Broker Sues Former Execs

The Youngs and the bank deny any wrongdoing and have pledged to vigorously defend against the legal charges.

Lombard, Ill.-based First Advantage claims in federal court filings that the Youngs are setting up a business operation identical to its own using its former managers and a Web site with a similar address to its own. The broker claims the bank and Realtor Laurence Hundman bankrolled the new brokerage firm. Hundman is also named as a defendant in the lawsuit.

First Advantage says it does business in Bloomington as Mortgage Services Illinois but is more commonly known as MSI.

The Youngs left First Advantage to work for Mortgage Services III.

In a 92-page complaint filed in U.S. District Court for the Northern District of Illinois, Eastern Division, First Advantage claims the Youngs breached clauses in their employment agreements that the men would not compete with First Advantage’s business or solicit its employees.

The broker also claims the Youngs have violated copyright and cyber squatting laws by registering an Internet domain name that is “confusingly similar” to the one it uses.

Attorney Mike Lied, who represents the bank, Mortgage Services III and Larry Hundman, declined to be interviewed but sent over a copy of the response the bank filed in the lawsuit.

“My clients deny the wrongdoing alleged by 1st Advantage, but because of the ongoing litigation, decline any other comment,” he wrote.

“Mark Young and Jeff Young both deny any wrongdoing and are vigorously defending the lawsuit brought by 1st Advantage Mortgage,” Jim Mahoney, the Youngs’ attorney, said in an e-mailed statement. “In view of the pending litigation, we believe further comment would be inappropriate.”

Mark Young was hired and signed an employment agreement as executive vice president of First Advantage’s wholesale division in 2004, according to the complaint. Jeffrey Young, Mark’s son, was hired by First Advantage in 2004 as a secondary market manager for First Advantage’s wholesale division. Jeffrey also signed an employment agreement

The agreements allegedly prohibit the Youngs from competing in mortgage lending for one year after leaving First Advantage and from soliciting or hiring First Advantage employees.

Hundman, the Realtor, started Mortgage Services III in August 2005. The company performs mortgage services in downtown Lombard and directly competes for its business, the plaintiff contends.

Upon the sale of 51 percent interest of Mortgage Services III to First State Bank in Jan. 2006, Hundman began contacting First Advantage employees, including Mark and Jeffrey, in an attempt to convince them to leave the broker. First Advantage also alleges in the complaint that, at about the same time, Illinois’ banking regulators received a “Notice of Intent to Establish A Bank Subsidiary” from First State Bank to be called Mortgage Services III.

The bank and Mortgage Services III hired the Youngs in 2007, the complaint says. First Advantage said the two then solicited and hired First Advantage employees who were “key managers, including the shipping manager, suspense manager and compliance manager.”

The mortgage broker has lost at least 30 employees to Mortgage Services III since February 2007, First Advantage’s attorney, Richard Chapman, said in a telephone interview.

First Advantage is a full-service mortgage company with offices in several cities in Illinois, an office in Arizona and one in Texas. Its divisions include a wholesale mortgage division, a correspondent and retail division.

Chapman said that, while the broker is still in business, the Bloomington office recently consolidated its operations in large measure because of the loss of its employees.

Claiming substantial losses from business disruption, loss of confidential information, loss of valued employees and loss of opportunities in the mortgage loan business, First Advantage has asked the court for attorneys’ fees and costs, damages and for an injunction forbidding Mark Young from soliciting its employees or serving its customers for one year. The broker has also asked the court to give it ownership of the domain name registered by Mark Young.

The complaint was filed in May. A trial date has not yet been set.