Amazon, facing questions over workplacesafety, also probed on bank dealings

The Manhattan U.S. Attorney’s Office is conducting an investigation into Amazon under the Financial Institutions Reform, Recovery and Enforcement Act, a law that allows civil cases to be brought over wrongdoing that impacts banks. The office has deployed the 1989 law at the same time the Labor Department presses a workplace safety investigation of Amazon that has already led to several citations.

The Labor Department in December cited Amazon at six of its warehouses for not adequately reporting injuries and this week cited three company facilities, saying workers were exposed to ergonomic or equipment hazards.

Amazon has said it intends to appeal the citations. The company also said it never intentionally misrepresented its safety record.

Because Firrea cases proceed under civil law the government can more easily prove claims than in a criminal prosecution, which requires juries to be convinced of charges beyond a reasonable doubt.

The U.S. Attorney’s Office in Manhattan issued a subpoena in August to Amazon for information the company might have shared with financial institutions involved in at least $90 million in contracts or agreements with the online retailer in the previous five years, specifically information it shared on its injury rates and labor law compliance.

An Amazon unit last month challenged the subpoena and related subpoenas in federal court in Seattle.

“It is difficult to understand how a safety inquiry could plausibly be shoehorned into a Firrea investigation," Zainab Ahmad, a partner at outside counsel Gibson, Dunn & Crutcher LLP, wrote in a letter to government lawyers that is included with court papers.

“Firrea addresses financial fraud, not employee safety," Ms. Ahmad added, calling the U.S. Attorney’s Office’s legal theory “extremely tenuous" and “unprecedented."

The office is seeking a range of documents on Amazon’s labor practices, including internal communications touching on policies around workplace productivity. The office also wants video surveillance footage of Amazon facilities and has served subpoenas to take testimony from Amazon employees, including high-level executives, according to Ms. Ahmad.

Amazon in court papers in the case in Seattle said the information demands are “unrealistic" and the U.S. Attorney’s Office stretched to assert jurisdiction under Firrea.

While the law was meant to target insiders who looted savings-and-loan institutions, it has been applied in novel ways by government lawyers, said Robert Giuffra, a partner at the law firm Sullivan & Cromwell LLP who has worked on Firrea-related litigation.

“The Justice Department has a history of misusing the Firrea statute and stretching it far beyond its intended purposes," he added.

Firrea emerged as a “superweapon" for the U.S. Justice Department following the 2008 financial crisis, when it was used to bring cases against banks themselves, said Brian Feldman, a lawyer formerly with the civil fraud unit of the U.S. Attorney’s Office in Manhattan who now is in private practice at Harter Secrest & Emery LLP.

Mr. Feldman, who worked on Firrea-related cases during his time in the office, said that while the Amazon case involves a “novel set of circumstances," Firrea is written to allow the government to tackle a variety of fraud affecting banks.

Any fraud case against Amazon would turn on whether the company had made misrepresentations to lenders and whether those misrepresentations impacted their decision-making, he said.

A spokesman for the U.S. Attorney’s Office in Manhattan didn’t respond to a request for information on the identities of the financial institutions whose dealings with Amazon are under scrutiny.