Cases of poaching by various mortgage lenders are beginning to ramp up as the housing market continues its downward slide.
On June 14, Pacific Valley Bank filed suit against former Senior Vice President and Senior Business Banker Joseph Servi for allegedly improperly acquiring, using and/or disclosing trade secrets to his new employer, Pinnacle Bank.
Another poaching case was filed on June 23 between Shamrock Home Loans Inc. and former Business Development Recruiter Kaitlyn Handler, who is accused of misappropriation of trade secrets, breach of contract, breach of fiduciary duty, conversion, unjust enrichment and tortious interference with business relations. According to the lawsuit, Handler forwarded herself documents containing Shamrock’s trade secret information for the use and benefit of American Pacific Mortgage, her new employer and direct competitor of Shamrock.
There’s an increasing danger of poaching, in the mortgage industry and elsewhere, as inflation surges and income remains flat — in fact many in sales positions can expect their commission to decline this year as the volume of mortgage originations shrinks further. According to a survey by Elements Global Services, it would take just a 15% pay raise to get 49% of employees to leave their jobs. For some employees it’s even lower, as 15% of respondents said it would take just a 5% raise to leave their jobs.
These poaching lawsuits are all beginning to look the same with only minor differences in language, but the allegations are nearly all the same. The alleged conspirators also seem to follow a similar process in which they forward confidential documents to their Gmail account before sending it off to their new employer. Then, they immediately resign from the company. Due to the repetitive nature of this problem, one would think that a company would take more preventative measures to protect trade secrets or restrict who can see any documents titled “Master Pipeline Spreadsheet.”
Handler, for example, allegedly sent the following files to Shamrock’s competitor American Pacific Mortgage, including but not limited to, “Master Pipeline Spreadsheet,” “Shamrock Scripts,” “Battlecard Competing Companies,” “Prospect Contact Information List,” and “Shamrock Competitor Analysis Framework.” The documents contain Shamrock’s trade secret information, including confidential prospective employee information, training materials, and competitor data. The lawsuit does not reveal how Handler was able to obtain these documents.
After leaving the company, Handler allegedly solicited and diverted current and prospective Shamrock employees to discontinue business with the company and instead conduct business with American Pacific Mortgage.
Pacific Valley Bank’s Joseph Servi was able to obtain confidential information through his role as lead business development officer, tasked with the generation of new lending and deposit relationships as well as the maintenance of their existing portfolio of clients.
On April 14, 2022, Servi sent an unsolicited e-mail to clients of Pacific Valley Bank, the lawsuit claims, which stated:
“I wanted to let you know that I am now with Pinnacle Bank. A community bank with larger lending options that will help my customers including construction loans (large and small projects), a SBA department, a robust online banking platform and cash management tools and last but not least... very competitive rates.
I will be reaching out once I get settled, but feel free to contact me via cell or my email below if you have a customer with an immediate need.”
The lawsuit also claims that Servi lied to Pacific Valley’s current and potential customers, stating that they do not offer a robust online banking platform, cash management tools, competitive rates, and made other false claims that are currently unknown to the company.
According to the lawsuit, Servi expressed these false claims to induce third parties to transfer their business to Servi’s new employer, Pinnacle Bank. The lawsuit also states that Pacific Valley’s economic relationships were disrupted as a result, although it does not define to what lengths.
Both the defendants in either lawsuit signed an employment contract that explicitly forbids them from conducting this type of behavior, yet poaching continues to happen across the industry.
