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LoanDepot and CEO Hsieh sued by former COO over underwriting scheme

The former chief operating officer of loanDepot, Tamara “Tammy” Richards, is suing the company, alleging gender discrimination and wrongful termination over her refusal to participate in a scheme to loosen underwriting standards.

The legal filing in the California Superior Court for Orange County also claims the company had a “frat house” environment that encouraged mistreatment of women in the workplace.

Besides the company, the lawsuit names Anthony Hsieh, company founder and CEO, and Peter MacDonald, its executive vice president and general counsel, as defendants.

“loanDepot is committed to operating at all times according to ethical, responsible and compliant business practices grounded in values of inclusivity and respect for our team members, customers and all of our stakeholders,” an emailed statement from the company read. “The claims in the lawsuit, which we take very seriously, were previously thoroughly investigated by independent third parties and found to be without merit. We intend to defend ourselves vigorously against these outlandish allegations and will respond as appropriate during the legal process.”

Richards has over 30 years of experience in the mortgage business, including at Countrywide Home Loans; the legal filing said she was one of the few employees retained by Bank of America, which acquired the company in June 2008 after it crumbled during the financial crisis.

She joined loanDepot in February 2018 but almost immediately, Richards, along with other female employees, became concerned over mistreatment because of their gender, the legal filing alleges.

“As the only female executive, Ms. Richards not only witnessed numerous instances of upper-level management employees, including Hsieh, engaging in acts against women that created a hostile environment, she too was at times subjected to disparate treatment, marginalized or overtly sexualized as a woman by her male colleagues,” her lawsuit states. “From parties filled with prostitutes to sexual assaults against female employees, Hsieh and other upper-level managers either swept these complaints under the rug in some instances, or completely disregarded them in others.” The filing includes several examples of this alleged behavior.

But the breaking point apparently took place last August, where Richards alleges “Hsieh finally began to initiate his wide scale fraud for profit scheme. During a production meeting in which Ms. Richards was present, Hsieh began to scream ‘I am Mello Clear, and we must immediately close loans regardless of documentation!'”

Richards said she then went to the executive at loanDepot she reported to, Jeff Walsh, the senior executive vice president and told him that Hsieh’s urging of the production team to close loans without documentation was illegal, and that she would not stand for or participate in such activity. But allegedly Hsieh persisted in this program designed to ramp up origination volume.

Eventually, Hsieh allegedly began to retaliate against Richards. In November, she was removed as COO and instead offered a non-C Suite position, chief mortgage officer. The move also negatively affected the unvested Class X stock shares that were part of her compensation package initiated before loanDepot’s initial public offering on Feb. 11.

Post-IPO, the company has traded between $14 and $39 per share, the legal filing states. (Yahoo Finance has a 52-week low of the stock at $6.81 and a high of $39.85)

“With Defendants unjustifiably forcing forfeiture of Ms. Richards’ unvested Class X Units, Ms. Richards has a lost stock anywhere between $25 million and $50 million,” the filing said.

On March 30, Richards resigned, citing a “constructive termination” as a result of the company’s retaliation against her.

Besides filing the lawsuit, she also filed a complaint with California’s Department of Fair Employment and Housing on Sept. 21.


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