The legal dispute between Irvine-based nonbank loanDepot and its former chief operating officer (COO) Tamara “Tammy” Richards finally came to a close on February 7, 2025, after a unanimous jury verdict was returned in the company’s favor.
Richards, who is now COO of Kind Lending, filed the complaint in the Superior Court of California, County of Orange, Sept. 21, 2021. In the complaint, Richards alleged that her then-employer, loanDepot Founder and CEO Anthony Hsieh, encouraged his sales team to cut corners while underwriting loans in order to increase profits and prepare for the company’s initial public offering (IPO).
Litigation Saga of loanDepot
Plenty of mortgage professionals have fond memories of the year 2021, when interest rates hit historic lows and triggered a nationwide refinance boom. At the time, loanDepot was the nation’s second-largest lender and had launched its IPO several months earlier, when a lawsuit containing explosive allegations from the company’s COO, Tammy Richards, surfaced on September 21, 2021.
Specifically, Richards claimed that the loanDepot executives hatched a strategy, dubbed “Project Alpha,” in which Hsieh personally identified over 8,000 loans that were closed without proper documentation. She claims he then identified over 200 processors with “super authority” to close these loans without documentation, and processors would receive extra bonuses if those loans closed by the end of November.
Additionally, Richards claims she was also the only female in the company’s upper management, and she alleged in her complaint that gender discrimination and sexual harassment “was a constant concern." According to the complaint, the behavior “enabled by Hsieh, fostered a misogynistic ‘frat house’ culture within the company's corporate office, at the expense of its female employees.”
In a separate lawsuit, loanDepot settled another class action lawsuit for $3.5 million containing similar claims relating to “Project Alpha,” filed by its shareholders.
The class action suit accused the company, its founder Anthony Hsieh, other top executives, and bank underwriters of making misleading disclosures around the time of its 2021 IPO. Following an amended complaint in 2022 and a subsequent motion to dismiss by the defendants, a settlement was reached in August.
According to loanDepot’s SEC filing, the claims against the two former executive officers, Hsieh and Macdonald, were dismissed by the court several years ago. Also, the plaintiff's claims regarding improper origination of loan documents, gender discrimination, and several other ancillary employment claims were dismissed as a result of several pre-trial motions filed on behalf of the company.
Earlier this month, a unanimous jury returned a verdict in favor of loanDepot regarding the remaining claims such as wrongful termination, various employment claims, and loan origination practices, absolving the company of any wrongdoing.
Yet, loanDepot’s countersuit against Richards, alleging that she stole confidential information pertaining to about 8,000 loans — which she previously claimed were approved without proper documentation — is still pending.
“We are pleased with the jury’s unanimous decision, which has vindicated our position on this case from the beginning,” said loanDepot President and CEO Frank Martel in an emailed statement. “We take great pride in our commitment to fostering a professional workplace where we respect our colleagues and customers in the communities where we live and work.”
Looking forward, Martel added, “We remain focused on the important work of Project North Star, which lays the foundation for a very positive trajectory in 2025 and beyond.”
Legal victory may provide some relief to the company's stakeholders; however, the company's stock has fallen over 32% in the past six months and faces profitability challenges, with analysts not expecting positive earnings this year.
