Citizens Bank sues SoFi over alleged poaching of mortgage staff

Citizens Bank has filed a lawsuit against digital lender SoFi, accusing the San Francisco-based company of systematically recruiting thirty mortgage-focused employees since 2024. The legal action, submitted to the United States District Court for the District of Connecticut, alleges that SoFi orchestrated the departure of key personnel in a manner that the bank describes as a pattern of racketeering. While the hires have impacted operations across nine states, the suit primarily focuses on two specific groups of employees in Connecticut and Texas, claiming their exit significantly weakened Citizens’ market position in those regions.

The complaint details a coordinated resignation of nine employees from a Connecticut branch in June. According to the bank, mortgage market manager Michael Daversa resigned on June 12, stating he was unaware of any other departures. However, six colleagues on his team resigned within a 49-minute window, with two additional staff members leaving later that same day. Citizens asserts that this sequence of events effectively annihilated the branch’s operational capacity. The bank further claims that internal reviews revealed Daversa had contacted multiple employees to promote SoFi’s opportunities, describing the move as a way to get ahead of the pack and work with familiar faces. Allegations also include the transfer of confidential client lists and data to personal email accounts and the printing of loan pipeline reports on the day of the resignations.

The financial impact of these departures is substantial, with the Connecticut employees who left representing more than $400 million in closed loans and approximately $5 million in revenue from the previous year. This group accounted for 70 per cent of the branch’s mortgage producers and 80 per cent of its mortgages. Citizens contends that the June departures essentially eliminated its market presence in Connecticut, a situation compounded by the loss of three additional employees to SoFi since the initial wave. The bank argues that SoFi stole the fruits of its efforts rather than engaging in legitimate business acquisitions or building its own units.

A similar incident is alleged to have occurred in Texas in August 2024, where a senior consumer lending executive left for SoFi, followed by 11 other employees from the Texas mortgage department. Citizens claims this migration handicapped its ability to operate in the southwest region. The lawsuit accuses SoFi of obtaining trade secrets without authorisation, interfering with employment contracts, and aiding former employees in breaching non-compete clauses. The bank has sent cease-and-desist letters to the departing staff but reports receiving no response from them or from SoFi.

SoFi has rejected the claims, with a spokesperson describing the lawsuit as baseless and a clever attempt to prevent employees from pursuing career opportunities elsewhere. The company stated that it lawfully competes to recruit and retain top talent and expects other organisations to do the same. SoFi argues that Citizens has provided no evidence that it offered incentives for employees to violate their contracts. The digital lender has until 30 September to respond to the lawsuit, which includes colourful descriptions of its alleged actions as choreographed misconduct, reckless indifference, and unscrupulous behaviour.