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| NetBank Inc. has filed a lawsuit against a former executive of its now defunct nonconforming mortgage subsidiary — claiming he owes the company $1.1 million as a result of being terminated.
The lawsuit was filed against John Giagiari, who previously headed sales at Meritage Mortgage Corp. Giagiari contended in talks with Georgia-based NetBank that he owes the company nothing as he is entitled to severance pay and other benefits under the employment agreement he signed with the company. A man who answered a California phone number listed in Giagiari’s name denied that he was Giagiari but acknowledged that he knew him and then declined to comment on the lawsuit or to forward a message to the former NetBank worker. Giagiari was fired Nov. 27. NetBank filed a nine-page complaint the same day in Fulton County Superior Court. NetBank wants Giagiari to repay his 2006 salary and bonuses. Giagiari’s base salary was $200,000. According to court documents, any commissions advanced to him had to be at least $750,000 each calendar year. A NetBank spokesman, Matthew Shepherd, citing the company’s policy of not publicly discussing matters in litigation, declined to comment on the lawsuit but said the company had hoped to avoid litigation. Giagiari was hired in 2004 to be the Director of Sales. He was fired last month because of Meritage’s financial under performance and the poor quality of loans delivered by Meritage’s customers, according to court documents. NetBank also decided to discontinue the nonconforming channel. Under Giagiari’s employment agreement, his employment with the bank could be terminated without notice if cause could be found. The agreement also stated Giagiari would immediately repay bonuses and commissions if the agreement was terminated by the company. Shephard described Meritage’s performance as “bleak.” He said the lender posted a loss of loss of $1.0 million for the first quarter of 2006 on a pre-tax basis, a loss of $9.8 million for the second quarter of 2006 and a loss of $25.6 million in the third quarter of 2006. Shepherd said the nonconforming lender focused on near prime credit applicants, people with average FICO scores of around 640 or 650. Late last month, the company announced its withdrawal from the nonconforming mortgage, RV, boat and aircraft financing arena by entering into a personnel placement agreement with Oregon-based Lime Financial Services. Lime agreed to extend job offers to many of the company’s non-conforming sales force and operations support staff. Related: Subprime Unit Closing |
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