate firm Northstar Commercial Partners.
Bezos didn’t respond. But his company sure did.
The emailer soon heard from Amazon attorneys, and the FBI. The following April, the FBI served a search warrant at the home of Northstar owner and CEO Brian Watson. Later that month, just over two years ago, Amazon sued Watson and his firm.
For a long time, the identity of the man who wrote that email — “I never considered myself a rat,” he’d told Bezos — remained known only to Amazon.
But that changed recently. And on March 30, watched by a multitude of lawyers including his own, and by his former boss Watson, Danny Mulcahy sat down in a downtown Las Vegas office building to be deposed in connection with the lawsuit.
The process took nearly seven hours. Mulcahy testified that the Securities and Exchange Commission has also investigated Northstar, a fact that hadn’t previously been made public.
And he was asked by an attorney for Watson why he had sent the email to Bezos.
“I felt like it was the right thing to do,” Mulcahy responded.
The message to [email protected], an account Amazon publicizes, bore the subject line: “Whistleblower- Confidential- OPSEC- On-going Kickbacks & AWS Security risk.”
“Would you care to hear about a couple of your employees who have taken kickbacks in excess of $8,000,000, maybe as high as $50,000,000, and in my opinion represent a threat to the security of AWS?” the email began, using an acronym for “Amazon Web Services.”
The writer didn’t go into the details, but offered to provide a roadmap.
“My knowledge and evidence will lead you to the others that have empirical evidence,” the writer said. “This is the quietest way I can disclose this, I thought about doing a SEC whistleblower or just calling a newspaper but honestly I have so much respect for what you have accomplished I feel better just telling you.”
In court documents, Amazon has said the email is the first thing that alerted it to what the company has called “a significant fraud and kickback scheme” involving Northstar.
Mulcahy wouldn’t be the only individual connected to Northstar to provide information. A month later, in January 2020, Tim Lorman — at the time Northstar’s chief operating officer — shared concerns with Chicago-based IPI Partners, Northstar’s partner in the Amazon development deals. IPI then relayed information to Amazon.
Lorman’s name, however, came out after Amazon filed suit. But Mulcahy remained anonymous for months, even surviving a late 2020 court challenge seeking to unmask him led by Carl Nelson, one of two Amazon employees alleged to have accepted the kickbacks. At that time, Mulcahy’s attorney said he feared for his safety.
“Danny Mulcahy was very much a trusted and valued employee of Northstar,” Brownstein Hyatt attorney Stan Garnett, who represents Watson, told BusinessDen Friday. “It was disappointing to Brian to learn that he was the one who sent that email.”
Amazon’s lawsuit largely revolves around data center buildings in northern Virginia that Northstar developed for Amazon Web Services.
The company alleges that two of its former employees, Carl Nelson and Casey Kirschner, accepted millions of dollars in exchange for steering the development contracts to Northstar. The company says the payments were made through entities set up by Arvada attorney Rod Atherton, who is also a defendant in the lawsuit.
Watson has denied all wrongdoing, and his attorneys have said that Amazon is misinterpreting arrangements that are common in the field of commercial real estate. Nelson has also denied wrongdoing, and his wife has been outspoken about the case in recent months on Twitter, calling the company’s approach “extraordinarily cruel.”
Kirschner, who grew up in the Denver area, and whose brother Christian Kirschner is a longtime friend of Watson’s, has cooperated with a related investigation by the FBI. In a signed statement, according to Amazon, he said in part: “I accepted money from Northstar associated with deals I worked on with Amazon.”
The status of that FBI investigation is unclear. But in court filings, Watson’s attorneys have emphasized that he has not been charged with any crime. And earlier this year, the federal government agreed to return more than half a million dollars it had seized from Nelson and his wife.
In December, the case was among those highlighted in a Politico piece that reported that Amazon “has built a closer relationship than many large companies have with federal law enforcement.”
Two years into the lawsuit, there’s still no clear timeline for when a trial might start. Amazon recently amended its accusations for a third time. Watson’s and Northstar’s finances are now overseen by a receiver, with whom Watson has feuded.
Mulcahy wasn’t a Northstar employee at the time he sent the email.
The 51-year-old said in his deposition that he joined Northstar as director of equity somewhere between March and June of 2017, after seeing the job posted on LinkedIn. He made less than $100,000 in the role, he said.
Mulcahy said the amount of equity he raised at Northstar was probably more than $50 million but less than $100 million. He said it was both his and Watson’s job to raise money, and that Watson raised more than him.
Mulcahy said he resigned from Northstar in April 2019 to work for himself.
“I’m a Capricorn, I always want to do my own thing,” he said.
“I don’t know much about the signs, unfortunately,” responded Watson’s attorney, Sara Bodner of Brownstein Hyatt.
Mulcahy said he also had concerns at the time of his resignation that Northstar was engaged in illegal conduct related to side deals and unequal treatment of investors.
The deposition took place in Las Vegas because Mulcahy lives there. He lived in Colorado the majority of the time he worked for Northstar. Before that, he lived and worked in other states.
Mulcahy now owns Dacia Resort Group, which owns and operates eight RV parks in Oregon, Missouri, Oklahoma, Texas and Florida. The company has three employees including Will Camenson, a former Northstar employee.
Entities affiliated with Camenson are also defendants in Amazon’s lawsuit. The company claims that Camenson and another former Northstar employee, Kyle Ramstetter, purchased a northern Virginia property for $98.7 million in 2019 and resold it to Amazon for $116.4 million the same day.
A portion of the profits, Amazon alleges, were paid to Nelson and Kirschner, and later to Watson, who wasn’t initially aware of the deal and felt it should’ve been a Northstar deal. Watson subsequently fired the two men, court filings indicate.
In Mulcahy’s deposition, Watson’s attorney asked him what he knew about Northstar’s “referral program.”
“That Brian would compensate people who made referrals of investors or deals,” Mulcahy said. “He would pay them, you know, in some matter arbitrarily.”
Mulcahy said Watson regularly talked about the program at company meetings. Mulcahy said he personally did not play a lead role in growing or managing the referral program, but just followed Watson’s instructions when he was told to do something regarding it.
Mulcahy said he recalled generally hearing concerns within the office about the company’s Amazon deals and that “the awarding of the contracts wasn’t above board.”
In his deposition, Mulcahy said he didn’t discuss his email to Bezos with anyone before sending it. He said there wasn’t anything specific that happened that made him send the email nine months after leaving Northstar, and no one asked him to do so.
“Just finally decided to do it,” he said.
He said his goal was that “it was acknowledged and rectified” that “there was likely unscrupulous behavior happening at the Amazon level,” specifically that contracts were being awarded “outside the free market.”
Mulcahy said conversations in the Northstar office had left him with the understanding that Christian Kirschner was being used as a “conduit” to funnel kickbacks to his brother and Nelson.
“A lot of it is assumption and hearsay,” Mulcahy said. “But that was my understanding.”
During the deposition, Gibson Dunn attorney Jack Heyburn, who represents Amazon, showed him a December 2018 email exchange, in which Watson asked Mulcahy to “send me how much we have paid our top 10 referral partners.” He specified that Christian Kirschner should be included.
Mulcahy emailed that Kirschner and Villanova Trust had been paid $50,000, which he believed to be correct.
“I think Christian has received millions,” Watson responded.
Heyburn asked Mulcahy in the deposition: “What was your reaction when you saw his response?”
“Wow,” Mulcahy said.
Mulcahy ultimately forwarded the exchange from his company account to a personal email account, and later provided it to Amazon.
In court filings since the deposition, Watson’s attorneys have highlighted Mulcahy’s acknowledgement that he doesn’t have “tangible evidence” kickbacks were paid.
Watson attorney Garnett told BusinessDen Friday it was “interesting and reassuring” to depose Mulcahy, because it made clear “his conclusions had been based on water-cooler talk and rumors he’d been hearing around the office.”
“This whole case is kind of a game of telephone,” Garnett said.
Garnett said Amazon “misused what he (Mulcahy) said, and filed declarations that were not true.” Last month, a judge granted a motion by Amazon to withdraw certain statements the company’s lawyers had submitted early in the case because they had erroneously claimed they represented “personal knowledge” of the scheme.
On March 30, however, Mulcahy said he didn’t think it was unreasonable to email Bezos given the information he had.
“You know, he can do his own investigation,” he said of Bezos.
In his email to Bezos, Mulcahy wrote he “wouldn’t turn away compensation or some type of professional engagement but we can see how this plays out.”
In his deposition, Mulcahy said he has not been compensated. He said he probably applied for a job at Amazon since sending the email, but those efforts apparently went nowhere.
When an Amazon representative responded to Mulcahy’s 2019 email to Bezos, and he prepared to share more information, Mulcahy wrote that he’d “like to get an agreement for immunity (not that I need one but I can’t get too careful).”
Asked in March why he wanted that, Mulcahy responded: “Whether it’s knowingly or not, I was still a party to the transaction. I didn’t want to be drug into it. I had no decision-making, I had no control, etc. But none of that matters. So I just figured, hey, it doesn’t hurt to ask.”
Mulcahy said that there was some back-and-forth on that matter, but he doesn’t know if an agreement was ever actually executed. He did share additional information, sending a company organization chart and a document he felt demonstrated how much had been paid to Villanova Trust, an entity allegedly used to funnel the kickbacks.
“Seemed like a lot of money,” Mulcahy said in his deposition.
Other topics Mulcahy touched on during his deposition included Watson’s personality. He said that, throughout his employment at Northstar, he believed Watson was a narcissist, and that gradually he came to conclude Watson was a sociopath as well. He also said no one else played a meaningful role in decision making at Northstar.
“He made all the decisions,” Mulcahy said. “There’s no decisions per se made without Brian, yes.”
Mulcahy later would become somewhat disappointed with Amazon. On the same day that the FBI served a warrant at Watson’s mansion, IPI — the company’s partner in the development deals — moved to oust Northstar from the joint venture. Mulcahy would later write to an Amazon representative that had hurt Northstar’s investors, some of whom Mulcahy brought on board.
“I did you all a favor, and now my investors are being screwed by IPI and you refused to help when I called a few months ago,” Mulcahy wrote in one email, the date of which is not clear.
“I only had three demands: Protect my identity, protect my investors, and take it easy on Will Camenson,” Mulcahy emailed Amazon. “As far as I could tell you haven’t done any of this.”
Reached by BusinessDen last week, Mulcahy told a reporter he was still glad he emailed Jeff Bezos early that December.
“It was still the right thing to do, regardless … of the grief that’s come with opening a can like this,” he said, highlighting his identity becoming public as one disappointment.
Mulcahy said he hasn’t closely followed the case against Northstar, only paying attention when his attorney indicates there’s something he needs to know.
“I’ve put it in my rearview mirror,” he said.