California lender accuses CrossCountry of racketeering

A California lender alleges CrossCountry Mortgage used a "transition desk" of dedicated staff to poach one of its branch managers and divert loans to the competitor, according to a new lawsuit.

Chula Vista-based American Mortgage Network accuses CrossCountry of racketeering, among 10 counts, in a complaint filed Tuesday in the U.S. District Court for the Northern District of Georgia. AmNet also names former employee Spencer Thomas and CrossCountry manager William Myers as defendants in the suit. 

CrossCountry already faces a slew of similar accusations, but AmNet's lawsuit is the rare, if not sole complaint also charging the lender with a civil count of the Racketeer Influenced and Corrupt Organizations Act which is often associated with criminal enterprises. 

"Cross Country has teams set up specifically to facilitate the transition and transfer of loans from competitors using their current loan officers as Cross Country's agents despite the fact that those loan officers remain licensed with and employed by competitors," wrote attorney Ari Karen of law firm Mitchell Sandler on behalf of AmNet.

Karen and a spokesperson for AmNet declined to comment on pending litigation this week while a representatives for CrossCountry didn't respond to a request for comment. 

Thomas, a Georgia resident, was hired by AmNet in 2019 and was a branch manager and senior loan officer when he began secret discussions with CrossCountry last May, the lawsuit claims. Until his departure in August, Thomas diverted 15 loans to CrossCountry worth approximately $7 million in violation of his contractual obligations and trade secrets laws, said AmNet, which said it reviewed its loan origination system. 

During the same period, Thomas also allegedly attempted to induce more AmNet workers to switch firms. To ensure a smooth transition of the rerouted loan pipeline, CrossCountry provided a "dedicated migration team" of loan officers for AmNet employees to aid in the transition of confidential information, the complaint said. 

AmNet claims CrossCountry's transition desk is a separate department it has used to divert loans from numerous competitors, citing poaching lawsuits against the company from Annie Mac in 2020 and loanDepot in 2018. The transition group of nine loan officers is allegedly led by CrossCountry production manager William Myers, who reports to chief production officer Craig Montgomery. 

"These loan officers spend a substantial portion of their time moving loans from the current, soon to be former, employers of loan officers who are joining CrossCountry," Karen wrote, further describing defendants' actions as racketeering activity.

CrossCountry also allegedly provides legal advice to loan officers it solicits from competitors and offers them indemnity if their former firms bring actions against them for unlawful activity, said AmNet, citing a 2018 lawsuit against CrossCountry by Homeside Financial. 

Along with damages, AmNet is seeking an account of all loans Thomas diverted and closed or attempted to close with CrossCountry Mortgage beginning last May, and disgorgement of profits CrossCountry realized as a result of the mortgages. 

AmNet was founded in 2019 and is a fully employee-owned company with 34 workers listed on LinkedIn. The company offers conventional, government-sponsored, jumbo and home equity line of credit loans and is licensed in 41 states and Washington, D.C. with a few additional state licenses pending, according to its website. 

CrossCountry in comparison is one of the industry's largest non-bank lenders, producing $53.5 billion in lending volume in 2021. As of last month it had 8,000 employees across 600 branches nationwide. The firm has also been the target of raiding accusations by lenders small and large, including multiple pending lawsuits from loanDepot.