Misconduct allegations shadow smart city proposal in Nevada

RENO, Nev. (AP) — A former school teacher has sued the CEO of a major cryptocurrency company that wants to build a smart city in the Nevada desert, accusing him and his wife of sexually harassing her and creating a hostile workplace at their Lake Tahoe home where she worked as a nanny, tutor and assistant.

Lawyers for Blockchains CEO Jeff Berns and his wife in turn are asking a judge to sanction the 45-year-old woman and her attorney, former Washoe County District Attorney Cal Dunlap.

They say her claims were concocted as part of an orchestrated plot to blackmail Berns while he was pushing a proposal in the Nevada Legislature backed by the governor to establish “Innovation Zones” key to Blockchains’ plans to someday build a futuristic city east of Reno.

Rebecca Eller’s lawsuit says Jeff and Mary Berns engaged in a civil conspiracy to defraud her in 2018 by concealing that her job duties would “include serving as sexual eye candy” and “to eventually participate with them in three-person sex.”

“The environment … was sexually pervasive, degrading, and insulting,” the latest version of the lawsuit says.

The Reno Gazette Journal first reported on the lawsuit seeking in excess of $150,000 in damages.

Defense motions filed last month say Eller concealed that “her true intent” in accepting employment with the Berns was to gather personal information “to use against them in order to extort money from the Berns or coerce a large settlement.”

Gov. Steve Sisolak has touted Innovation Zones as key to Nevada’s economic future and offered support of a draft proposal circulating in the Legislature. But the idea of giving companies powers similar to those of local government has generated pushback and led the governor to reduce the proposal to a study.

A resolution to form a committee to further study the proposal and potential ramifications was introduced Thursday in the state Senate.

Berns’ lawyers filed their most recent motion for an award of attorney’s fees as sanctions on April 22, just days before Sisolak put the brakes on the Innovation Zone proposal.

That motion was sealed by Washoe District Judge David Hardy, who earlier sealed the initial lawsuit filed in September and redacted parts of the amended suit filed in March.

Berns, 59, told the BBC in March he intended to sell the desert land where he hopes to build the smart city if lawmakers decided against Innovation Zones. He declined comment on the governor’s recent move and whether he thought the lawsuit affected the decision.

But he said earlier the “ludicrous” allegations in the lawsuit by a “former disgruntled employee” are an attempt to “extort me and malign my family.” The Berns are seeking at least $50,000 in counter damages.

“Considering this absurd lawsuit was filed nearly eight months ago, the timing of this being pushed to the media during the Nevada legislative session is not a coincidence,” he said in a statement emailed to The Associated Press last month.

His lawyer, Kent Robison, wrote in April court filings that Eller learned while working at their home that Berns “would be launching a huge project” in 2021.

Eller “waited to file this lawsuit to help exploit the Berns into an inappropriate settlement thinking that the Berns would not want to risk adverse publicity given the Innovation Zone concept,” Robison wrote.

Sisolak wouldn’t say whether the sexual harassment allegations affected his handling of the proposal, which he earlier said had potential to make Nevada a hub for cryptocurrency and other yet-to-be developed implementations of blockchain technology

“This bill was not about Jeff Berns,” Sisolak told the Gazette Journal. “This bill was about Innovation Zones.”

Washoe District Judge Hardy said, in refusing to dismiss most of the lawsuit last month, that he reached the “highly unusual conclusion” to seal documents and purge “all content that is immaterial, scandalous and impertinent.”

“The parties have created a litigation tone and status quo that must be stopped,” he wrote.

He dismissed claims the Berns were “stalking” Eller but refused to dismiss fraud and conspiracy claims.

The lawsuit says Eller relocated from Colorado where she earned $58,000 annually and was working in July 2018 as a part-time substitute teacher and private tutor for students in Incline Village, including Berns’ daughter, when Mary Berns asked if she was interested in a job.

The Berns offered her $75,000 with medical benefits to be a nanny, tutor and personal assistant living in their guest house for free. After signing a confidentiality and non-disclosure agreement making Blockchains her employer, she moved in Aug. 1, 2018, the suit said.

The next few months, Eller said Mary Berns made “invasive inquiries” into her private sex life, insisted on discussing the Berns’ sex lives and suggested that she and Eller share a hotel room, the suit said. It said she told Eller to “indulge her husband … with back and shoulder rubs,” and that Jeff Berns once swatted her buttocks and said she had “a great figure.”

Eventually she quit. She got a job at Lake Tahoe School but said in the lawsuit Berns had donated more than $1 million to the school and used his connections to end her work there.

The Berns tell a different story.

They say as early as May 2018, Eller began telling Mary Berns that Eller’s husband was abusing and cheating on her. She regularly sought comfort from Mary Berns and voluntarily confided personal information to her, the defense says.

“The Berns are guilty of only trying to be compassionate and provide the plaintiff with a secure job and safe living arrangement.”