Grow Financial FCU in Tampa has filed suit in federal court against GTE Financial, alleging a former employee conspired with GTE to steal private information from the credit union, including trade secrets and private member information.
According to a copy of the complaint obtained by Credit Union Journal, former Grow Financial underwriting specialist Erica Pierson is accused of having copied and distributed confidential internal credit union documents and member information at the request of GTE. The distribution is said to have begun in August 2016 when – at the request of GTE AVP James Esner, himself a former Grow Financial manager and Pierson’s former supervisor – Pierson allegedly searched Grow Financial’s computer system for information on its lending strategy and internal loan application-processing procedures before sending those on to Esner “for implementation and use at GTE.”
Pierson is alleged to have sent the documents from her Grow Financial email account to her personal account before sending them on to Esner at GTE. Soon after, Pierson is alleged to have sent a copy of the credit union’s Dealer Scorecard and other documents containing personally identifiable information on Grow Financial Members, market research, technology and IT information and more.
About a month after those transmissions began, Pierson gave two weeks’ notice to Grow Financial, but did not disclose she was going to work for GTE, according to the complaint. During her final two weeks she is said to have emailed and/or printed out “dozens of reports and other documents, many of which contain confidential and/or proprietary Grow Financial information,” including personal information on Grow Financial members, historical loan ratio and performance reports, bankruptcy and collection files, and documents relating to indirect lendign production, mortgage, loan application volume data and more.
The complaint alleges that after Pierson decided to leave Grow Financial and after being hired at GTE, she continued to email and print out proprietary credit union documents “with the intent to use them or make them available for use at GTE, at the request of GTE, or both.”
Seeking jury trial
Grow Financial CEO Robert Fisher told Credit Union Journal his credit union hired a forensic firm to uncover the alleged crime, which required alerting the National Credit Union Administration and 13 state attorneys general.
Given the cooperative nature of the industry, it’s rare for two credit unions to be embroiled in such a legal battle, even when they are close competitors.
“We don’t do something like this lightly,” Fisher said in an interview. “This, in our opinion, was pretty egregious, and we had to go through extensive things with our members because their data was stolen…I’m just shocked.”
The complaint does not peg a specific dollar amount – it merely notes losses greater than $5,000 – to the breach and does not list a specific amount requested for restitution, though the document alleges Grow “is entitled to an award of its damages, including its financial losses including, but not limited to, the costs of conducting an investigation into Defendants’ conduct, the cost of taking corrective action, and damages to its reputation and resulting financial losses, such amounts to be determined at trial, Defendants’ unjust enrichment, and/or a reasonable royalty.” The credit union also alleges entitlement to “exemplary damages up to twice its damages and an award of its reasonable attorney’s fees.
While the sharing of trade secrets – and the competitive advantage that goes along with that – are a concern, Fisher indicated that Grow Financial's leadership is equally upset about the breach of members’ private data.
“We have a huge responsibility to protect [members’ information],” said Fisher. “That’s what we do and that’s the part our board really is upset about and takes seriously, because they represent the membership and have a fiduciary responsibility to make sure we protect that data and to make sure this never happens again.”
Fisher told CU Journal the costs involved were “not tiny,” citing the expense of hiring forensic firms, alerting members, regulators, government officials and more.
GTE is not making itself available for interviews, but did provide a statement.
“While litigation among credit unions has not been typical, lawsuits in general have become more common as market competition on both the employment and consumer side has increase,” GTE Financial President and CEO Brian Best said in a statement emailed to CU Journal. “Although efforts were made to gain understanding and clarification prior to this point, we neglected to receive any additional communication that could have helped in possibly avoiding litigation. GTE will continue to move forward in positive ways, ensuring the member and employee experience will not be impacted. We wholeheartedly believe in partnership and supporting fellow credit unions to strengthen the industry and our community and will continue to do so.”
The suit was filed in federal court on May 24 and Grow Financial is seeking a jury trial.
“I’ve never seen anything like this in all my years,” Grow Financial’s Fisher told CU Journal. “I’ve been here for 27 years, but for another credit union to steal your members’ personal information is beyond me.”