Chicago-based Guaranteed Rate Inc. was ordered to pay more than $25 million in damages for an alleged corporate espionage scheme that seems straight out of the play Glengarry Glen Ross, with an employee diverting hundreds of loan applications from a rival mortgage company.
A California jury this week found that Guaranteed Rate and loan officer Benjamin Anderson defrauded his former employer, Mount Olympus Mortgage, by downloading and transferring more than 200 active loan files and personal financial data on 900 borrowers before switching firms nearly two years ago.
“It was quite an elaborate scheme,” said Chad Hummel, a Los Angeles-based partner with Sidley Austin who represented Mount Olympus Mortgage. “He transferred all of the data without our consent or any of the customers’ consent.”
Guaranteed Rate denied the allegations in an emailed statement Friday afternoon.
Anderson signed an employment agreement with Guaranteed Rate in April 2014 while still working for Irvine, California-based Mount Olympus. He began downloading loan files and sending them through his personal email account to his new employer soon after signing the new employment agreement, Hummel said. Mount Olympus discovered the data theft about five weeks later, at which point many of the loans were already in process at Guaranteed Rate.
Hummel said Anderson’s “front-loaded” contract with Guaranteed Rate encouraged the fraud.
“It incentivized him to send hundreds of active loan files from our computer systems to Guaranteed Rate, which they immediately put into processing and started closing mortgage loans — all while he was still employed with us,” Hummel said.
Darren Beck, a Guaranteed Rate spokesman, said the company was not involved in any scheme to get Anderson to divert loan applications.
“Guaranteed Rate would never encourage Ben Anderson, or any loan officer, to bring over loans in process or download any data,” Beck said. “Ben Anderson has repeatedly maintained that Guaranteed Rate did not ask or encourage him to do any such thing.”
Anderson was fired by Mount Olympus in June 2014 and immediately went to work for Guaranteed Rate. Mount Olympus sent cease-and-desist letters and then filed a lawsuit in the Superior Court of California against Guaranteed Rate, Anderson and several other people who allegedly participated in the scheme.
Founded in 2000 by Victor Ciardelli, Guaranteed Rate is one of the 10 largest home lenders in the U.S., funding $18 billion in loans last year, according to the company.
Beck dismissed the idea that the company would have anything to gain from Mount Olympus, “a small regional operation that funded approximately $300 million in its best year.”
Beck said the list that Anderson cultivated included his friends, neighbors and family members.
Anderson was ranked as one of the top mortgage producers in the country last year, closing 377 loans valued at nearly $182 million, according to National Mortgage News. He remains employed by Guaranteed Rate.
The judgment includes $13 million in punitive damages, $5.6 million in lost profits and $4.6 million in lost business value.
“Unfortunately, due to the exaggerations and distortions of the facts by Mount Olympus, the jury was not able to fully comprehend the issues in question,” Beck said. “Needless to say, Guaranteed Rate strongly disagrees with the jury’s conclusion, and we are reviewing all available options for an appeal in the case.”
