LoanDepot Inc., one of the nation’s largest non-bank providers of mortgages, has sued its cross-town rival, West Capital Lending Inc., alleging various violations of tax, labor and trade secrets laws.
The lawsuit, filed on Oct. 10, accuses West Capital of staging a large-scale employee raid and data theft campaign dating back to 2021. It also accuses West Capital of improperly hiring loan originators as independent contractors.
“As our complaint alleges in detail, West Capital Lending has manipulated fair lending, privacy and tax laws and regulations to create an unfair competitive advantage,” a loanDepot (NYSE: LDI) spokesperson told the Business Journal on Oct. 20.
West Capital Lending is a leading Mortgage Brokerage and Direct Lender specializing in residential mortgage loans.
‘Misappropriated’ Stolen Data
The lawsuit says West Capital (WCL) and the company’s executives “concealed and misappropriated data that they knew had been stolen from loanDepot;” misclassified employees as independent contractors to gain a competitive advantage over loanDepot and to induce loanDepot loan originators to leave loanDepot; and capitalized on stolen leads and customer information in order to divert prospective and current loanDepot applicants and borrowers to WCL.
It alleges “violations of federal and state laws, including state and federal labor laws, loan originator compensation laws and consumer privacy laws, to gain a competitive advantage.”
LoanDepot claims it suffered competitive harm at the hands of West Capital and is seeking money damages and court-ordered bars against the alleged illegal practices.
The California Superior Court in Orange County had not scheduled a hearing as of Oct. 20, according to a loanDepot spokesperson.
West Capital did not respond to a request for comment at press time.
West Capital: Baseless Suit
Industry website National Mortgage Professional quoted Daniel Iskander, co-founder of West Capital Lending, as calling the loanDepot lawsuit baseless.
“Anyone can sue anyone for any reason,” Iskander states on the site. “This isn’t the first time a competitor has tried to sue us for losing loan officers to the broker channel. We operate within all state and federal laws and, most importantly, with integrity for our loan officers and our borrowers.”
Iskander added: “There’s absolutely no validity to any type of corporate theft in any way, shape, or form. The only validity to the entire complaint by loanDepot is that West Capital Lending is a top brokerage. Period.”
West Capital has signed a new office lease for 44,241 square feet at 17911 Von Karman Ave. in Irvine, almost four times larger than what it occupied at its last known address, which is 11,613 square feet at 24 Executive Park in Irvine.
LoanDepot shares are up about 65% this year and were trading at $3.37 apiece for a market cap of $1.1 billion as of Oct. 20.
