Mortgage lender Guaranteed Rate Mortgage allegedly owes one of its former employees, who has been recognized as one of the top loan producers in the country, more than $2 million in compensation, according to a lawsuit filed by the former employee.
Joseph Caltabiano, the former vice president of mortgage lending at Guaranteed Rate, left the Chicago-based company in November and joined rival BeMortgage. Caltabiano’s lawsuit alleges that he left, in part, because Guaranteed Rate executives were manipulating and misreporting financial information for their own benefit.
Caltabiano filed the suit Dec. 8 in Cook County Circuit Court in response to a lawsuit his former employer filed against him last month. Guaranteed Rate’s earlier lawsuit alleges Caltabiano planned and participated in an exodus of more than 20 employees to BeMortgage, a mortgage lender that operates as a division of Bridgeview Bank Group.
“Guaranteed Rate has a history of pursuing legal courses after somebody departs,” Caltabiano, who had been with the company about 15 years, said in an interview. “We felt this was the best course of action to both vindicate myself of their alleged charges and point out some items that I’m owed compensation for.”
Guaranteed Rate said in a statement that all of the allegations in the countersuit are retaliatory and without merit.
“This counterclaim is an attempt to paint Guaranteed Rate in a negative light to distract from Mr. Caltabiano’s and Bridgeview Bank’s own actions against Guaranteed Rate,” the company said in its statement. “Guaranteed Rate plans to use all available resources to vigorously defend itself and the individuals named in the suit as well as potentially seek further damages from Mr. Caltabiano and Bridgeview.”
Peter Haleas, chairman of Bridgeview Bank Group’s board, has denied any wrongdoing on the part of the bank.
Caltabiano was responsible for closing more than $200 million in loans this year, according to his lawsuit. Guaranteed Rate had agreed to pay him twice a month in commissions plus bonuses, but it allegedly failed to do so for the pay period after his resignation, according to the lawsuit.
There were other instances in which Guaranteed Rate allegedly failed to pay Caltabiano, including an agreed upon issuance of stock options, his lawsuit alleges.
Caltabiano’s lawsuit also alleges that Guaranteed Rate and some of its executives, including Chief Executive Officer Victor Ciardelli, Chief Investment Officer Edward Ahern, Chief Operating Officer Nikolaos Athanasiou and Chief Strategy Officer John Elias, who are all named in the suit, manipulated the company’s finances.
The lawsuit alleges that they were underreporting the gain on sale, or the amount of revenue made on a loan when it’s closed compared with when it’s sold to an investor. The executives then allegedly were able to pocket revenue from the actual gain on sale instead of paying Caltabiano and others their full compensation, the suit says.
The manipulations allegedly occurred over the past decade and have led to “a flurry of” resignations by executives, loan officers and others this year, according to Caltabiano’s lawsuit.
“Unfortunately, when you lose trust in a company, that’s a very difficult place to work,” Caltabiano said.
Allegations of manipulations arose earlier this year, when a lawsuit Guaranteed Rate filed against several former employees was playing out in court.
Guaranteed Rate filed that lawsuit in May, alleging an employee and two former employees solicited other workers to join competitor Cross Country Mortgage and planned to open competing branches while still employed by Guaranteed Rate. According to court documents, the case was terminated in September after the judge dismissed some of the claims for lack of jurisdiction.
Separately, Guaranteed Rate announced on Thursday that it’s selling a “meaningful minority stake” to Boston-based private equity firm Thomas H. Lee Partners in a deal set to close in early 2018. It’s the first time the 17-year-old company has sold a stake to an outside institutional investor.
The company said it plans to use the funds to repurchase shares from existing investors and invest in technology and recruiting to continue growing its business.
Guaranteed Rate, which last year bought naming rights to the White Sox stadium in a deal valued at $25.1 million, now has about 220 offices across the U.S. The company said it earned more than $778 million in gross revenue in 2016 and expects to fund more than $20 billion in new mortgage loans this year.
Lauren Zumbach contributed.
