Oregon DOJ: Public Officials Exploited Nonprofit for Amazon Data Center Profits

A Scandal Involving a Nonprofit, Fiber-Optic Business, and Alleged Insider Deals

The Oregon Department of Justice has filed a civil complaint against eight individuals, including former officials from Morrow County and a state legislator, for allegedly exploiting a nonprofit organization to gain personal financial benefits. The case centers around the sale of a fiber-optic business called Windwave Communications at what the department claims was an undervalued price.

According to Attorney General Dan Rayfield, the individuals involved had knowledge of the true value of Windwave but sold it to themselves, misleading others for personal gain. The nonprofit in question, Inland Development Corp., was originally established to provide internet access to rural schools, hospitals, and government offices. However, the lawsuit suggests that its assets were misused for private benefit.

The Windwave Sale: A Major Discrepancy

Windwave Communications was purchased by five individuals for $2.6 million, despite the justice department asserting that the company was worth at least $9.5 million. This discrepancy is attributed to the fact that Amazon, one of Windwave’s largest customers, was expanding its data center operations in the area. The sale occurred when all eight defendants were serving on Inland’s board, either before or during the transaction.

Rayfield emphasized that the individuals involved had inside knowledge about the company's valuation and used that information to their advantage. “You had inside actors within Inland, with knowledge about the valuation of one of their businesses that they were selling off,” he said. “The interesting component of this is they were selling it to themselves.”

Background and Timeline of the Case

The case stems from a three-year investigation initiated after a 2022 report by The Oregonian/OregonLive exposed questionable dealings involving public officials in Morrow County. The report revealed that officials had awarded tax breaks to Amazon while simultaneously arranging property sales and benefiting from the arrangement by purchasing Windwave.

Morrow County, located 160 miles east of Portland along the Columbia River, is home to large farms, food processing businesses, and a growing number of Amazon data centers. Since 2017, the county has provided Amazon with over $330 million in tax breaks. According to the recent complaint, the officials deliberately withheld financial information related to Amazon’s potential business opportunities to artificially lower Windwave’s valuation.

Five of the defendants, including Port of Morrow commissioners and a former county commissioner, have since left their positions. The lawsuit also names Windwave’s CEO, Blake Lawrence, who shares ownership of the business with the four former public officials.

Legal Implications and Potential Outcomes

The lawsuit seeks to recover $6.9 million from the Windwave owners to compensate Inland for the loss. It also aims to recover attorney fees and may include punitive damages if warranted. The justice department is investigating whether Amazon played any role in the alleged insider dealing, though no direct evidence has been found yet.

Amazon has not confirmed whether it was aware that some of the officials who awarded tax breaks to the company also owned Windwave. However, the company reiterated its commitment to ethical business practices and stated that it has invested $39 billion in eastern Oregon since 2011.

Ethical Concerns and Public Accountability

Inland’s attorneys had previously advised the nonprofit to seek a “fairness opinion” from an outside party to ensure the transaction was above board. However, the complaint states that the defendants ignored this recommendation. The case highlights broader concerns about the misuse of nonprofit assets and the need for transparency in public affairs.

Rayfield emphasized that nonprofits are meant to serve the public good and receive tax exemptions as a result. He stressed the importance of holding individuals accountable for using these assets for personal gain.

“This type of insider dealing is not appropriate and should not be allowed,” Rayfield said. The lawsuit aims to return the fair value of Windwave to Inland so that it can continue to support rural communities in the region.

Ongoing Investigations and Future Steps

While the case is still unfolding, it raises important questions about the intersection of public officials, private interests, and corporate influence. The Oregon Department of Justice continues to investigate the matter, and more details may emerge in the coming months.

For now, the case serves as a reminder of the need for vigilance in ensuring that public resources are used for the benefit of all, not just a select few.