Proficio Mortgage Ventures, Llc V The Federal Savings BankMOTION for Partial Summary Judgment Relating to DamagesD. Neb.January 27, 20171 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 M cD O N A L D • C A R A N O • W IL S O N L L P 2 3 0 0 W E S T S A H A R A A V E N U E • S U IT E 1 2 0 0 • L A S V E G A S , N E V A D A P H O N E ( 7 0 2 )8 7 3 -4 1 0 0 • F A X ( 7 0 2 ) 8 7 3 -9 9 6 6 JEFF SILVESTRI Nevada State Bar No. 5779 JOSEPH P. SCHRAGE Nevada State Bar No. 11270 McDONALD CARANO WILSON LLP 2300 W. Sahara Avenue, Suite 1200 Las Vegas, NV 89102 Telephone: 702.873.4100 Facsimile: 702.874.9966 E-mail: jsilvestri@mcdonaldcarano.com jschrage@mcdonaldcarano.com DAVID S. AMERICUS (pro hac vice) STEVEN H. LEECH (pro hac vice) GOZDECKI, DEL GIUDICE, AMERICUS, FARKAS & BROCATO LLP One East Wacker Drive, Suite 1700 Chicago, IL 60601 Telephone: 312.782.5010 Facsimile: 312.782.4324 E-mail: d.americus@gozdel.com s.leech@gozdel.com Counsel for Defendant Federal Savings Bank UNITED STATES DISTRICT COURT DISTRICT OF NEVADA PROFICIO MORTGAGE VENTURES, LLC, Plaintiff, v. THE FEDERAL SAVINGS BANK, Defendant. CASE NO. 2:15-cv-00510-RFB-VCF DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT RELATING TO DAMAGES Defendant The Federal Savings Bank (“TFSB”), by and through its undersigned attorneys, respectfully submits this Motion for Partial Summary Judgment Relating to Damages. . . . . . . . . . DATED this 27 th day of January, 2017. Case 2:15-cv-00510-RFB-VCF Document 89 Filed 01/27/17 Page 1 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 M cD O N A L D • C A R A N O • W IL S O N L L P 2 3 0 0 W E S T S A H A R A A V E N U E • S U IT E 1 2 0 0 • L A S V E G A S , N E V A D A P H O N E ( 7 0 2 )8 7 3 -4 1 0 0 • F A X ( 7 0 2 ) 8 7 3 -9 9 6 6 GOZDECKI, DEL GIUDICE, AMERICUS, FARKAS & BROCATO LLP By: s/ Steven H. Leech David S. Americus (pro hac vice) Steven H. Leech (pro hac vice) GOZDECKI, DEL GIUDICE, AMERICUS, FARKAS & BROCATO LLP One East Wacker Drive, Suite 1700 Chicago, IL 60601 Telephone: 312.782.5010 Facsimile: 312.782.4324 E-mail: d.americus@gozdel.com s.leech@gozdel.com Jeff Silvestri (#5779) Joseph P. Schrage (#11270) 2300 W. Sahara Avenue, Suite 1200 Las Vegas, NV 89102 Telephone: 702.873.4100 Facsimile: 702.874.9966 E-mail: jsilvestri@mcdonaldcarano.com jschrage@mcdonaldcarano.com Counsel for Defendant The Federal Savings Bank Case 2:15-cv-00510-RFB-VCF Document 89 Filed 01/27/17 Page 2 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 M cD O N A L D • C A R A N O • W IL S O N L L P 2 3 0 0 W E S T S A H A R A A V E N U E • S U IT E 1 2 0 0 • L A S V E G A S , N E V A D A P H O N E ( 7 0 2 )8 7 3 -4 1 0 0 • F A X ( 7 0 2 ) 8 7 3 -9 9 6 6 MEMORANDUM OF POINTS AND AUTHORITIES I. Introduction Proficio alleges it was damaged when TFSB purportedly misappropriated its trade secrets and/or alleged confidential information and used the information to wrongfully close 85 reverse mortgage loans. Proficio alleges several claims based on this basic factual premise. In each of its claims, Proficio seeks lost profits as its compensatory damages. However, Proficio not only seeks its alleged lost profits from the 85 loans, but the lost profits allegedly sustained by North American Marketing (“NAM”), an independent entity that is not a party to this litigation. Specifically, Proficio entered into an agreement with NAM relating to the loans at issue, which expressly limited Proficio’s profits from each closed loan to 70 basis points plus a $135 per loan fee. 1 Pursuant to the agreement, NAM was entitled to all additional profits from each loan. Notwithstanding the express terms of its agreement with NAM, Proficio seeks lost profits based on 100% of the loan profits (not the substantially reduced profits it would have received from the loans as a result of its agreement with NAM). This is improper as a matter of law. To be clear, TFSB denies all allegations of wrongdoing. Notwithstanding, TFSB asks this Honorable Court to enter a partial summary judgment in its favor and against Proficio limiting Proficio’s damages, in the event it succeeds at trial, to the profits it would have received pursuant to the NAM agreement. II. Statement of Uncontested Facts Proficio is a mortgage company that originates mortgage loans. (Ex. A, Miller Dep. 10:15- 18.) Proficio operated a branch in Henderson, Nevada. (Ex. B, Ohlhausen Dep. 76:24 – 79:19.) TFSB is a federal savings association with a branch in Las Vegas, Nevada. (Dkt 51, Am. Compl., ¶ 6; Dkt. 57, Ans. To Am. Compl., ¶ 6.) Proficio alleges that certain Proficio employees took confidential Proficio information prior to leaving Proficio, and brought the information with them 1 A basis point equal 1/100 of 1%, or 0.0001. Thus, 70 basis points equals 0.007. Case 2:15-cv-00510-RFB-VCF Document 89 Filed 01/27/17 Page 3 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 M cD O N A L D • C A R A N O • W IL S O N L L P 2 3 0 0 W E S T S A H A R A A V E N U E • S U IT E 1 2 0 0 • L A S V E G A S , N E V A D A P H O N E ( 7 0 2 )8 7 3 -4 1 0 0 • F A X ( 7 0 2 ) 8 7 3 -9 9 6 6 when they joined TFSB. (Dkt. 51, Am. Compl., ¶ 64.) Proficio alleges that 85 loans were improperly closed by TFSB, and Proficio seeks lost profits associated with those loans. (Ex. C, Womack Report, at 4.) Proficio claims that it incurred $1,533,200 in lost profits. (Ex. C, Womack Report, at 5.) Proficio originated reverse mortgage loans in conjunction with an affiliate, NAM. (Ex. A, Miller Dep., 25:19 – 26:11.) The relationship between Proficio and NAM was governed by an Affiliate Manager Agreement (“NAM Agreement”), entered into between NAM and Proficio in December 2012. (Ex. B, Ohlhausen Dep. 124:1 – 125:10.) A true and correct copy of the NAM Agreement is attached hereto as Exhibit E. (Ex. D, Pittman Dep. 37:22 – 38:6.) Pursuant to this Agreement, NAM provided Proficio with substantial services, including recruitment, lead generation, training, budgeting and expense management, and operational work flow management. (Ex. E, NAM Agreement, at 1, § 1.) Proficio agreed to employ loan originators recruited by NAM, and to make available its loan products to the originators recruited by NAM. (Ex. E, NAM Agreement, at 1, § 2.) Proficio’s reverse mortgage division, the division at issue in this case, was the group managed by NAM pursuant to the NAM Agreement. (Ex. D, Pittman Dep. 38:9-20.) Under the NAM Agreement, NAM received 100% of the monthly group profit generated by NAM’s group. (Ex. E, NAM Agreement, at 1, § 3.) Under the NAM Agreement, Proficio received a management fee consisting of 70 basis points based on closed loan volume, plus a $135 per loan fee. (Ex. E, NAM Agreement, at 3, § 3((b)(iii).) The 70 basis points compensation was calculated by multiplying the loan’s principal amount by 0.007. (Ex. B, Ohlhausen Dep. 142:16 – 143:7.) In addition, Proficio received a fee in the amount of $135 for each closed loan. (Ex. E, NAM Agreement, at 3, § 3((b)(iii).) The remaining profits belonged to NAM. (Ex. E, NAM Agreement, at 1, § 3.) In addition to the plain terms of the NAM Agreement, Proficio’s and NAM’s officers acknowledged that the sole profits earned by Proficio were 70 basis points based on closed loan volume, plus a $135 per loan fee. David Pittman, Proficio’s Chief Financial Officer, acknowledged that Proficio’s profits from closed reverse mortgage loans consisted solely of 70 basis points and a Case 2:15-cv-00510-RFB-VCF Document 89 Filed 01/27/17 Page 4 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 M cD O N A L D • C A R A N O • W IL S O N L L P 2 3 0 0 W E S T S A H A R A A V E N U E • S U IT E 1 2 0 0 • L A S V E G A S , N E V A D A P H O N E ( 7 0 2 )8 7 3 -4 1 0 0 • F A X ( 7 0 2 ) 8 7 3 -9 9 6 6 $135 closed loan fee. In his deposition, Pittman testified as follows: “Q. The profits would have been just the 70 basis points plus the $135 closed loan fee? A. Per that agreement, yes.” (Ex. D, Pittman Dep. 97:13-15.) Pittman also stated: Q. And then what -- what amount of the profits were retained by Proficio Mortgage Ventures? A. Profits was [sic] these fees that were -- we see here in the 70 basis points. Q. So the sole profits Proficio Mortgage Ventures earned in connection with a closed reverse mortgage loan was this $135 per closed loan flat fee and the 70 basis points on the balance of the loan? A. The profits, yes. Q. And everything else was paid to North American Marketing? A. The difference between expenses and the revenues and these fees, yes. (Ex. D, Pittman Dep. 51:8-20.) Alek Ohlhausen, one of the owners of North American Marketing, confirmed the division of profits pursuant to the NAM Agreement. Ohlhausen testified “Q. So basically the only financial benefits that Proficio receives is $100 fee per employee boarded, reimbursement of its payroll processing expenses 2 , $135 dollars for each closed loan, and then 70 basis points on the closed loan production; is that correct? … A. Yes.” (Ex. B, Ohlhausen Dep., 144:4-10.) II. Argument Based on the plain text of the NAM AMA, and the clear, unequivocal, undisputed testimony of its Chief Financial Officer confirmed by one of the co-owners of its affiliate manager, any Proficio lost profits on loans allegedly taken by TFSB would be 70 basis points and a $135 closed loan fee. Proficio’s expert has identified 85 loans that Proficio alleges TFSB wrongfully closed. The principal amount of those loans is $14,315,463. Thus, if Proficio were to be found to be entitled to its lost profits on all 85 loans identified by Proficio’s expert, which TFSB denies, the amount 2 The per employee boarding fee and payroll reimbursement are not at issue in this case. Case 2:15-cv-00510-RFB-VCF Document 89 Filed 01/27/17 Page 5 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 M cD O N A L D • C A R A N O • W IL S O N L L P 2 3 0 0 W E S T S A H A R A A V E N U E • S U IT E 1 2 0 0 • L A S V E G A S , N E V A D A P H O N E ( 7 0 2 )8 7 3 -4 1 0 0 • F A X ( 7 0 2 ) 8 7 3 -9 9 6 6 would equal $111,683.24 (the result of a mathematical formula of (14,315,463 * 0.007) + (135 * 85)). A. Legal Standard. A party may seek summary judgment on all or part of any claim or defense, including damages. F. R. Civ. Pro. 56(a); see also Sherwin v. Infinity Auto Ins. Co., 2:11-CV-43 JCM VCF, 2011 WL 5598344, at *1 (D. Nev. Nov. 16, 2011). Summary judgment allows courts to avoid unnecessary trials where no material factual dispute exists. N.W. Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). The court must view the evidence and the inferences arising therefrom in the light most favorable to the nonmoving party, Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996), and should award summary judgment where no genuine issues of material fact remain in dispute and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). Judgment as a matter of law is appropriate where there is no legally sufficient evidentiary basis for a reasonable jury to find for the nonmoving party. Fed. R. Civ. P. 50(a); Findlay v. Alaska Air Group, Inc., 2:10-CV-01461-ECR, 2011 WL 2710499, at *2 (D. Nev. July 12, 2011). B. Proficio’s Recovery is Limited to Its Profits under the NAM Agreement. Proficio’s recovery for lost profits on its allegedly taken loans is properly limited to the amount it would have received under the NAM Agreement. “Compensatory damages “are intended to redress the concrete loss that the plaintiff has suffered by reason of the defendant's wrongful conduct.”” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003). Thus, compensatory damages means the amount of money that will reasonably and fairly compensate the plaintiff for any injury caused by the defendant. Model Civil Jury Instructions, 9 th Cir., No. 5.1. A plaintiff may recover its actual loss pursuant to the Nevada Trade Secrets Act. N.R.S. § 600A.040, emphasis added. Actual loss is typically construed as lost profits, lost customers, lost market share, and similar losses. JustMed, Inc. v. Byce, 600 F.3d 1118, 1131 (9th Cir. 2010) (Idaho law). Damages seeks to place the injured party in the same place it would have been had there been no Case 2:15-cv-00510-RFB-VCF Document 89 Filed 01/27/17 Page 6 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 M cD O N A L D • C A R A N O • W IL S O N L L P 2 3 0 0 W E S T S A H A R A A V E N U E • S U IT E 1 2 0 0 • L A S V E G A S , N E V A D A P H O N E ( 7 0 2 )8 7 3 -4 1 0 0 • F A X ( 7 0 2 ) 8 7 3 -9 9 6 6 injury. Goodrich & Pennington Mortg. Fund, Inc. v. J.R. Woolard, Inc., 120 Nev. 777, 783, 101 P.3d 792, 796 (2004), emphasis added. A recovery in excess of one hundred percent of damages is a windfall which is not permitted. Ellison v. California State Auto. Ass'n, 106 Nev. 601, 604, 797 P.2d 975, 977 (1990). In the instant case, Proficio claims as compensatory damages the amount of lost profits for 85 loans. In order to establish lost profits, a plaintiff must show loss of net profits, not gross revenue. Hunt Foods, Inc. v. Phillips, 248 F.2d 23, 33 (9th Cir. 1957). It is undisputed, however, that Proficio’s actual profits for the loans at issue would have been 70 basis points based on closed loan volume, plus a $135 per loan fee. Any lost profit recovery above that level would result greater recovery for Proficio than if it had closed the 85 loans itself. This case is materially similar to the case of Eaton v. J. H., Inc., 94 Nev. 446, 581 P.2d 14 (1978). In Eaton, the plaintiffs sought lost profit damages for a breach of contract in the amount of the contractual rate of $250 per week. Id. at 448, 581 P.2d at 15. The Court, however, awarded the plaintiffs only their share of the weekly profits, an amount of $160 per week, which constituted the actual lost profits of the plaintiffs. Id. at 451, 581 P.2d at 17. The Nevada Supreme Court found no error in the trial court’s calculation. 3 Id.; see also United States v. Anderson, 741 F.3d 938, 952 (9th Cir. 2013) (holding the actual loss to the displaced (authentic) seller was the profit lost from the displaced sales—not the retail value of the goods that would have been sold, and thus that the gross proceeds a defendant collects from infringing sales were an inappropriate measure of the victim’s lost profits.) In the instant case, Proficio was contractually obligated to share the profits generated by its reverse lending operations. Proficio’s compensatory damages should similarly be limited to its share of those profits, i.e. 70 basis points based on closed loan volume, plus a $135 per loan fee. It is anticipated that Proficio will attempt to argue that its payments to NAM were fixed costs, not variable costs, and that such fixed costs are not properly deducted from lost profits. Such an argument would be without merit. The profits of any given reverse mortgage loan for Proficio can be determined solely by reference to the number of loans Proficio closes and the principal 3 The Supreme Court remanded on an unrelated issue to determine the correct start date for the weekly lost profit calculation. Case 2:15-cv-00510-RFB-VCF Document 89 Filed 01/27/17 Page 7 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 M cD O N A L D • C A R A N O • W IL S O N L L P 2 3 0 0 W E S T S A H A R A A V E N U E • S U IT E 1 2 0 0 • L A S V E G A S , N E V A D A P H O N E ( 7 0 2 )8 7 3 -4 1 0 0 • F A X ( 7 0 2 ) 8 7 3 -9 9 6 6 balances of such loans. All of these components are variable components, and cannot in any way be characterized as fixed costs. Moreover, Proficio’s payments to NAM were themselves variable payments, depending on the overall profitability of the loan officer group managed by NAM, which itself was dependent on the amount of loans closed. More fundamentally, Proficio’s argument, if accepted by the Court, would amount to a windfall to Proficio. Proficio would become entitled to profits it never would have earned, even in the absence of any wrongful conduct from TFSB. More simply, had Proficio itself been able to close the 85 loans at issue, rather than TFSB, it would have earned only 70 basis points based on closed loan volume, plus a $135 per loan fee, i.e. an amount of $111,683.24. It would be manifestly unjust to permit Proficio to receive any greater amount as compensatory damages for its alleged lost profits. Indeed, NAM has retained independent counsel and has threatened to sue TFSB. Such a suit would inevitably seek NAM’s lost profits for the same loans, i.e. the amount greater than 70 basis points based on closed loan volume, plus a $135 per loan fee. Thus, any award to Proficio in excess of 70 basis points based on closed loan volume, plus a $135 per loan fee (i.e. $111,683.24) potentially exposes TFSB to paying twice for the same alleged injury. As an equitable matter, Courts should avoid such an unjust result. See e.g. Uthe Tech. Corp. v. Aetrium, Inc., 808 F.3d 755, 761 (9th Cir. 2015) (noting that a tort victim is entitled to one complete satisfaction of its claim, neither more nor less), quoting Seymour v. Summa Vista Cinema, Inc., 809 F.2d 1385, 1389 (9th Cir. 1987), amended, 817 F.2d 609 (9th Cir. 1987). III. Conclusion The law is clear. Proficio, if it prevails at trial, is only entitled to compensatory damages in the amount of its actual loss. The only actual lost profits incurred by Proficio are its profits on the 85 loans allegedly wrongfully closed by TFSB. Proficio’s profits on such loans are limited to the sums it receives pursuant to the NAM Agreement, i.e. 70 basis points based on closed loan volume, plus a $135 per loan fee. Accordingly, this Court should limit any lost profit recovery for Proficio to 70 basis points of closed loan volume, plus a $135 per loan fee, for any loans TFSB is found to have wrongfully closed. Case 2:15-cv-00510-RFB-VCF Document 89 Filed 01/27/17 Page 8 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 M cD O N A L D • C A R A N O • W IL S O N L L P 2 3 0 0 W E S T S A H A R A A V E N U E • S U IT E 1 2 0 0 • L A S V E G A S , N E V A D A P H O N E ( 7 0 2 )8 7 3 -4 1 0 0 • F A X ( 7 0 2 ) 8 7 3 -9 9 6 6 WHEREFORE, for the reasons set forth above, The Federal Savings Bank respectfully requests that this Honorable Court enter an Order granting partial summary judgment on the issue of damages, limiting Proficio’s lost profit recovery, if any, to 70 basis points based on closed loan volume, plus a $135 per loan fee for any loans TFSB is ultimately found to have wrongfully taken, and granting The Federal Savings Bank such other and further relief as the Court deems necessary and appropriate. DATED this 27 th day of January, 2017. GOZDECKI, DEL GIUDICE, AMERICUS, FARKAS & BROCATO LLP By: /s Steven H. Leech David S. Americus (admitted pro hac vice) Steven H. Leech (admitted pro hac vice) GOZDECKI, DEL GIUDICE, AMERICUS, FARKAS & BROCATO LLP One East Wacker Drive, Suite 1700 Chicago, IL 60601 Telephone: 312.782.5010 Facsimile: 312.782.4324 E-mail: d.americus@gozdel.com s.leech@gozdel.com Jeff Silvestri (#5779) Joseph P. Schrage (#11270) 2300 W. Sahara Avenue, Suite 1200 Las Vegas, NV 89102 Telephone: 702.873.4100 Facsimile: 702.874.9966 E-mail: jsilvestri@mcdonaldcarano.com jschrage@mcdonaldcarano.com Counsel for Defendant Federal Savings Bank Case 2:15-cv-00510-RFB-VCF Document 89 Filed 01/27/17 Page 9 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 M cD O N A L D • C A R A N O • W IL S O N L L P 2 3 0 0 W E S T S A H A R A A V E N U E • S U IT E 1 2 0 0 • L A S V E G A S , N E V A D A P H O N E ( 7 0 2 )8 7 3 -4 1 0 0 • F A X ( 7 0 2 ) 8 7 3 -9 9 6 6 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I am an employee of Gozdecki, Del Giudice, Americus, Farkas & Brocato LLP, and that on the 27 th day of January, 2017, a true and correct copy of the foregoing DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT RELATING TO DAMAGES was electronically filed with the Clerk of the Court by using CM/ECF service which will provide copies to all counsel of record registered to receive CM/ECF notification. /s Steven H. Leech An employee of Gozdecki, Del Giudice, Americus, Farkas & Brocato LLP Case 2:15-cv-00510-RFB-VCF Document 89 Filed 01/27/17 Page 10 of 10 Exhibit A Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 1 of 49 Page 1 ·1· · · · · · · ·UNITED STATES DISTRICT COURT ·2· · · · · · · · · · DISTRICT OF NEVADA ·3 ·4· ·PROFICIO MORTGAGE· · · · · · ·) · · ·VENTURES, LLC,· · · · · · · · ) ·5· · · · · · · · · · · · · · · · ·) Case No. · · · · · · · ·Plaintiff,· · · · · )· ·2:15-cv-00510-RFB-VCF ·6· · · · · · · · · · · · · · · · ·) · · · · · · · ·vs.· · · · · · · · ·) ·7· · · · · · · · · · · · · · · · ·) · · · · · · · · · · · · · · · · · ·) ·8· ·THE FEDERAL SAVINGS BANK,· · ·) · · · · · · · · · · · · · · · · · ·) ·9· · · · · · ·Defendant.· · · · · ) · · ·______________________________) 10 11 12 13· · · · · · · · ·DEPOSITION OF JOHN MILLER 14· · · · · · · · · · · · ·VOLUME I 15· · · · · · · ·Taken on Friday June 24, 2016 16· · · · · · · · · · · ·At 9:37 a.m. 17· · · · · · · Taken at Greenberg Traurig, LLP 18· · · · · · · · 3773 Howard Hughes Parkway 19· · · · · · · · · · Las Vegas, Nevada 20 21 22 23 24· · ·Reported by:· ·KENDALL D. HEATH, NV. CCR No. 475 · · · · · · · · · · · ·CA. CSR No. 11861 25 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 2 of 49 Page 2 ·1· ·APPEARANCES OF COUNSEL: ·2· ·For the Plaintiff · · ·Proficio Mortgage ·3· ·Ventures, LLC: ·4 · · · · · · · ·THOMAS S. CARGILL, ESQ. ·5· · · · · · ·FOLEY & LARDNER, LLP · · · · · · · ·111 North Orange Avenue ·6· · · · · · ·Suite 1800 · · · · · · · ·Orlando, Florida 32801-2386 ·7· · · · · · ·(407) 423-7656 · · · · · · · ·tcargill@foley.com ·8 ·9 · · ·For the Defendant 10· ·The Federal Savings Bank: 11· · · · · · ·STEVEN LEECH, ESQ. · · · · · · · ·GOZDECKI, DEL GIUDICE, AMERICUS 12· · · · · · · ·FARKAS & BROCATO, LLP · · · · · · · ·One East Wacker Drive 13· · · · · · ·Suite 1700 · · · · · · · ·Chicago, IL 60601 14· · · · · · ·(312) 782-5010 · · · · · · · ·s.leech@gozdel.com 15 16 17· ·ALSO PRESENT: 18· · · · · · ·Eric Naranjo, The Federal Savings Bank · · · · · · · ·John Calk, The Federal Savings Bank 19 20 21 22 23 24 25 Page 3 ·1· · · · · · · · · · · · · ·INDEX ·2 · · · · · · · · · · · · · EXAMINATION ·3 · · ·WITNESS· · · · · · · · · · · · · · · · · · · · ·PAGE ·4 · · ·JOHN MILLER ·5 · · ·VOLUME I ·6 · · · · · · · · · · · By Mr. Leech ................. 4 ·7 ·8 ·9 10· · · · · · · EXHIBITS MARKED AS CONFIDENTIAL · · · · · · · · · · · ATTORNEYS EYES ONLY 11 12 · · ·Exhibit· · · Description· · · · · · · · · · · · Page 13 · · ·Exhibit 20· ·Affiliate Manager Agreement· · · · 30 14· · · · · · · · between Proficio Mortgage Ventures · · · · · · · · · and North American Marketing 15 · · ·Exhibit 21· ·Proficio's termination notice to· ·103 16· · · · · · · · the Affiliate Manager Agreement 17· ·Exhibit 22· ·Transition Expense Agreement· · · ·111 18 19 20 21 22 23 24 25 Page 4 ·1· · · · · · · · · · ·LAS VEGAS, NEVADA ·2· · · · · · · · · ·FRIDAY, JUNE 24, 2016 ·3· · · · · · · · · · · · · ·-o0o- ·4· · · · · · ·MR. LEECH:· Let the record reflect this is ·5· ·the discovery deposition of John Miller taken in the ·6· ·case of Proficio Mortgage Ventures versus Federal ·7· ·Savings Bank. ·8· ·Thereupon, ·9· · · · · · · · · · · ·JOHN MILLER, 10· · · · ·having been called as a witness by the 11· · · · ·Defendant, was duly sworn, examined and 12· · · · ·testified as follows: 13 14· · · · · · · · · · · ·EXAMINATION 15· ·BY MR. LEECH: 16· · · · Q.· ·Mr. Miller, would you state and spell your 17· ·first and last name for the record. 18· · · · A.· ·John Miller.· J-o-h-n, M-i-l-l-e-r. 19· · · · Q.· ·And have you ever given a deposition 20· ·before? 21· · · · A.· ·Yes. 22· · · · Q.· ·In what case? 23· · · · A.· ·One involving title around my house.· One 24· ·involving litigation of a trust.· Those are the two 25· ·I remember off the top of my head. Page 5 ·1· · · · Q.· ·Did either of those cases involve ·2· ·ProficioBank or Proficio Mortgage Ventures? ·3· · · · A.· ·No. ·4· · · · Q.· ·This may be old hat, but I'm going to go ·5· ·over the ground rules for the deposition.· As you ·6· ·can see, we have a court reporter here.· She is ·7· ·taking everything down in shorthand.· It is ·8· ·difficult for her to do her job if we are talking ·9· ·over each other.· I will ask that you let me finish 10· ·my question, and I'll let you finish your answer so 11· ·only one person is talking at a time.· Do you 12· ·understand that? 13· · · · A.· ·Yes. 14· · · · Q.· ·Also because she's taking everything down, 15· ·your answers needs to be verbal, i.e., yes, no.· She 16· ·can't take down nods of the head or "uh-huh" or 17· ·"uh-uh."· Do you understand that? 18· · · · A.· ·Yes. 19· · · · Q.· ·If you do not understand a question, you 20· ·can certainly ask me to rephrase it, and I will do 21· ·my best to do so.· If you answer the question, I 22· ·will assume that you understood the question; is 23· ·that fair? 24· · · · A.· ·Yes. 25· · · · Q.· ·We can take a break at any time.· I would Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 3 of 49 Page 6 ·1· ·only ask if there's a question pending, that you ·2· ·answer the question before we take a break. ·3· · · · A.· ·Understand. ·4· · · · Q.· ·Other than meeting -- strike that. ·5· · · · · · ·Is Mr. Cargill your attorney for purposes ·6· ·of this deposition? ·7· · · · A.· ·Mr. Cargill represents Proficio.· I don't ·8· ·have an attorney representing me. ·9· · · · · · ·MR. CARGILL:· As the attorney for 10· ·Proficio, we are representing John Miller as a 11· ·former employee of Proficio. 12· ·BY MR. LEECH: 13· · · · Q.· ·Other than meetings that you had with Mr. 14· ·Cargill, what did you do to prepare for this 15· ·deposition? 16· · · · A.· ·I looked over the complaint that was filed 17· ·and, I believe, Frank Naranjo's deposition. 18· · · · Q.· ·Did you review any other documents in 19· ·preparation for this deposition? 20· · · · A.· ·No. 21· · · · Q.· ·Other than with Mr. Cargill, did you speak 22· ·with anyone about this deposition? 23· · · · A.· ·No. 24· · · · Q.· ·What is your highest level of education? 25· · · · A.· ·Bachelor's degree from University of Notre Page 7 ·1· ·Dame. ·2· · · · Q.· ·When did you get that? ·3· · · · A.· ·2000. ·4· · · · Q.· ·What was the degree in? ·5· · · · A.· ·Double major in economics and ·6· ·philosophy. ·7· · · · Q.· ·Have you had any further education since ·8· ·that degree? ·9· · · · A.· ·No. 10· · · · Q.· ·Starting in about 2000 -- strike that. 11· · · · · · ·For whom did you work in 2000? 12· · · · A.· ·I walked for PWH Trust. 13· · · · Q.· ·What does PWH Trust do? 14· · · · A.· ·PWH was a private trust with extensive 15· ·investor holdings. 16· · · · Q.· ·So they were an investment trust or 17· ·investment company? 18· · · · A.· ·Yes. 19· · · · Q.· ·How long did you work there? 20· · · · A.· ·Until 2007. 21· · · · Q.· ·And in 2007 where did you go? 22· · · · A.· ·I started my own company. 23· · · · Q.· ·What was the name of that company? 24· · · · A.· ·Maurader Trading. 25· · · · Q.· ·And what sort of the trading did Maurader Page 8 ·1· ·Trading do? ·2· · · · A.· ·We were and investment advising firm with ·3· ·the State of Nevada. ·4· · · · Q.· ·So did it trade on its on account or did ·5· ·you trade on behalf of clients? ·6· · · · A.· ·On behalf of clients. ·7· · · · Q.· ·What did you trade -- stocks?· Bonds? ·8· · · · A.· ·Stocks, both private and public. ·9· · · · Q.· ·And how long did you work at Maurader 10· ·trading? 11· · · · A.· ·I sold the client list to Morgan Stanley 12· ·in 2009, maybe 2010 when we finished.· I'm not 13· ·exactly sure the dates. 14· · · · Q.· ·After you worked at Maurader Trading where 15· ·did you go? 16· · · · A.· ·I did some consulting and served on 17· ·boards, which is what I do now. 18· · · · Q.· ·When did you start working at Proficio 19· ·Mortgage Ventures? 20· · · · A.· ·I believe it was January of 2014 that I 21· ·was asked to join the board, and I don't remember 22· ·the date that I actually took over as the interim 23· ·president of the mortgage company, which ultimately 24· ·became active sometime in late '13 -- I'm sorry 25· ·'15. Page 9 ·1· · · · Q.· ·When you say you were asked to join the ·2· ·board in January of 2014, do you mean the board of ·3· ·ProficioBank? ·4· · · · A.· ·NHB Holdings as well as the bank. ·5· · · · Q.· ·And what is NHB Holdings? ·6· · · · A.· ·That's the holding company for ·7· ·ProficioBank. ·8· · · · Q.· ·What were the circumstances that led up to ·9· ·you being invited to join the board of 10· ·ProficioBank? 11· · · · A.· ·I purchased some stock and met with the 12· ·other board members. 13· · · · Q.· ·When you say "purchased some stock," do 14· ·you mean you purchased stock in NHB Holdings, the 15· ·bank holding company? 16· · · · A.· ·Correct. 17· · · · Q.· ·How much stock did you purchase? 18· · · · · · ·MR. CARGILL:· Objection.· Relevance. 19· · · · · · ·THE WITNESS:· I don't know the exact 20· ·number, approximately $150,000 worth.· I don't 21· ·remember the number of shares. 22· ·BY MR. LEECH: 23· · · · Q.· ·To the best of your recollection, what 24· ·ownership percentage do you have in that company? 25· · · · A.· ·Less than one percent. Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 4 of 49 Page 10 ·1· · · · · · ·MR. CARGILL:· Object to the form.· I don't ·2· ·know if you meant currently or when he purchased it. ·3· ·BY MR. LEECH: ·4· · · · Q.· ·So you currently own shares in NHB ·5· ·Holdings? ·6· · · · A.· ·I do. ·7· · · · Q.· ·Do you own the same or more shares than ·8· ·when you first invested? ·9· · · · A.· ·Same. 10· · · · Q.· ·What is the relationship of Proficio 11· ·Mortgage Ventures to ProficioBank? 12· · · · A.· ·It is a subsidiary of the bank. 13· · · · Q.· ·Is it a wholly-owned subsidiary? 14· · · · A.· ·Yes. 15· · · · Q.· ·What activities did Proficio Mortgage 16· ·Ventures engage in? 17· · · · A.· ·At the time when I joined the board, it 18· ·was originating both forward and reverse mortgages. 19· · · · · · ·MR. CARGILL:· Let the record show that 20· ·Eric Naranjo has joined the deposition. 21· · · · · · ·(Eric Naranjo joins deposition.) 22· ·BY MR. LEECH: 23· · · · Q.· ·How much work have you done in banking, 24· ·Mr. Miller? 25· · · · A.· ·Starting in 2008, I served as a board Page 11 ·1· ·member -- well, starting in 2000 I began working on ·2· ·investment trust bank holdings, and that ultimately ·3· ·led to being a startup capital for numerous banks ·4· ·across the United States and ultimately led to ·5· ·several board positions. ·6· · · · Q.· ·Other than board positions, have you held ·7· ·any management positions in a bank or mortgage ·8· ·company? ·9· · · · A.· ·Not prior to my acting presidency at 10· ·Proficio, no. 11· · · · Q.· ·Do you know when Proficio Mortgage 12· ·Ventures first began to originate HECM loans? 13· · · · A.· ·I do not. 14· · · · Q.· ·Do you know who would know that? 15· · · · A.· ·The board at the time.· Acting president 16· ·at the time was Richard Holley, I believe, so 17· ·sometime during his tenure, I believe. 18· · · · Q.· ·Can you spell his last name? 19· · · · A.· ·H-o-l-l-e-y. 20· · · · Q.· ·So do you know whether Proficio had any 21· ·reverse mortgage lead lists at the time it entered 22· ·into -- at the time it began originating HECM 23· ·mortgages? 24· · · · A.· ·I don't -- I don't know.· I don't know 25· ·what the strategy was when they started. Page 12 ·1· · · · Q.· ·Were you aware if they had any processing ·2· ·infrastructure in place? ·3· · · · A.· ·I know how they acquired most of their ·4· ·business prior to me joining was through affiliate ·5· ·arrangements where they were bringing in groups. ·6· · · · Q.· ·What affiliate arrangements are you ·7· ·familiar with? ·8· · · · A.· ·When I took over as acting president of ·9· ·the mortgage company, I believe there were five 10· ·active affiliate agreements.· So I'm vaguely 11· ·familiar with each one of those.· One of my main 12· ·tenets as president was to end those agreements. 13· · · · Q.· ·What were the names of the companies that 14· ·Proficio Mortgage Ventures was affiliated with? 15· · · · A.· ·North American Marketing.· I cannot 16· ·remember the other names.· I know some of the 17· ·principals, that's it. 18· · · · Q.· ·Who were the principals that you 19· ·remember? 20· · · · · · ·MR. CARGILL:· I'll just object to 21· ·relevance. 22· · · · · · ·THE WITNESS:· I remember -- I don't know 23· ·if he was principal or not now that I think about 24· ·it.· I'm unsure.· Sorry, I can't remember exactly 25· ·whether or not they were principals in those or not. Page 13 ·1· · · · · · ·I know there's several people that I dealt ·2· ·with that were involved in the mortgage company at ·3· ·the time that I tried to negotiate out of these ·4· ·agreements with, but I'm actually not sure they were ·5· ·principals. ·6· ·BY MR. LEECH: ·7· · · · Q.· ·When did you first learn about North ·8· ·American Marketing? ·9· · · · A.· ·Shortly after becoming a board member, 10· ·there was a meeting with the FDIC, and all of the 11· ·affiliate arrangements were mentioned. 12· · · · Q.· ·Were you familiar with any North American 13· ·Marketing's prior affiliations prior to Proficio? 14· · · · A.· ·At the time or did I come to know? 15· · · · Q.· ·Let's start first with at the time you 16· ·first learned of North American Marketing. 17· · · · A.· ·No. 18· · · · Q.· ·Did you ever come to know about their 19· ·prior affiliations? 20· · · · A.· ·I came to know that they were with a 21· ·former Utah Bank prior to coming to Proficio. 22· · · · Q.· ·And do you recall the name of that Utah 23· ·bank? 24· · · · A.· ·First Layton, I believe. 25· · · · Q.· ·Did you participate in any way in the Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 5 of 49 Page 14 ·1· ·discussions that Proficio had with North American ·2· ·Marketing prior to its becoming an affiliate of ·3· ·Proficio? ·4· · · · A.· ·No. ·5· · · · Q.· ·Did you ever learn about how that ·6· ·arrangement came to be? ·7· · · · A.· ·No, I did not. ·8· · · · Q.· ·Do you know if Proficio considered ·9· ·affiliating with other companies besides North 10· ·American Marketing to originate either forward or 11· ·reverse mortgage? 12· · · · A.· ·I couldn't say.· That was definitely a 13· ·strategy that was in place, but I wasn't making 14· ·decisions at the time, so I couldn't state what 15· ·their intentions were. 16· · · · Q.· ·Did you have any discussions with any 17· ·other company about bringing that company aboard as 18· ·a potential affiliate of Proficio to originate 19· ·either forward or reverse mortgages? 20· · · · A.· ·No. 21· · · · Q.· ·Are you aware of what North American 22· ·Marketing promised to do for Proficio as part of its 23· ·affiliate arrangement? 24· · · · · · ·MR. CARGILL:· Object to the form. 25· · · · · · ·THE WITNESS:· Yes. Page 15 ·1· ·BY MR. LEECH: ·2· · · · Q.· ·What did North American Marketing promise ·3· ·to do as part of its affiliate relationship with ·4· ·Proficio? ·5· · · · · · ·MR. CARGILL:· Object to the extent it ·6· ·calls for legal conclusion or argument. ·7· · · · · · ·THE WITNESS:· I would say they were ·8· ·supposed to uphold the construct of the affiliate ·9· ·agreement, which I believe was to provide marketing 10· ·services and compliance aspects of generating those 11· ·leads. 12· ·BY MR. LEECH: 13· · · · Q.· ·When you say "marketing services," what do 14· ·you mean? 15· · · · A.· ·I would say whatever was required to 16· ·economically generate viable leads to produce to 17· ·generate loans. 18· · · · Q.· ·Were they providing any additional 19· ·marketing services? 20· · · · A.· ·Not exactly sure what you mean.· The bank 21· ·wasn't telling them how to generate leads.· Their 22· ·job was to generate leads. 23· · · · Q.· ·You mentioned compliance services, I 24· ·think, or compliant services. 25· · · · A.· ·They were -- obviously, with the Page 16 ·1· ·generation of leads that has implications in the -- ·2· ·in compliance with the bank as well as the mortgage ·3· ·company.· They, of course, were supposed to generate ·4· ·those leads in a compliant manner. ·5· · · · Q.· ·What specific compliance concerns was ·6· ·North American Marketing supposed to address? ·7· · · · A.· ·I think over the course of their ·8· ·arrangement with Proficio, I assume those rules and ·9· ·legalities changed, but it would be something like 10· ·offering -- the offer of a free appraisal and how 11· ·that was offered and how it was handled internally. 12· ·Something like that would be a compliance matter. 13· · · · Q.· ·What other compliance matters are you 14· ·familiar with? 15· · · · A.· ·There's -- 16· · · · · · ·MR. CARGILL:· Object to the form. 17· · · · · · ·THE WITNESS:· I mean, there's tons related 18· ·to consumer lending.· I'm definitely not an expert 19· ·on them. 20· ·BY MR. LEECH: 21· · · · Q.· ·I'm asking specific to North American 22· ·Marketing, were there any other compliance concerns 23· ·that you had with respect to their operation? 24· · · · A.· ·There's RESPA.· There's HUD issues. 25· ·There's all kind -- like I said, I'm not an expert. Page 17 ·1· ·Those two come to mind.· I'm sure there's others as ·2· ·well. ·3· · · · Q.· ·Was it your understanding that North ·4· ·American Marketing was to operate in compliance with ·5· ·all the applicable regulations? ·6· · · · A.· ·Yes. ·7· · · · Q.· ·Do you know how North American Marketing ·8· ·obtained the lead information that it provided to ·9· ·Proficio as part of the affiliate's arrangement? 10· · · · A.· ·I do not.· I think that was the purpose of 11· ·using them versus trying to do it internally. 12· · · · Q.· ·So that did not -- strike that. 13· · · · · · ·So that Proficio did not have to undertake 14· ·any activities to generate leads? 15· · · · · · ·MR. CARGILL:· Object to the form. 16· · · · · · ·THE WITNESS:· No.· That North American 17· ·Marketing were experts or specialists in lead 18· ·generation and marketing services. 19· ·BY MR. LEECH: 20· · · · Q.· ·Did North American Marketing represent 21· ·itself as a specialist in marketing services? 22· · · · A.· ·I wasn't there at the time that they were 23· ·brought on as affiliates, but in my interaction with 24· ·them, I would say I would consider them specialists 25· ·in marketing services. Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 6 of 49 Page 18 ·1· · · · Q.· ·Did you have any concern that North ·2· ·American Marketing's providing lead information to ·3· ·Proficio would violate any agreement North American ·4· ·Marketing had with one of its prior affiliates? ·5· · · · A.· ·No, I did not. ·6· · · · Q.· ·Were you aware of any retroactive -- were ·7· ·you aware of any restrictions on North American ·8· ·Marketing's ability to provide Proficio with lead ·9· ·information? 10· · · · A.· ·I was not aware of North American 11· ·Marketing -- if they had any agreements prior that 12· ·restricted them from fulfilling their affiliate 13· ·agreement if that's what you mean. 14· · · · Q.· ·Did you ever inquire of North American 15· ·Marketing whether they had any such agreements? 16· · · · A.· ·I would assume that was -- no.· I would 17· ·assume that was done by prior management at the time 18· ·of the agreements signed. 19· · · · Q.· ·And that would be Mr. Holley? 20· · · · A.· ·I was not there, so ... 21· · · · Q.· ·Do you know if North American Marketing 22· ·was permitted to provide lead information to other 23· ·companies besides Proficio during the time North 24· ·American Marketing was affiliated with Proficio? 25· · · · · · ·MR. CARGILL:· Object to the extent it Page 19 ·1· ·calls for a legal conclusion. ·2· · · · · · ·THE WITNESS:· I believe that the affiliate ·3· ·agreement and the employment agreements with ·4· ·employees that handled that data restricted them ·5· ·from sharing any of that data.· In other words, it ·6· ·was an exclusive affiliate agreement. ·7· ·BY MR. LEECH: ·8· · · · Q.· ·Do you know if North American Marketing ·9· ·provided Proficio with lead information that it had 10· ·previously provided to First National Bank of 11· ·Layton? 12· · · · A.· ·I do not. 13· · · · Q.· ·Do you know whether or not North American 14· ·Marketing provided the lead information that it 15· ·provided to Proficio to any other entity prior to 16· ·its affiliating with Proficio? 17· · · · A.· ·I do not. 18· · · · Q.· ·Would it concern you if such lead 19· ·information had been circulated among other 20· ·companies besides Proficio? 21· · · · A.· ·Yes. 22· · · · Q.· ·Why would it concern you? 23· · · · A.· ·Because I believe it would be a violation 24· ·of the agreement and data that could have 25· ·implications to the bank's upholding their Page 20 ·1· ·compliance regulations. ·2· · · · Q.· ·So other than it being a potential ·3· ·violation of the agreement and it posing potential ·4· ·compliance risks, did you have other -- would you ·5· ·have other concerns had the information provided to ·6· ·Proficio been previously shared with other North ·7· ·American Marketing affiliates? ·8· · · · A.· ·I would be concerned about consumer ·9· ·ramifications as well.· In other words, that a 10· ·consumer might be able to file a lawsuit saying 11· ·their information was not adequately handled or 12· ·incorrectly handled. 13· · · · Q.· ·If the lead information had been shared 14· ·with other affiliates prior to it being provided to 15· ·Proficio, would that affect the value of the lead 16· ·information? 17· · · · A.· ·Yes. 18· · · · Q.· ·In what way? 19· · · · A.· ·Depending on what was done -- it's hard to 20· ·say unless I know what was done with the information 21· ·with another affiliate. 22· · · · Q.· ·If the lead lists had been shared with, 23· ·say, First National Bank of Layton or anyone else 24· ·originating reverse mortgages, how would that affect 25· ·the value of lead information? Page 21 ·1· · · · · · ·MR. CARGILL:· Objection to the extent it's ·2· ·calling for speculation. ·3· · · · · · ·THE WITNESS:· Once again, I'd have to know ·4· ·what the other affiliate was actually doing with the ·5· ·information -- whether they were just looking at it ·6· ·or whether they were calling it or whether they were ·7· ·scrubbing it.· I need more information. ·8· ·BY MR. LEECH: ·9· · · · Q.· ·Let's say they were just looking at it. 10· ·How would that affect the value of the lead 11· ·information? 12· · · · A.· ·If it caused them to take some action 13· ·based on the number of leads and quality of leads 14· ·and it changed the way they marketed, that gave them 15· ·an advantage to more leads or cheaper leads, then 16· ·that would be a significant disadvantage to 17· ·Proficio. 18· · · · · · ·If they called them, it would be even more 19· ·detrimental in the sense there would be a loss of 20· ·potential lead, which ultimately would lead to a 21· ·premium.· So the ramification there could be 22· ·thousands and thousands of dollars per each lead. 23· · · · Q.· ·And I believe you mentioned if they were 24· ·scrubbing the lead information.· What did you mean 25· ·by "scrubbing the lead information"? Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 7 of 49 Page 22 ·1· · · · A.· ·Well, as you buying leads from other ·2· ·marketing companies as well as what you generate ·3· ·in-house, you may take those names and see if you've ·4· ·already called them.· That would be a way to scrub ·5· ·it or you're calling a smaller number or somehow ·6· ·taking a lead list and whittling it down to more ·7· ·high value or more valuable leads. ·8· · · · Q.· ·So other than, say, removing leads that ·9· ·the bank had previously called, what steps did 10· ·Proficio take to scrub lead information? 11· · · · · · ·MR. CARGILL:· Object to the form. 12· · · · · · ·THE WITNESS:· It wasn't my job.· One of 13· ·the first things I did when I became president was 14· ·hire a marketing VP.· That was their job.· So I did 15· ·not tell them how to do their job.· Loan values 16· ·would be one thing that I know we definitely looked 17· ·at. 18· ·BY MR. LEECH: 19· · · · Q.· ·To your knowledge, were any other factors 20· ·looked at in whittling down lists at Proficio 21· ·Mortgage Ventures? 22· · · · A.· ·Age, location, ZIP code.· Yeah, there were 23· ·very big, large data bases to try to be as efficient 24· ·as possible. 25· · · · Q.· ·So how would Proficio Mortgage Ventures go Page 23 ·1· ·about scrubbing a lead by age? ·2· · · · A.· ·I'm not an expert, and it was not my job. ·3· ·I can tell you that I know that the amount that a ·4· ·consumer could borrower in a reverse mortgage or the ·5· ·equity they could extract out of their home was ·6· ·based partially on not just the home's value, but ·7· ·their age, which plays a relevant role in how much ·8· ·they borrow and the premium generated in the end. ·9· · · · · · ·So there's a strategy that could be 10· ·employed based on that data. 11· · · · Q.· ·What would that strategy be? 12· · · · A.· ·Focusing the number of calls based on what 13· ·you believe the borrower, the potential borrower's 14· ·loan value could ultimately be, PBV. 15· · · · Q.· ·Any other strategies that you're aware? 16· · · · A.· ·Obviously they have to be a certain age to 17· ·qualify for a reverse mortgage. 18· · · · Q.· ·Right. 19· · · · A.· ·Like I said, it wasn't my job to come up 20· ·with marketing strategies. 21· · · · Q.· ·Then you mentioned loan values.· Would 22· ·that be the principal balance that you -- you being 23· ·Proficio -- could lend to the borrower? 24· · · · A.· ·All I could tell you is I know that in our 25· ·marketing purchases and internal lead generation Page 24 ·1· ·strategies, the amount, the potential value of the ·2· ·home played a role in what we were willing to spend ·3· ·to generate a lead. ·4· · · · Q.· ·You mentioned spending to generate a lead. ·5· ·What sort of items did Proficio spend on to generate ·6· ·a lead? ·7· · · · · · ·MR. CARGILL:· I'll object to the extent it ·8· ·calls for speculation.· I think he made it clear ·9· ·this wasn't his area. 10· · · · · · ·MR. LEECH:· He may have some knowledge. 11· · · · Q.· ·Go ahead. 12· · · · A.· ·I mean, we looked at ad words, life 13· ·transfers.· I think I already mentioned just the 14· ·value, whether the PBV was potentially above a 15· ·hundred thousand, below a hundred thousand, 16· ·location.· All of those things played into the value 17· ·of a lead. 18· · · · Q.· ·I guess my question is, to the best of 19· ·your knowledge, what sort of things did Proficio 20· ·spend money on to generate a lead? 21· · · · A.· ·Ad words, website development.· I guess 22· ·those would be the big things. 23· · · · Q.· ·Did it spend money on mailers? 24· · · · A.· ·When I initially started, there was 25· ·mailers generated by all of the affiliates.· All of Page 25 ·1· ·that did stop, and there might have been a few ·2· ·mailers while I was president, but in a sense all ·3· ·that was being shut down as I shut down the other ·4· ·affiliates. ·5· · · · Q.· ·Is ad words a form of Internet ·6· ·advertising? ·7· · · · A.· ·Yeah.· I'm not an expert.· I believe ·8· ·that's one way to move your website and drive ·9· ·traffic, potential consumers to your website. 10· · · · Q.· ·What are live transfers? 11· · · · A.· ·Live transfers is when you would hire 12· ·another company that is doing -- employing similar 13· ·strategies to generate a lead, and they get that 14· ·lead on the phone and are willing to sell that lead 15· ·to you to attempt to -- to generate a loan. 16· · · · Q.· ·So they would literally transfer the call 17· ·over to someone at Proficio? 18· · · · A.· ·Yes. 19· · · · Q.· ·With respect to the affiliate relationship 20· ·between North American Marketing and Proficio, what 21· ·services did Proficio provide to North American 22· ·Marketing? 23· · · · A.· ·Their job list to generate leads that my 24· ·employees could call to try to generate loans at the 25· ·end of the day, compliance leads. Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 8 of 49 Page 26 ·1· · · · Q.· ·That was North American Marketing's job; ·2· ·correct? ·3· · · · A.· ·Yes. ·4· · · · Q.· ·My question was what was Proficio's role ·5· ·in this relationship? ·6· · · · A.· ·Our job was to try to take those leads and ·7· ·generate loans. ·8· · · · Q.· ·Any other responsibilities? ·9· · · · A.· ·Yes.· We had to package the loan in a way 10· ·to sell them to extract a premium for them, that we 11· ·weren't holding them on our books. 12· · · · · · ·MR. CARGILL:· Object to the extent it 13· ·calls for legal conclusion or interpretation of the 14· ·Affiliate Manager Agreement. 15· ·BY MR. LEECH: 16· · · · Q.· ·You mentioned you were not holding the 17· ·loan on the books and you were going to extract a 18· ·premium.· Can you explain what a premium is? 19· · · · A.· ·We held the loan on our books for a very 20· ·short period of time.· And the ultimate goal was to 21· ·sell it in the market with an investor.· The reverse 22· ·mortgages in particular were basically being 23· ·underwritten by the investor themselves with a 24· ·guaranty that they would purchase those when they 25· ·closed. Page 27 ·1· · · · · · ·The premium was established based upon the ·2· ·UPB and several other things as well as live active ·3· ·market that varied based on demand for that ·4· ·underlying security. ·5· · · · Q.· ·Am I correct in describing the premium as ·6· ·the amount paid over -- strike that. ·7· · · · · · ·When Proficio originated a reverse ·8· ·mortgage, did it advance the money to the borrower? ·9· · · · A.· ·Yes.· We used a warehouse line from the 10· ·bank. 11· · · · Q.· ·When the Proficio sold to the investor, 12· ·the investor would reimburse Proficio that it -- 13· · · · A.· ·Plus some additional amount. 14· · · · Q.· ·Let me finish the question. 15· · · · · · ·When Proficio sold the reverse mortgage to 16· ·an investor, the investor would reimburse Proficio 17· ·the amount it advanced to the borrower plus an 18· ·additional amount; is that correct? 19· · · · A.· ·I don't know exactly how the financial 20· ·agreement was set up, whether they were paid as 21· ·separate amounts, i.e. the amount and some premise 22· ·associated with it.· I didn't deal with the 23· ·day-to-day financial agreements.· They had a 24· ·secondary marketing person that did that. 25· · · · Q.· ·Would it be fair to describe the premium Page 28 ·1· ·as the revenue to Proficio associated with that ·2· ·specific reverse mortgage loan? ·3· · · · A.· ·Yes. ·4· · · · Q.· ·Any other sources of revenue associated -- ·5· ·strike that. ·6· · · · · · ·Did Proficio have any other revenues ·7· ·besides the premium associated with any given ·8· ·reverse mortgage loan? ·9· · · · · · ·MR. CARGILL:· Object to the form. 10· · · · · · ·THE WITNESS:· Not to my knowledge. 11· ·BY MR. LEECH: 12· · · · Q.· ·So other than originating the loan and 13· ·marketing the loan in the secondary market, what 14· ·other duties did Proficio have as part of its 15· ·relationship with North American Marketing? 16· · · · · · ·MR. CARGILL:· Same objection, legal 17· ·conclusion. 18· · · · · · ·THE WITNESS:· We had a financial agreement 19· ·to pay them as the agreement stated, obviously. 20· ·Beyond that, I believe it was in a sense a best 21· ·efforts. 22· ·BY MR. LEECH: 23· · · · Q.· ·In a sense a best efforts -- 24· · · · A.· ·To take the leads and generate as many 25· ·loans as possible. Page 29 ·1· · · · Q.· ·Are you familiar with any other -- strike ·2· ·that. ·3· · · · · · ·Did Proficio have any other duties other ·4· ·than the areas that you've just discussed as part of ·5· ·its arrangement with North American Marketing? ·6· · · · A.· ·I would say that compliance would be the ·7· ·same thing.· The licensing required to do all of the ·8· ·actual calling.· Their job was to make sure we, even ·9· ·though we were purchasing the leads, we obviously 10· ·had all the compliance issues associated with that. 11· ·So those were additional issues. 12· · · · Q.· ·Was compliance at Proficio a 13· ·responsibility, or was it North American Marketing's 14· ·responsibility? 15· · · · A.· ·Both. 16· · · · Q.· ·Was licensing a Proficio responsibility or 17· ·was that a North American Marketing 18· ·responsibility? 19· · · · A.· ·If they had licensing needs to generate 20· ·whatever marketing they required that would be on 21· ·them.· From the concept of loan origination, that 22· ·would be on Proficio. 23· · · · Q.· ·Do you know if North American Marketing 24· ·had any license -- strike that. 25· · · · · · ·Do you know if North American Marketing Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 9 of 49 Page 30 ·1· ·was licensed as a lead generation company in any ·2· ·state? ·3· · · · A.· ·I do not know that. ·4· · · · Q.· ·Do you know if they needed to be licensed ·5· ·as a lead generation company in any state? ·6· · · · A.· ·No, I do not know. ·7· · · · · · ·MR. LEECH:· Let's start with what we left ·8· ·off yesterday. ·9· · · · · · ·(Defendant's Exhibit 20 was marked 10· · · · · · ·for identification and as 11· · · · · · ·Confidential, Attorneys Eyes Only.) 12· ·BY MR. LEECH: 13· · · · Q.· ·Would you review this document, please. 14· · · · · · ·(Witness reviewing document.) 15· · · · A.· ·Okay. 16· · · · Q.· ·Can you identify this document? 17· · · · A.· ·This appears to be the Affiliate Manager 18· ·Agreement between Proficio mortgage and North 19· ·American Marketing. 20· · · · Q.· ·If I could direct your attention to 21· ·Section 1 of this agreement, that's titled "Duties 22· ·of Affiliate Manager."· Do you see that section? 23· · · · A.· ·Yes. 24· · · · Q.· ·In the first subparagraph, subparagraph A, 25· ·it states that "The affiliate manager will provide Page 31 ·1· ·management consulting services to a group of retail ·2· ·mortgage production branches owned and operated by ·3· ·PMV."· Do you see that section? ·4· · · · A.· ·I do. ·5· · · · Q.· ·What management consulting services did ·6· ·North American Marketing provide to PMV? ·7· · · · A.· ·I think it kind of goes down a little bit ·8· ·further about operation work flow management and all ·9· ·those things they helped PMV kind of set up and 10· ·organize to be effective in -- in closing reverse 11· ·mortgages. 12· · · · Q.· ·So there's a sub Romanette that says 13· ·"Recruiting Services." 14· · · · · · ·Did North American Marketing assist PMV in 15· ·identifying potential mortgage origination officers 16· ·and originators? 17· · · · A.· ·Yes.· Prior to my arrival, yes. 18· · · · Q.· ·How about subsequent to your arrival? 19· · · · A.· ·I've already stated one of my roles was to 20· ·end all of these affiliate agreements.· So no 21· ·affiliate was growing over the time period I was 22· ·basically shutting them down. 23· · · · Q.· ·Would you have directed North American 24· ·Marketing to cease any efforts to grow or recruit 25· ·additional personnel? Page 32 ·1· · · · A.· ·Not necessarily recruit additional ·2· ·personnel but to add branches or any of those kinds ·3· ·of things.· The goal was to end these agreements, ·4· ·not necessarily shut down the company. ·5· · · · Q.· ·By "company," which company do you mean? ·6· · · · A.· ·I would say it wasn't to shut down ·7· ·origination, it was just to end the agreements, the ·8· ·establishments of how the manager agreements were ·9· ·constructed. 10· · · · Q.· ·Looking at the next little Romanette, it 11· ·refers to lead generation and marketing services. 12· ·States, "The affiliate manager will assist the group 13· ·in identifying prospective customers with the high 14· ·likelihood of being able to benefit from home 15· ·mortgage products offered by PMV."· Do you see that 16· ·language? 17· · · · A.· ·Yes. 18· · · · Q.· ·How did North American Marketing go about 19· ·providing these services? 20· · · · A.· ·That was their job, so I don't think 21· ·they -- they really didn't share that information 22· ·with us. 23· · · · Q.· ·They just provided lead lists? 24· · · · A.· ·When I arrived, I would say their aspect 25· ·of handling the generation of marketing, yes, that's Page 33 ·1· ·in a sense what they did as well as, I assume, other ·2· ·things that they weren't telling us.· It was not ·3· ·transparency implied in the agreement. ·4· · · · Q.· ·I understand that.· That's what I'm trying ·5· ·to get an understanding of. ·6· · · · · · ·You don't know how they prepared these ·7· ·lead lists that they provided to Proficio? ·8· · · · A.· ·No, I don't know how they prepared the ·9· ·leads lists. 10· · · · Q.· ·And they weren't obligated to be 11· ·transparent with Proficio about how they went about 12· ·preparing their lead lists? 13· · · · A.· ·Which was one of the reasons we were 14· ·terminating the agreements. 15· · · · Q.· ·So from your perspective -- strike that. 16· · · · · · ·From Proficio's perspective, North 17· ·American Marketing was something of a black box that 18· ·just provided lead lists?· Is that a fair 19· ·description? 20· · · · · · ·MR. CARGILL:· Object to the form. 21· · · · · · ·THE WITNESS:· A black box that was 22· ·supposed to be following all the compliance matters. 23· ·Yes, that's the stance of the form of management; 24· ·correct. 25· ·/// Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 10 of 49 Page 34 ·1· ·BY MR. LEECH: ·2· · · · Q.· ·Turning to the third sub Romanette, it ·3· ·states it is entitled "Sales Training."· Do you see ·4· ·that provision? ·5· · · · A.· ·Yes. ·6· · · · Q.· ·What sales and leadership did North ·7· ·American Marketing provide to the employees of the ·8· ·branches assigned to the group? ·9· · · · A.· ·They definitely took new potential 10· ·employees and explained the product of what a 11· ·reverse mortgage was, explained the call protocols, 12· ·calling protocols, explained the script they were 13· ·supposed to follow.· They also helped implement the 14· ·required compliance on bordering of whatever the 15· ·bank overlay was at the time. 16· · · · Q.· ·Any other sales training activities that 17· ·North American Marketing provided to employees of 18· ·Proficio? 19· · · · A.· ·Not that I can think of. 20· · · · Q.· ·Now, when you say "they," you mean North 21· ·American Marketing; correct? 22· · · · A.· ·Yes. 23· · · · Q.· ·Who specifically worked at North American 24· ·Marketing? 25· · · · · · ·MR. CARGILL:· Object to the form. Page 35 ·1· · · · · · ·THE WITNESS:· There's quite a few people. ·2· ·I guess you could say the two principals were Scott ·3· ·and Alek, and then everyone else that was in the ·4· ·branch was a Proficio employee.· I don't know of ·5· ·anyone else that was working for North American ·6· ·Marketing. ·7· ·BY MR. LEECH: ·8· · · · Q.· ·So the only two individuals you believe ·9· ·were working for North American Marketing were Scott 10· ·Guild and Alek Ohlhausen? 11· · · · · · ·MR. CARGILL:· Objection; asked and 12· ·answered. 13· · · · · · ·THE WITNESS:· I guess, to my knowledge. 14· ·BY MR. LEECH: 15· · · · Q.· ·And none of the employees -- strike that. 16· · · · · · ·None of the employees of Proficio were 17· ·also employees of North American Marketing? 18· · · · · · ·MR. CARGILL:· Again, asked and answered. 19· · · · · · ·THE WITNESS:· I do not know that any were 20· ·employees of North American Marketing. 21· ·BY MR. LEECH: 22· · · · Q.· ·Turning to sub Romanette (iv), where it's 23· ·entitled "Budget and Expense Management."· Do you 24· ·see that provision? 25· · · · A.· ·Yes. Page 36 ·1· · · · Q.· ·What sort of budgeting and expense ·2· ·management did North American Marketing provide to ·3· ·Proficio? ·4· · · · A.· ·I didn't actually interact on this.· The ·5· ·CFO at the bank would have handled budgeting and ·6· ·expense management with the affiliates, but it would ·7· ·be based on current sales and expectations of leads ·8· ·and what was happening with premiums, balancing all ·9· ·of that out. 10· · · · Q.· ·Any other budgeting and expense management 11· ·services provided by North American Marketing that 12· ·you're aware of? 13· · · · A.· ·Beyond that you'd have to ask the CFO. 14· · · · Q.· ·Who is the CFO? 15· · · · A.· ·At the time it was -- when I initially 16· ·started, it was Steve Chapton, then eventually, I 17· ·don't know if he was approved or not, Dave Pittman 18· ·was acting CFO for a period of time.· I don't know 19· ·whether or not he was ever approved by the FDIC 20· ·during my tenure or not. 21· · · · Q.· ·Looking at Romanette (v), the provision 22· ·entitled "Operational Workflow Management."· Do you 23· ·see that provision? 24· · · · A.· ·Yes. 25· · · · Q.· ·It states that, "The Affiliate Manager Page 37 ·1· ·will provide recommendations for improving ·2· ·processes, procedures and workflow in PMV Mortgage ·3· ·fulfillment centers." ·4· · · · · · ·What recommendations did North American ·5· ·Marketing make? ·6· · · · A.· ·I couldn't be specific. ·7· · · · Q.· ·Describe generally what recommendations. ·8· · · · A.· ·It would be how to handle lead calls, how ·9· ·to set up processing versus -- versus origination 10· ·services, follow-ups, and all those things would 11· ·have been run by the compliance officer to make sure 12· ·the work flows and things jive with current 13· ·regulations or regulatory changes. 14· · · · Q.· ·Anything else you think related to 15· ·operational flow management that North American 16· ·Marketing did on behalf of Proficio? 17· · · · A.· ·Not to my knowledge. 18· · · · Q.· ·The next Romanette, "Pricing," appears to 19· ·be crossed out.· Do you see that? 20· · · · A.· ·Yes. 21· · · · Q.· ·Do you know if North American Marketing 22· ·provided any rate sheet -- anything related to rate 23· ·sheet pricing in connection with this agreement? 24· · · · A.· ·I believe it was all generated in-house by 25· ·the secondary marketing manager. Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 11 of 49 Page 38 ·1· · · · Q.· ·And those were Proficio employees, not ·2· ·North American Marketing employees? ·3· · · · A.· ·Correct. ·4· · · · Q.· ·Then the seventh Romanette is the word ·5· ·"Fullfillment" followed by a question mark that also ·6· ·appears to be crossed out.· Do you see that ·7· ·provision? ·8· · · · A.· ·Yes. ·9· · · · Q.· ·What do you understand the word 10· ·"fulfillment" in that context? 11· · · · · · ·MR. CARGILL:· I'll object to the extent 12· ·it's crossed out. 13· · · · · · ·THE WITNESS:· There's a question mark 14· ·there as well.· I don't know what they meant other 15· ·than to say maybe the closing and actual sale of the 16· ·loan.· I don't know.· Apparently they never did 17· ·it. 18· ·BY MR. LEECH: 19· · · · Q.· ·So it's your understanding this was 20· ·crossed out and North American Marketing did not 21· ·provide these services to Proficio as part of this 22· ·arrangement? 23· · · · A.· ·Correct. 24· · · · · · ·MR. CARGILL:· Objection to the extent the 25· ·document speaks for itself. Page 39 ·1· ·BY MR. LEECH: ·2· · · · Q.· ·Going back up to Provision V, last four ·3· ·words, "PMV Mortgage Fulfillment Centers."· What ·4· ·were mortgage fulfillment centers? ·5· · · · A.· ·The terminology doesn't mean anything to ·6· ·me.· Those are not terms I used while I was acting ·7· ·president, so I assume that -- assume they meant ·8· ·branches where we had closers and actually delivered ·9· ·documents to secondary investors.· But I 10· ·don't -- without it spelled out anywhere, the name 11· ·doesn't mean anything to me. 12· · · · Q.· ·Looking at Paragraph 2, provision titled, 13· ·"Duties of PMV," in paragraph 2A, "Employment of 14· ·Originators and Branches." 15· · · · · · ·"PMV agrees to hire and employ loan 16· ·originators and branches recruited by the affiliate 17· ·manager subject to PMV's standard employment 18· ·qualifications and requirements." 19· · · · · · ·Do you see that provision? 20· · · · A.· ·Yes. 21· · · · Q.· ·The following line, "All such loan 22· ·originators and branches recruited by the affiliate 23· ·manager will be assigned to the group."· Do you see 24· ·that provision? 25· · · · A.· ·Yes. Page 40 ·1· · · · Q.· ·Is it your understanding that North ·2· ·American Marketing was recruiting employees that ·3· ·Proficio was obligated to hire? ·4· · · · · · ·No, it says very clearly -- ·5· · · · · · ·MR. CARGILL:· Objection -- hold on, hold ·6· ·on.· Object to the extent it calls for a legal ·7· ·interpretation of the document. ·8· · · · · · ·THE WITNESS:· Looking at the document, it ·9· ·states very clearly that anyone presented would have 10· ·to meet PMV'S qualifications and requirements. 11· ·BY MR. LEECH: 12· · · · Q.· ·What were PMV's standard employment 13· ·qualifications and requirements? 14· · · · A.· ·You'd have to talk to the HR director. 15· ·All the things that would require compliance with 16· ·the law, regulation. 17· · · · Q.· ·Are you familiar with any other standard 18· ·employment qualifications and requirements other 19· ·than the ones you've identified, to the best of my 20· ·knowledge? 21· · · · A.· ·There's some I think related to HUD. 22· ·There's -- I know -- requires extensive background 23· ·search.· I don't know the intricacies, but there's 24· ·quite a few. 25· · · · Q.· ·Is it your understanding, however, if an Page 41 ·1· ·employee -- a potential employee recruited by North ·2· ·American Marketing met PMV's standard employment ·3· ·qualifications and requirements, Proficio was ·4· ·obligated to hire that individual? ·5· · · · · · ·MR. CARGILL:· Same objections. ·6· · · · · · ·THE WITNESS:· I -- I couldn't tell you. I ·7· ·know that there were people that were presented by ·8· ·the affiliate during my time to hire as originators ·9· ·that ultimately PMV turned down.· I wouldn't be 10· ·aware of all those things, but I know HR would for 11· ·whatever reason tell me they're not capable of 12· ·hiring them and we would not hire them. 13· ·BY MR. LEECH: 14· · · · Q.· ·What individuals were you referring to 15· ·that were presented to PMV for hiring and were 16· ·turned down? 17· · · · A.· ·I can't remember the names.· Over the 18· ·course of my time, I think I fired over 700 people, 19· ·and I don't even know, the number of people that I 20· ·looked at to hiring was much smaller, but there were 21· ·definitely people for whatever reasons, we did not 22· ·hire. 23· · · · Q.· ·And did potential employees presented to 24· ·you by North American Marketing, what was the bases 25· ·for declining to hire those individuals? Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 12 of 49 Page 42 ·1· · · · A.· ·I was advised by human resources that ·2· ·there were, for several reasons, not to engage -- ·3· ·not to hire that person, so we didn't hire them. I ·4· ·don't remember the details.· In fact, sometimes I ·5· ·wouldn't ask.· If HR did not recommend hiring them, ·6· ·I wouldn't do it. ·7· · · · Q.· ·Turning back to the agreement to paragraph ·8· ·2B, the operation of branches, what did -- what were ·9· ·Proficio Mortgage Ventures' duties with respect to 10· ·the operation of branches? 11· · · · · · ·MR. CARGILL:· Object to the extent it 12· ·calls for a legal conclusion and the document speaks 13· ·for itself. 14· · · · · · ·THE WITNESS:· We were licensed to operate 15· ·branches in numerous states.· Our -- our duties 16· ·required under those licenses, needed to be 17· ·fulfilled for the legal generation of -- of mortgage 18· ·products.· So our duties were to make sure we were 19· ·following all those rules. 20· ·BY MR. LEECH: 21· · · · Q.· ·Any other duties that you can think of? 22· · · · A.· ·No. 23· · · · · · ·MR. LEECH:· Let's take a short break. 24· · · · · · ·(Break taken.) 25· ·/// Page 43 ·1· ·BY MR. LEECH: ·2· · · · Q.· ·Are you familiar with how North American ·3· ·Marketing was compensated for the services it ·4· ·provided? ·5· · · · A.· ·Vaguely. ·6· · · · Q.· ·Would you review Exhibit 20, paragraph 3 ·7· ·and let me know when you're finished. ·8· · · · · · ·(Witness reviewing document.) ·9· · · · A.· ·Okay. 10· · · · Q.· ·Does this provision refresh your 11· ·recollection at all as you how North American 12· ·Marketing was compensated for the services it 13· ·provided? 14· · · · A.· ·Yes.· It's a little weird because the rate 15· ·locks really don't work the same way in reverse 16· ·mortgages.· So the wording looks like it was 17· ·originally designed for forward but not really 18· ·retailored for reverse, but, yeah vaguely it 19· ·refreshes to a certain extent. 20· · · · Q.· ·How was North American Marketing 21· ·compensated for the services it provided? 22· · · · · · ·MR. CARGILL:· Objection to the extent the 23· ·documents speaks for itself. 24· · · · · · ·THE WITNESS:· Basically, it's related to 25· ·net revenues after selling the loans. Page 44 ·1· ·BY MR. LEECH: ·2· · · · Q.· ·What portion of the net revenues after ·3· ·selling the loans did North American Marketing ·4· ·receive pursuant to this agreement? ·5· · · · A.· ·They would receive 100 percent of the ·6· ·monthly group profit. ·7· · · · Q.· ·Is this type of arrangement common in the ·8· ·mortgage industry? ·9· · · · A.· ·I couldn't say.· Outside of Proficio, I 10· ·never worked for a mortgage company. 11· · · · Q.· ·In any of your consulting work or other 12· ·bank work, have you seen a consulting arrangement 13· ·similar to this? 14· · · · A.· ·There was a large period of time where 15· ·this was commonplace.· I think that regulation 16· ·changes have made it uncommon. 17· · · · Q.· ·So if North American Marketing is 18· ·receiving one hundred percent of the net revenues 19· ·after selling the loan, what money was Proficio 20· ·receiving pursuant to this agreement? 21· · · · · · ·MR. CARGILL:· Object to the extent the 22· ·document speaks for itself. 23· · · · · · ·THE WITNESS:· I rather not say without 24· ·actually looking at how the balance sheets worked 25· ·out exactly.· After group expenses with the fees, I Page 45 ·1· ·don't know exactly what you're asking me. ·2· · · · · · ·Can you rephrase it? ·3· ·BY MR. LEECH: ·4· · · · Q.· ·Directing your attention to Page 3, ·5· ·specifically to the third Romanette entitled "PMV ·6· ·Management Fees."· Do you see that provision in the ·7· ·chart below it? ·8· · · · A.· ·Yes, I see that. ·9· · · · Q.· ·Looking at the chart, the first item 10· ·listed under "Service" is "Employee Boarding," and 11· ·the second column there's a fee, says, "One time fee 12· ·of $100 per employee." 13· · · · · · ·What is your understanding of this 14· ·provision? 15· · · · A.· ·There's a charge basic to look at people 16· ·presented to be hired. 17· · · · Q.· ·So for every person North American 18· ·Marketing presented to be hired, Proficio received 19· ·$100? 20· · · · A.· ·I think it would be actually if we 21· ·completed the process, but, yes. 22· · · · Q.· ·So every person actually hired by 23· ·Proficio? 24· · · · A.· ·Correct. 25· · · · Q.· ·So let me rephrase so it's clear. Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 13 of 49 Page 46 ·1· · · · · · ·So for every person actually hired by ·2· ·Proficio, Proficio would receive a one-time fee of ·3· ·$100; is that correct? ·4· · · · A.· ·Correct. ·5· · · · Q.· ·It looks to me -- looking at the second ·6· ·row of that chart below "Service," it looks to me ·7· ·that "Human Resources Oversight and Processing" is ·8· ·crossed out, but the "Payroll Processing Expenses" ·9· ·are not crossed out; is that correct? 10· · · · A.· ·It appears to be. 11· · · · Q.· ·Then in the sell over, the fee is 12· ·identified as being "the actual cost estimated at 13· ·$35 per employee per month if/when a payroll is 14· ·run."· Do you see that provision? 15· · · · A.· ·Yes. 16· · · · Q.· ·Did Proficio -- strike that. 17· · · · · · ·What is your understanding of this 18· ·provision? 19· · · · A.· ·That we're basically going to get $35 per 20· ·employee, whatever the payroll cycle was at the time 21· ·for, I guess, like a human resources charge in a 22· ·sense to that affiliate. 23· · · · Q.· ·Do you know if that charge was actually 24· ·charged to -- 25· · · · A.· ·I don't. Page 47 ·1· · · · Q.· ·-- North American Marketing? ·2· · · · A.· ·I would assume it would be. ·3· · · · Q.· ·Do you have any reason to believe it was ·4· ·not charged? ·5· · · · A.· ·No. ·6· · · · Q.· ·Going down to the next row, it appears ·7· ·that on the service side it says "E-mail Licensing ·8· ·And Help Desk Services," and that is crossed out. ·9· ·And then in the "Sell Over," the fee is listed as 10· ·"$100 per employee per month."· That is also crossed 11· ·out. 12· · · · · · ·Did North American Marketing provide any 13· ·e-mail licensing and help desk services to Proficio? 14· · · · · · ·Strike that question. 15· · · · · · ·Did Proficio provide any e-mail, licensing 16· ·and help desk services to North American Marketing? 17· · · · A.· ·Yes. 18· · · · Q.· ·Do you know if Proficio charged North 19· ·American Marketing $100 per employee per month? 20· · · · A.· ·Based on the agreement, I would say no. 21· ·But I did not calculate the affiliate payments, so I 22· ·don't know for sure. 23· · · · Q.· ·Who did calculate the affiliate 24· ·payments? 25· · · · A.· ·The CFO. Page 48 ·1· · · · Q.· ·And that would have been -- ·2· · · · A.· ·Steve Chapton for a time, then David ·3· ·Pittman later on. ·4· · · · Q.· ·Going to the next row down, it says "Loan ·5· ·Fulfilment/Quality Control." ·6· · · · · · ·What services related to loan fulfillment ·7· ·and quality control did Proficio Mortgage Ventures ·8· ·provide to North American Marketing? ·9· · · · A.· ·Processing, origination, sale. 10· · · · Q.· ·Any other services related to loan 11· ·fulfillment and quality control? 12· · · · A.· ·No, not that I can think of. 13· · · · Q.· ·The fee is $135 per closed loan.· You see 14· ·that provision? 15· · · · A.· ·I do. 16· · · · Q.· ·Is that $135 per closed loan file? 17· · · · A.· ·I'm unsure what you mean between loan and 18· ·loan file. 19· · · · Q.· ·That's just a flat fee -- strike that. 20· · · · · · ·So that $135 fee is a flat fee per loan 21· ·that closes.· Is that your understanding of that 22· ·provision? 23· · · · A.· ·Yes. 24· · · · Q.· ·So if one loan closes in, say, a month, 25· ·Proficio would be paid $135 pursuant to this Page 49 ·1· ·provision.· If two loans closed in a month, Proficio ·2· ·would be paid $270; is that correct? ·3· · · · A.· ·Yes. ·4· · · · Q.· ·And final row in this chart, the services ·5· ·listed as "PMV Management," what management services ·6· ·did PMV provide pursuant to this agreement? ·7· · · · A.· ·I would say we were management, included ·8· ·everything from handling secondary marketing, to all ·9· ·the compliance, to all the licensing, and for that 10· ·they were being compensated 70 basis points on the 11· ·closed loan production. 12· · · · Q.· ·Can you explain what 70 basis points on 13· ·the closed loan production means? 14· · · · A.· ·It's 70 basis points of the revenue on the 15· ·loan.· So it would vary for each loan. 16· · · · Q.· ·Let's back up.· Maybe make this simple for 17· ·me:· What is a basis point? 18· · · · A.· ·A basis point is a percentage. 19· · · · Q.· ·Is one basis point equal to .1 percent? 20· · · · A.· ·No. 21· · · · Q.· ·Is one basis equal to .01 percent? 22· · · · A.· ·Yes. 23· · · · Q.· ·Now, this says 70 basis points on closed 24· ·loan production. 25· · · · · · ·What was your understanding about the Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 14 of 49 Page 50 ·1· ·closed loan production referred to? ·2· · · · A.· ·That would be a loan that both closed and ·3· ·sold.· So does it make sense? ·4· · · · Q.· ·It does.· What I'm trying to get at, ·5· ·though, is what number did you use when you -- 70 ·6· ·basis points of what essentially?· The revenues to ·7· ·the group on the loan or the total balance of the ·8· ·loan? ·9· · · · A.· ·I didn't actually do the calculations.· I, 10· ·to be honest, don't know. 11· · · · Q.· ·And the CFO we already identified -- 12· · · · A.· ·Yes. 13· · · · Q.· ·Would those be the individuals who would 14· ·know how to calculate these payments? 15· · · · A.· ·Yes. 16· · · · Q.· ·Other than the fee set forth in this 17· ·chart, did North American Marketing -- strike that. 18· · · · · · ·Other than the fees set forth in this 19· ·chart, did PMV have any other revenue streams 20· ·associated with his relationship with North American 21· ·Marketing? 22· · · · A.· ·Not to my knowledge. 23· · · · Q.· ·Now, you referenced earlier in connection 24· ·with loan fulfillment and quality control that PMV 25· ·was handling origination, processing and marketing Page 51 ·1· ·on the secondary market; is that correct? ·2· · · · · · ·MR. CARGILL:· Object to the extent it ·3· ·misstates testimony. ·4· · · · · · ·THE WITNESS:· Something like that. I ·5· ·don't remember exactly what I stated. ·6· ·BY MR. LEECH: ·7· · · · Q.· ·So what origination activities did ·8· ·Proficio Mortgage Ventures as opposed to North ·9· ·American Marketing perform pursuant to this 10· ·agreement? 11· · · · A.· ·We would contact the customer if they were 12· ·interested in a loan, proceed with trying to see if 13· ·they qualified for a reverse mortgage.· We were in 14· ·charge of helping them get through the loan 15· ·application process, checking with HUD, doing all 16· ·the things, and ultimately generating documents for 17· ·that loan, going through closing, appraisals, all 18· ·that kind of stuff in a processing basis ultimately 19· ·funding closing and selling the loan. 20· · · · Q.· ·Any other services -- any other services 21· ·related to origination processing and marketing on 22· ·the secondary market that you're aware of? 23· · · · A.· ·Any compliance issues with states, as well 24· ·as any federal compliance issues. 25· · · · Q.· ·Anything else? Page 52 ·1· · · · A.· ·Not to my knowledge. ·2· · · · Q.· ·North American Marketing, did they perform ·3· ·any services in connection with the loan fulfillment ·4· ·and quality control? ·5· · · · A.· ·I think the agreement states that they ·6· ·help to construct operation work flow management, ·7· ·Section 1.A.5.· So they definitely played a role in ·8· ·helping us tweak or set up the actual work flow ·9· ·within the -- in the fulfillment cycle. 10· · · · Q.· ·Did they perform anything else in terms of 11· ·actually originating and closing reverse mortgage 12· ·loans? 13· · · · · · ·MR. CARGILL:· Object to the form. 14· · · · · · ·THE WITNESS:· Not during my tenure. I 15· ·can't speak prior to me getting here. 16· ·BY MR. LEECH: 17· · · · Q.· ·You don't know what role they had prior to 18· ·getting involved with Proficio? 19· · · · A.· ·I can't speak to the time I wasn't there. 20· · · · Q.· ·They also provided the lead information 21· ·that we previously discussed? 22· · · · · · ·MR. CARGILL:· Objection.· Asked and 23· ·answered. 24· · · · · · ·THE WITNESS:· Yes. 25· ·/// Page 53 ·1· ·BY MR. LEECH: ·2· · · · Q.· ·Were those leads for the exclusive use of ·3· ·Proficio Mortgage Ventures? ·4· · · · A.· ·To my understanding, yes. ·5· · · · Q.· ·Can you identify the provision in this ·6· ·agreement that provided that the lead information be ·7· ·exclusive to Proficio? ·8· · · · · · ·MR. CARGILL:· Objection to the extent it ·9· ·requires a legal conclusion. 10· · · · · · ·THE WITNESS:· I cannot. 11· ·BY MR. LEECH: 12· · · · Q.· ·If I could direct your attention to 13· ·page 5, paragraphs 18 and 19.· If you would review 14· ·those and let me know when you're finished. 15· · · · · · ·(Witness reviewing document.) 16· · · · A.· ·I've read them.· Is there a question? 17· · · · Q.· ·There will be. 18· · · · · · ·Do either of those provisions provide that 19· ·the lead information provided by North American 20· ·Marketing to Proficio as exclusive to Proficio? 21· · · · · · ·MR. CARGILL:· Objection, legal 22· ·interpretation or legal conclusion. 23· · · · · · ·THE WITNESS:· I would state that under the 24· ·confidentiality agreement and the statement about 25· ·compliance, I don't know where that is, would Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 15 of 49 Page 54 ·1· ·basically limit them from providing that lead to ·2· ·anyone else after they provided it to us. ·3· ·BY MR. LEECH: ·4· · · · Q.· ·Turning to Section 18 of this agreement, ·5· ·the first line reads, "This agreement provides no ·6· ·exclusivity of any type to the affiliate manager or ·7· ·any branches assigned to the group." ·8· · · · · · ·What is your understanding of that ·9· ·sentence? 10· · · · · · ·MR. CARGILL:· Same objection. 11· · · · · · ·THE WITNESS:· I guess it would be 12· ·something along the lines of the North American 13· ·Marketing could generate leads for another company. 14· ·Yeah, they could generate leads for another company. 15· ·BY MR. LEECH: 16· · · · Q.· ·So they were not required to provide these 17· ·services exclusively to Proficio Mortgage 18· ·Ventures? 19· · · · · · ·MR. CARGILL:· Same objections. 20· · · · · · ·THE WITNESS:· The services that they 21· ·provided could be provided separately to another 22· ·company, yes. 23· ·BY MR. LEECH: 24· · · · Q.· ·Could they provide the same lead 25· ·information to another company that they provided to Page 55 ·1· ·Proficio Mortgage Ventures? ·2· · · · · · ·MR. CARGILL:· Objection.· Asked and ·3· ·answered. ·4· · · · · · ·THE WITNESS:· My interpretation, the ·5· ·confidentiality would preclude them from doing that ·6· ·as well as some regulations. ·7· ·BY MR. LEECH: ·8· · · · Q.· ·When North American Marketing provided ·9· ·lead information to Proficio, did Proficio own that 10· ·information? 11· · · · · · ·MR. CARGILL:· Objection to the extent it 12· ·calls for a legal conclusion. 13· · · · · · ·THE WITNESS:· I believe that's what we 14· ·were paying for, yes. 15· ·BY MR. LEECH: 16· · · · Q.· ·You understood you were purchasing those 17· ·leads from North American Marketing for Proficio? 18· · · · A.· ·Yes. 19· · · · Q.· ·What provision of the -- strike that. 20· · · · · · ·To your knowledge, does any provision in 21· ·the Affiliate Manager Agreement address or grant 22· ·Proficio any ownership interest or other right to 23· ·use any specific lead lists provided by North 24· ·American Marketing? 25· · · · · · ·MR. CARGILL:· Same objections, and the Page 56 ·1· ·document speaks for itself. ·2· · · · · · ·THE WITNESS:· I think beyond the document, ·3· ·there are some regulations that clearly interpret ·4· ·the concept of once a -- when a consumer becomes a ·5· ·client or affiliated directly with a licensed ·6· ·entity, that even goes beyond the agreement. ·7· ·BY MR. LEECH: ·8· · · · Q.· ·Are you aware of anything else that would ·9· ·grant Proficio any ownership interest or other right 10· ·to use any specific lead list? 11· · · · A.· ·Can you ask the question again. 12· · · · Q.· ·You identified the agreement, and then you 13· ·identified some regulations that provided for 14· ·ownership interest, if I understood your testimony 15· ·correctly; is that correct? 16· · · · A.· ·Yes. 17· · · · Q.· ·Anything other than what we have just 18· ·discussed that would provide Proficio with any 19· ·ownership interest or right to use any specific lead 20· ·list provided to Proficio by North American 21· ·Marketing? 22· · · · A.· ·Not to my knowledge. 23· · · · Q.· ·And I recognize that you're not an 24· ·attorney, but you did reference the regulations.· To 25· ·the best of your ability, what regulations were you Page 57 ·1· ·referring to? ·2· · · · A.· ·I'm definitely not an expert in ·3· ·compliance.· That would be one of the things I would ·4· ·consultant an attorney on. ·5· · · · · · ·Consumer lending has changed significantly ·6· ·in the last -- since the creation of consumer ·7· ·finance whatever it is, CFPB.· And so -- I believe ·8· ·there's some things directly related to what would ·9· ·be expected under those implications that would 10· ·be -- I would need legal advice on. 11· · · · Q.· ·To be clear, I'm not asking any 12· ·communication you may have had with your attorney 13· ·about this issue.· I'm just asking, to the best of 14· ·your ability -- I think you've answered the 15· ·question. 16· · · · A.· ·Okay. 17· · · · Q.· ·Are you aware of any particular provision 18· ·in this agreement that North American Marketing 19· ·failed to comply with? 20· · · · · · ·MR. CARGILL:· Same objections. 21· · · · · · ·THE WITNESS:· No, not to my knowledge that 22· ·there's anything in here that they filed to comply 23· ·with. 24· ·BY MR. LEECH: 25· · · · Q.· ·Are there any representations made in this Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 16 of 49 Page 58 ·1· ·agreement that Proficio subsequently discovered to ·2· ·be false? ·3· · · · · · ·MR. CARGILL:· Same objections. ·4· · · · · · ·THE WITNESS:· Not to my knowledge. ·5· ·BY MR. LEECH: ·6· · · · Q.· ·Did Proficio have any control over who ·7· ·North American Marketing hired to work for North ·8· ·American Marketing? ·9· · · · A.· ·I do not believe the agreement in any way 10· ·gives Proficio power to say who could work for North 11· ·American Marketing other than to say they must be 12· ·compliant. 13· · · · Q.· ·Where in the agreement does it specify 14· ·that compliance -- 15· · · · A.· ·I think there's compliance language in 16· ·here.· The loan must comply with all -- I guess 17· ·that's Section 3 under Compensation, 3 A and B.· The 18· ·loan must comply with federal law, state, local 19· ·regulations, as well as the loan must comply with 20· ·the PMV public policies and guidelines. 21· · · · · · ·So if somehow North American Marketing was 22· ·to have allowed origination of a loan that deviated 23· ·from that, they wouldn't be compensated, at least 24· ·that's my interpretation. 25· · · · Q.· ·Any other provision that references North Page 59 ·1· ·American Marketing's hiring had to be compliant? ·2· · · · A.· ·My goal was to unwind all these affiliate ·3· ·agreements.· Over the course of time since 2012 to ·4· ·my beginning in '14 that these agreements weren't ·5· ·really structured in a way that was compliant ·6· ·ongoing, so no. ·7· · · · Q.· ·Flip to the back page of this agreement. ·8· · · · · · ·Do you recognize the first signature on ·9· ·this page? 10· · · · · · ·MR. CARGILL:· Object to the form. 11· · · · · · ·THE WITNESS:· The signature, no. 12· ·BY MR. LEECH: 13· · · · Q.· ·Do you recognize the name Scott Guild? 14· · · · A.· ·Yes. 15· · · · Q.· ·Who is Scott Guild? 16· · · · A.· ·He was apparently the VP of North American 17· ·Marketing. 18· · · · Q.· ·And do you recognize the signature below 19· ·the line by Proficio Mortgage Ventures, LLC? 20· · · · A.· ·I don't recognize the signature. 21· · · · · · ·MR. CARGILL:· Object to form. 22· ·BY MR. LEECH: 23· · · · Q.· ·You recognize the name Richard Holley? 24· · · · A.· ·Yes. 25· · · · Q.· ·Who was Richard Holley? Page 60 ·1· · · · A.· ·As stated, Richard Holley was the CEO of ·2· ·ProficioBank. ·3· · · · Q.· ·The dates on this page are from December ·4· ·of 2012. ·5· · · · · · ·To your understanding, was December of ·6· ·2012 when this affiliation arrangement began? ·7· · · · · · ·MR. CARGILL:· Objection.· He testified he ·8· ·wasn't there. ·9· · · · · · ·THE WITNESS:· Yeah, I wasn't there. 10· · · · · · ·MR. LEECH:· It's a 30(b)6 depo.· He should 11· ·have some knowledge. 12· · · · Q.· ·You mentioned you were concerned about the 13· ·structure of these types of arrangements being 14· ·compliant? 15· · · · A.· ·I don't think the sophistication of this 16· ·document lacks enough transparency for a regulated 17· ·entity like a bank to have insight into the 18· ·generation and handling of consumers related to 19· ·regulatory changes that took place between 2012 and 20· ·2014 when I joined.· Some of that related to CFPB. 21· · · · Q.· ·So we're clear, for the record, what is 22· ·CFPB? 23· · · · A.· ·Consumer Finance Protection Bureau, 24· ·something like that, I believe. 25· · · · Q.· ·Was that regulatory agency something Page 61 ·1· ·created by the Dodd-Frank law? ·2· · · · · · ·MR. CARGILL:· Object to the extent it ·3· ·requires a legal answer. ·4· · · · · · ·THE WITNESS:· I believe so. ·5· ·BY MR. LEECH: ·6· · · · Q.· ·Let me ask it another way:· Do you recall ·7· ·approximately when the CFPB came into being? ·8· · · · A.· ·Approximately? ·9· · · · Q.· ·To the best of your knowledge. 10· · · · A.· ·2013, 2014, somewhere in that time 11· ·range. 12· · · · Q.· ·So you identified as one of your concerns 13· ·about -- one of your compliance concerns in 14· ·connection with the agreement, issue of 15· ·transparency, and the generation of consumer leads. 16· ·Did I summarize that correctly? 17· · · · A.· ·Close enough. 18· · · · Q.· ·Can you summarize it for me? 19· · · · A.· ·Regulations over the course of time change 20· ·the way consumers and consumer data needed to be 21· ·handled.· So I think the agreement lacks the 22· ·sophistication required under the guise of a bank 23· ·operating in that space to adequately have knowledge 24· ·of how consumers are treated. 25· · · · Q.· ·Are there any other aspects of this Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 17 of 49 Page 62 ·1· ·agreement that raised concerns to you from a ·2· ·compliance standpoint? ·3· · · · · · ·MR. CARGILL:· Objection to the extent it ·4· ·calls for a legal conclusion. ·5· · · · · · ·THE WITNESS:· Other than to say, as I ·6· ·stated before, the agreement looks like it was ·7· ·originally written for a -- for a forward kind of ·8· ·affiliate, and then there's some language in here ·9· ·that isn't as relevant for reverse mortgages. 10· · · · · · ·Compliance -- I don't feel comfortable, 11· ·you know, what in here would be noncompliant in 12· ·particular. 13· ·BY MR. LEECH: 14· · · · Q.· ·I'm not asking you to give legal opinion. 15· ·You've been on bank boards; correct? 16· · · · A.· ·Yes. 17· · · · Q.· ·Part of your role as a member of the board 18· ·of directors of the bank is to make sure the bank 19· ·operates in a manner compliant with applicable 20· ·regulations; is that correct? 21· · · · A.· ·Yes. 22· · · · Q.· ·So you obviously have some familiarity 23· ·with the issues of what is and is not compliant 24· ·banking; correct? 25· · · · A.· ·Somehow, yes. Page 63 ·1· · · · Q.· ·So, to the best of your knowledge with ·2· ·your experience as having been a director of banks, ·3· ·what aspects of this agreement raise compliance ·4· ·concerns· to you?· I'm not asking you to say ·5· ·definitively this is compliant or not.· I'm asking ·6· ·what your concerns are. ·7· · · · · · ·MR. CARGILL:· Objection.· But you are ·8· ·asking about compliance with regard to a legal ·9· ·document.· So I'll state the same objection as to 10· ·interpretation and legal conclusion. 11· · · · · · ·THE WITNESS:· I would say my concern is 12· ·nowhere in this agreement does it state banking 13· ·regulation or federal laws applicable to the 14· ·generation of marketing activity, the fulfillment or 15· ·the compensation of the manager or the affiliate or 16· ·the bank, and that clear delineation of 17· ·responsibility.· So that would be my concern. 18· ·BY MR. LEECH: 19· · · · Q.· ·That the agreement doesn't clearly 20· ·delineate responsibility? 21· · · · A.· ·No.· That there's no statement of banking 22· ·regulation related to the agreement laid out, the 23· ·expectations of either services provided by the 24· ·affiliate or the bank or the mortgage company. 25· · · · Q.· ·I'm sorry.· I'm not understanding -- Page 64 ·1· · · · A.· ·In other words, there is no direct -- ·2· ·there's no tie back to a regulation that would be ·3· ·applicable to the origination of these loans. ·4· · · · · · ·In other words, a reference to a CFPB, to ·5· ·federal banking regulations, to HUD guidelines, to ·6· ·RESPA, to any other real estate or consumer law that ·7· ·is applicable to lead generation, marketing ·8· ·services, sales, payment, operational work flows. ·9· ·None of that is stated in this agreement, in my 10· ·opinion, and I would expect that to be. 11· · · · Q.· ·Any other compliance concerns beside the 12· ·lack of reference to applicable regulations? 13· · · · A.· ·No. 14· · · · Q.· ·Are you familiar with the phrase 15· ·"rent-a-charter"? 16· · · · A.· ·Yes. 17· · · · Q.· ·What does that phrase mean to you? 18· · · · A.· ·That phrase would mean that an 19· ·organization used its licensing advantages to allow 20· ·another company to provide a service that they 21· ·otherwise wouldn't have the right to. 22· · · · Q.· ·Would you characterize the relationship 23· ·between Proficio Mortgage Ventures and North 24· ·American Marketing as a rent-a-charter 25· ·relationship? Page 65 ·1· · · · A.· ·I would characterize the -- I would say ·2· ·that the oversight of the bank was designed to ·3· ·prevent that.· I'm not exactly sure that that was ·4· ·always the case before my arrival. ·5· · · · Q.· ·You say the oversight of the bank was ·6· ·designed to prevent a rent-a-charter relationship ·7· ·arising in this relationship? ·8· · · · A.· ·Yes. ·9· · · · Q.· ·Do you know if the oversight of the bank 10· ·did, in fact, prevent a rent-a-charter relationship 11· ·from arising? 12· · · · A.· ·I think there was a lack of controls prior 13· ·to my joining as the president. 14· · · · Q.· ·So after you joined as the president, 15· ·would you characterize the relationship between 16· ·Proficio Mortgage Ventures and North American 17· ·Marketing as a rent-a-charter relationship? 18· · · · A.· ·My goal was to eliminate all these 19· ·affiliate manager agreements and change the 20· ·organizational structure of the entity.· So ... 21· · · · Q.· ·So yes?· No? 22· · · · A.· ·It was an ongoing process.· Clearly once 23· ·the affiliate manager agreements were all wound out, 24· ·there was definitely no question that it wasn't a 25· ·rent-a-charter. Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 18 of 49 Page 66 ·1· · · · Q.· ·And do you have any knowledge of how the ·2· ·banks -- whether the bank's oversight worked, in ·3· ·fact, prior to your arrival as president of Proficio ·4· ·Mortgage Ventures, LLC? ·5· · · · · · ·MR. CARGILL:· Objection to the extent it ·6· ·calls for speculation. ·7· · · · · · ·THE WITNESS:· I can say that I believe the ·8· ·board had knowledge via audits and other things that ·9· ·at least there was a question of whether or not the 10· ·bank had adequate oversight and controls. 11· ·BY MR. LEECH: 12· · · · Q.· ·Did Proficio have any say in which 13· ·services for Proficio -- strike that. 14· · · · · · ·Did Proficio Mortgage Ventures have any 15· ·say over who at North American Marketing performed 16· ·services for Proficio related to this arrangement? 17· · · · · · ·MR. CARGILL:· Object to the form. 18· · · · · · ·THE WITNESS:· Somewhere in here I'm pretty 19· ·sure.· No. 17, Limitation of Authority, "The 20· ·affiliate manager shall have no right to bind PMV in 21· ·contract agreements."· It goes on.· The limitation 22· ·of the authority clause basically, I think, prevents 23· ·them from tying PMV to anything, at least that's my 24· ·understanding. 25· ·/// Page 67 ·1· ·BY MR. LEECH: ·2· · · · Q.· ·My question is, as I understand it, North ·3· ·American Marketing is providing these lead lists and ·4· ·providing the work flow -- the work flow management ·5· ·advice and all the other things we discussed ·6· ·previously. ·7· · · · · · ·Did Proficio Mortgage Ventures have any ·8· ·authority to instruct North American Marketing who ·9· ·at North American Marketing would be performing 10· ·those services? 11· · · · A.· ·The agreement doesn't seem to state that, 12· ·that they would. 13· · · · Q.· ·So, to your knowledge, the answer is no? 14· · · · · · ·MR. CARGILL:· Objection.· Misstates 15· ·testimony. 16· · · · · · ·THE WITNESS:· I can speak on the time upon 17· ·coming in and this agreement being in place. 18· · · · · · ·I asked them questions to understand more 19· ·about what and how the leads were being generated 20· ·because my concerns related to regulation.· Some of 21· ·that wasn't as forthcoming as I was hoping for, so 22· ·one of the reasons the agreements were ultimately 23· ·wound down. 24· ·BY MR. LEECH: 25· · · · Q.· ·Who did you ask those questions to? Page 68 ·1· · · · A.· ·Scott would be one of the persons, as well ·2· ·as employees within the company that I thought might ·3· ·have some knowledge of what and who and how leads ·4· ·were being originated by North American Marketing, ·5· ·more forensic.· I was just asking to try to find ·6· ·out. ·7· · · · Q.· ·Other than Scott Guild you referenced ·8· ·employees at Proficio.· To the best of your ·9· ·recollection, who were those employees? 10· · · · A.· ·Jesse Brewer, Sarah Young, Marco -- I 11· ·can't say his last name.· It's an Italian last name. 12· · · · Q.· ·Who else? 13· · · · A.· ·Cease, and that's about it.· I can't think 14· ·of anyone else. 15· · · · Q.· ·What questions did you ask of Scott Guild 16· ·and these employees? 17· · · · A.· ·I was trying to understand why and how 18· ·they were creating lists and providing leads to my 19· ·loan originators, my loan officers. 20· · · · Q.· ·So you were asking questions about why 21· ·they were creating -- 22· · · · A.· ·No, how.· How and to what extent value was 23· ·being added versus going out and purchasing on my 24· ·own or having a lead-generation campaign through our 25· ·own website. Page 69 ·1· · · · Q.· ·So you're asking questions about how the ·2· ·list was being generated? ·3· · · · A.· ·Correct.· How leads were actually being ·4· ·generated, not necessarily the list themselves. ·5· · · · Q.· ·And what specific questions did you ask ·6· ·relating to how the leads were being generated? ·7· · · · A.· ·I would say a lot of the questions were ·8· ·generated by the person I hired to be the VP of ·9· ·marketing. 10· · · · Q.· ·Who was that person? 11· · · · A.· ·I can't recall his name right now.· The 12· ·initial person was -- I can't think of his name, a 13· ·gentleman back in Ohio.· I'd have to look through a 14· ·contact list to find his name, and later on was 15· ·Loren Vicor. 16· · · · Q.· ·So what specific questions did these 17· ·individuals provide to you to ask Scott Guild and 18· ·the employees? 19· · · · A.· ·Like I said, my goal was to unwind these 20· ·affiliate agreements and keep my sales force 21· ·operational.· So my goal was to try to start 22· ·generating my own leads to provide to my sales force 23· ·versus paying them to provide leads.· That's why I 24· ·hired a marketing VP. 25· · · · · · ·So we were also trying not to make sure we Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 19 of 49 Page 70 ·1· ·were competing with North American Marketing in ·2· ·purchasing or creating leads.· So he was asking ·3· ·questions about how they're actually generating ·4· ·leads and what our plan to do was to generate those ·5· ·leads. ·6· · · · Q.· ·And in response to your questions, what ·7· ·information did Mr. Guild provide how he was ·8· ·generating those leads? ·9· · · · A.· ·A lot of it had to do, if I remember 10· ·correctly, with -- I can't think of the name of the 11· ·company right now.· There's a lead-based company 12· ·here in Las Vegas as well as a company in San 13· ·Francisco.· I think that one was like 14· ·retirementplanning.com something like that.· ·These 15· ·are websites that run ad campaigns that would set 16· ·certain criteria based on our needs, I believe. 17· · · · Q.· ·And what criteria did they employ? 18· · · · A.· ·Some of the things I mentioned before -- 19· ·age, locations.· I wasn't involved in that aspect of 20· ·the marketing decisions other than to authorize some 21· ·expenses. 22· · · · Q.· ·So other than those Internet companies 23· ·that you just referred to, what other information 24· ·did Scott Guild provide to you about how North 25· ·American Marketing was generating leads? Page 71 ·1· · · · A.· ·He didn't really provide them, which was ·2· ·another reason that we felt like the agreement -- he ·3· ·felt like that was their propriety knowledge, and ·4· ·that's why they had entered into this agreement, so ·5· ·he didn't feel there was a need to share that with ·6· ·the bank. ·7· · · · Q.· ·I believe you stated you were also asking ·8· ·questions about to what extent value was being ·9· ·generated.· Would that be to what extent this 10· ·affiliate manager relationship was providing value 11· ·to Proficio?· What would that mean? 12· · · · A.· ·I would say it was this concept, 13· ·obviously, walking and not being a mortgage person, 14· ·per se, trying to understand why I couldn't just go 15· ·out and buy their leads from some of these companies 16· ·myself versus paying you to go out and buy them. 17· · · · · · ·So what exactly -- what were you adding to 18· ·the equation?· So trying to understand the value of 19· ·having you go out and purchase them from one of 20· ·these companies versus I'm just doing it myself as 21· ·Proficio Mortgage Company -- Mortgage Ventures. 22· · · · Q.· ·What information did you learn from Scott 23· ·Guild in relation to those questions? 24· · · · A.· ·That -- I learned that there were ways 25· ·to -- I did not learn how they were doing it, but I Page 72 ·1· ·did learn there were many leads that were being ·2· ·given to my loan officers that were not being ·3· ·purchased from lead providers in the marketplace. ·4· ·What I did not learn was how.· He did not share that ·5· ·information. ·6· · · · Q.· ·So he did not tell you how those leads you ·7· ·just referenced were acquired by North American ·8· ·Marketing? ·9· · · · A.· ·No. 10· · · · Q.· ·What else did you learn from Scott Guild 11· ·besides what you just testified to, about what value 12· ·North American Marketing was adding? 13· · · · A.· ·I think that there was no one employed by 14· ·Proficio Mortgage Ventures that knew enough about 15· ·the -- the mortgage product to design compliant work 16· ·flows.· So Scott and Alek both were key to creating 17· ·operational work flow management to generate 18· ·loans. 19· · · · Q.· ·So they was adding value by -- strike 20· ·that. 21· · · · · · ·So North American Marketing was adding 22· ·value to Proficio Mortgage Ventures because Scott 23· ·and Alek were the only two individuals who knew how 24· ·to generate a compliant work flow for mortgage 25· ·originators? Page 73 ·1· · · · A.· ·They were the most knowledgeable. ·2· · · · Q.· ·Are Proficio Mortgage Ventures mortgage ·3· ·originators licensed? ·4· · · · A.· ·There is an exemption -- I'm not a ·5· ·licensing expert. ·6· · · · Q.· ·To the best of your knowledge. ·7· · · · A.· ·To the best of my knowledge, outside of ·8· ·the branch managers that require individual ·9· ·licensing, there's an exemption that allows my loan 10· ·officers not to have broad spectrum licensing in 11· ·many states. 12· · · · Q.· ·Was Nevada one of those states? 13· · · · A.· ·Yes, I believe it is. 14· · · · Q.· ·So other than the lead generation that we 15· ·talked about and the compliant work flow that we 16· ·talked about, what other information did you learn 17· ·from Scott Guild about how North American Marketing 18· ·was adding value to Proficio Mortgage Ventures? 19· · · · A.· ·The sales training component coupled with 20· ·all the compliance regulations, bringing in someone 21· ·that is unfamiliar with mortgage lending and 22· ·consumer laws, I think they added value in sales 23· ·training. 24· · · · Q.· ·Other than the three areas that we just 25· ·discussed, what other areas did you -- did they add Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 20 of 49 Page 74 ·1· ·value? ·2· · · · A.· ·I can't think of any. ·3· · · · Q.· ·You also mentioned that you -- I asked you ·4· ·specifically about what you asked Scott Guild.· You ·5· ·also mentioned that you asked Proficio employees ·6· ·about how the leads were generated.· Did you -- ·7· ·strike that. ·8· · · · · · ·Did you ask -- strike that again. ·9· · · · · · ·Besides Scott Guild, did you ask other 10· ·employees of Proficio about how the North American 11· ·Marketing lead lists were generated? 12· · · · A.· ·Yes. 13· · · · Q.· ·Who at Proficio did you -- 14· · · · A.· ·I think I already stated that. 15· · · · Q.· ·Those individuals that you referenced 16· ·earlier, those were the individuals you asked? 17· · · · A.· ·Yes. 18· · · · Q.· ·What did you learn from those individuals 19· ·about how the North American Marketing lead lists 20· ·were generated? 21· · · · A.· ·That they knew very little about -- other 22· ·than -- other than they being given a list of names 23· ·and call regimens, they didn't have any information 24· ·what was going on, or had very little at least among 25· ·the ones I talked to. Page 75 ·1· · · · Q.· ·So they had very little information.· What ·2· ·information did they have? ·3· · · · A.· ·That some of the leads were coming from -- ·4· ·being purchased from lead providers. ·5· · · · Q.· ·Any other information they were able to ·6· ·provide to you? ·7· · · · A.· ·Not really.· I mean, it was clear their ·8· ·jobs were on their origination side and not on the ·9· ·marketing side. 10· · · · Q.· ·Did they provide you with information 11· ·about how the North American Marketing and Proficio 12· ·-- strike that. 13· · · · · · ·Did they provide you with information 14· ·about how North American Marketing provided value to 15· ·Proficio Mortgage Ventures? 16· · · · A.· ·I don't believe I asked that question. 17· · · · Q.· ·To them? 18· · · · A.· ·Yeah. 19· · · · Q.· ·Did Proficio have any ownership interest 20· ·in North American Marketing? 21· · · · A.· ·No, not to my knowledge. 22· · · · Q.· ·North American Marketing was completely 23· ·independent from Proficio? 24· · · · · · ·MR. CARGILL:· Object to the form. 25· · · · · · ·THE WITNESS:· Yeah, to my knowledge, Page 76 ·1· ·there's -- ·2· ·BY MR. LEECH: ·3· · · · Q.· ·Other than -- strike that. ·4· · · · · · ·Are you aware of any other contracts ·5· ·besides this Affiliate Manager Agreement between ·6· ·North American Marketing and Proficio Mortgage ·7· ·Ventures? ·8· · · · A.· ·Yes. ·9· · · · Q.· ·What contracts would those be? 10· · · · A.· ·Purchase agreements for assets associated 11· ·with the Henderson branch. 12· · · · Q.· ·Any other contracts? 13· · · · A.· ·No. 14· · · · · · ·MR. CARGILL:· Can we take a restroom 15· ·break? 16· · · · · · ·MR. LEECH:· Yes. 17· · · · · · ·(Break taken.) 18· ·BY MR. LEECH: 19· · · · Q.· ·When the North American Marketing-Proficio 20· ·affiliation began, are you familiar with what 21· ·personnel North American Marketing brought to 22· ·Proficio at that time? 23· · · · A.· ·I wasn't here at the time, so, no. 24· · · · Q.· ·When did you first meet Eric Naranjo? 25· · · · A.· ·Maybe at his deposition.· I don't remember Page 77 ·1· ·meeting him prior to his deposition. ·2· · · · Q.· ·So did you ever work with Eric Naranjo ·3· ·when you were at Proficio? ·4· · · · A.· ·I believe he was employed by the company ·5· ·while I was acting president, but I could be wrong. ·6· ·I don't know.· I don't know the dates of his ·7· ·employment. ·8· · · · Q.· ·I think I've asked you this already:· What ·9· ·dates were you acting president of Proficio, to the 10· ·best your recollection? 11· · · · A.· ·May of '15 to April of '16.· I could be 12· ·wrong, but I believe that's accurate. 13· · · · · · ·I think it was '14 to '16, so May of 14· ·'14. 15· · · · · · ·MR. CARGILL:· Was the question when he was 16· ·acting? 17· · · · · · ·MR. LEECH:· Yes. 18· · · · · · ·THE WITNESS:· I think January of '16 is 19· ·when they finally approved me. 20· ·BY MR. LEECH: 21· · · · Q.· ·Then May of 2014 to that time, you were 22· ·the acting president? 23· · · · A.· ·Correct. 24· · · · Q.· ·Do you know what role Eric Naranjo had at 25· ·Proficio? Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 21 of 49 Page 78 ·1· · · · A.· ·He was a loan officer. ·2· · · · Q.· ·Did he have any other role? ·3· · · · A.· ·I believe he might have had like a sales ·4· ·manager role.· I'm not familiar with exactly ... ·5· · · · Q.· ·Do you know if he worked for North ·6· ·American Marketing at the same time that he worked ·7· ·for Proficio Mortgage Ventures? ·8· · · · A.· ·I reviewed his deposition, and I believe ·9· ·he stated he believed he had been paid -- I can't 10· ·remember which.· But to my knowledge, no.· But 11· ·outside of reading that, I would believe that he 12· ·told the truth in his deposition, so ... 13· · · · Q.· ·So you have no knowledge of whether he 14· ·worked for North American Marketing -- 15· · · · A.· ·Other than reading his deposition. 16· · · · Q.· ·You have no personal firsthand knowledge 17· ·of him working for both North American Marketing and 18· ·Proficio? 19· · · · A.· ·Correct.· I have no personal knowledge. 20· · · · Q.· ·Did you ever meet an individual named 21· ·Russell Riddle? 22· · · · A.· ·You know the day that I came to the depos 23· ·a year ago, I believe, I don't know if I met Russ. 24· ·The name sounds familiar, but I don't know Russ. 25· · · · Q.· ·Do you recall working with him at Proficio Page 79 ·1· ·Mortgage Ventures? ·2· · · · A.· ·No, I don't. ·3· · · · Q.· ·Do you remember working with Shawn O'Brien ·4· ·when you were at Proficio Mortgage Ventures? ·5· · · · A.· ·I do not remember working with him. I ·6· ·remember the name, and I believe I met him and sat ·7· ·through his depo. ·8· · · · Q.· ·Did you ever meet a Eddie Gomez at -- ·9· ·while you were working at Proficio Mortgage 10· ·Ventures? 11· · · · A.· ·Once, again, I believe I met him -- his 12· ·depo might have been that same day.· I believe I met 13· ·him, but not really in a working capacity.· I think 14· ·I met him after his time at Proficio. 15· · · · Q.· ·So you didn't have any interaction with 16· ·either Mr. Riddle, Mr. O'Brien, or Mr. Gomez when 17· ·you were the acting president of Proficio Mortgage 18· ·Ventures? 19· · · · A.· ·Not to my knowledge. 20· · · · Q.· ·Did you ever meet a woman by the name of 21· ·Dian Stevens? 22· · · · A.· ·No. 23· · · · Q.· ·How about Steve Munoz? 24· · · · A.· ·Not to my knowledge. 25· · · · Q.· ·How about Sarah Young? Page 80 ·1· · · · A.· ·Yes. ·2· · · · Q.· ·Who is Sarah Young? ·3· · · · A.· ·Sarah Young. ·4· · · · Q.· ·I asked for that quite literally. ·5· · · · · · ·What was Sarah Young's role at Proficio ·6· ·Mortgage Ventures? ·7· · · · A.· ·She was the operations manager, I believe ·8· ·was her title. ·9· · · · Q.· ·What were her duties as operations 10· ·manager? 11· · · · A.· ·Her duties would have been to make sure 12· ·the policies of -- the procedures of the mortgage 13· ·company tied directly with the policies of the bank 14· ·and that they were compliant, and the operational 15· ·structure of loan origination not only followed 16· ·those procedures, but remained accurate.· And with 17· ·help of the compliance officer were constantly being 18· ·updated and refreshed to deal with the current 19· ·laws. 20· · · · Q.· ·So it's her role to oversee both the 21· ·origination of the mortgages, the processing of the 22· ·mortgages, and the selling of the mortgages on the 23· ·secondary market? 24· · · · A.· ·Her job would have stopped with the 25· ·closing of the loan.· She wouldn't have any control Page 81 ·1· ·or say what was taking place after the loan ·2· ·closed. ·3· · · · Q.· ·But she would have been overseeing the ·4· ·process basically from start of the origination to ·5· ·closing? ·6· · · · A.· ·Correct. ·7· · · · Q.· ·Do you know if she worked for North ·8· ·American Marketing during the time she was working ·9· ·at Proficio? 10· · · · A.· ·I have no knowledge of that. 11· · · · Q.· ·Do you have any reason to believe she was 12· ·working for North American Marketing at that time? 13· · · · A.· ·No. 14· · · · Q.· ·Do you know if she worked for North 15· ·American Marketing prior to working at Proficio? 16· · · · A.· ·No. 17· · · · Q.· ·Do you know where she currently works? 18· · · · A.· ·I believe she works at Resolute Bank. 19· · · · Q.· ·Was Sarah Young an employee of Proficio 20· ·when you arrived or did you participate in hiring 21· ·her? 22· · · · A.· ·She was already an employee when I got 23· ·more involved with the branch in Henderson. 24· · · · Q.· ·Did you have any role in hiring 25· ·Mr. Naranjo, Mr. Riddle, Mr. O'Brien, Mr. Gomez, Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 22 of 49 Page 82 ·1· ·Ms. Stevens or Mr. Munoz? ·2· · · · A.· ·No. ·3· · · · Q.· ·Do you know if any of those individuals I ·4· ·just listed brought their own personal lead lists to ·5· ·Proficio when they were hired by Proficio? ·6· · · · A.· ·No. ·7· · · · Q.· ·You have no knowledge? ·8· · · · A.· ·No. ·9· · · · Q.· ·I believe you stated that you -- strike 10· ·that. 11· · · · · · ·You became acting president of Proficio 12· ·Mortgage Ventures in May of 2014; correct? 13· · · · A.· ·I believe that to be true, yes. 14· · · · Q.· ·To the best of your recollection? 15· · · · A.· ·Yes. 16· · · · Q.· ·Prior to May of 2014 -- and I forget the 17· ·exact date even though I know you told me -- you 18· ·were a director of either ProficioBank or the 19· ·holding company? 20· · · · A.· ·Both boards. 21· · · · Q.· ·So prior to May of 2014, what interactions 22· ·specifically did you have with Proficio Mortgage 23· ·Ventures, LLC? 24· · · · A.· ·As a board member, we decided to make a 25· ·management change at the mortgage company, which is Page 83 ·1· ·basically what caused me to take that role. ·2· · · · Q.· ·When was that decision made? ·3· · · · A.· ·I believe the board make the decision in ·4· ·May to remove the acting president -- the president ·5· ·of the mortgage company and replace that role with ·6· ·me stepping up. ·7· · · · Q.· ·What led up to that decision? ·8· · · · · · ·MR. CARGILL:· Object to the form. ·9· · · · · · ·THE WITNESS:· Losses with the mortgage 10· ·company, current management being overburdened with 11· ·the role of both president of the bank and president 12· ·of the mortgage company.· I can't remember all of 13· ·the reasons, but those two come to mind. 14· ·BY MR. LEECH: 15· · · · Q.· ·Other than these two reasons, can you 16· ·recall any other reasons why ProficioBank decided to 17· ·make a change in the management of its mortgage 18· ·company? 19· · · · A.· ·I couldn't speak to the other directors. 20· ·I had some concerns about, you know, oversight and 21· ·lack of moving quickly on issues. 22· · · · Q.· ·With respect to lack of oversight, did 23· ·that lack of oversight have to do with North 24· ·American Marketing or some other aspect of Proficio 25· ·Mortgage Ventures' operation? Page 84 ·1· · · · A.· ·As a director, we received our safety and ·2· ·soundness inspection from FDIC, and they identified ·3· ·issues across the entire mortgage platform that ·4· ·raised concerns for them.· I believe those concerns ·5· ·were being dealt with slowly versus quickly. ·6· · · · Q.· ·So when you said you were concerned about ·7· ·a lack of moving quickly, you were concerned that ·8· ·the then current management of Proficio Mortgage ·9· ·Ventures was not moving quickly? 10· · · · A.· ·Yes. 11· · · · Q.· ·And the issues that they were not moving 12· ·quickly were the issues that were identified in the 13· ·safety and soundness report provided by the FDIC? 14· · · · A.· ·I'm not allowed to share with you the 15· ·findings of the safety and soundness report, but I 16· ·can say the FDIC identified issues in that report, 17· ·in the report to the board that preceded us to make 18· ·the decision to change management.· I can say that. 19· · · · Q.· ·Without any reference to the FDIC 20· ·whatsoever, when you said that you had concerns 21· ·about lack of moving quickly, on what issues was, in 22· ·your opinion, Proficio Mortgage Ventures' management 23· ·failing to move quickly? 24· · · · · · ·MR. CARGILL:· I'm going to object to the 25· ·question because the testimony was his concerns were Page 85 ·1· ·based on the report provided by the FDIC.· He ·2· ·testified he cannot speak as to what those issues ·3· ·were, and so I'll instruct him not to answer because ·4· ·I believe that's just another question to try to get ·5· ·to the same information. ·6· · · · · · ·MR. LEECH:· Reserving my right to seek ·7· ·discovery of the FDIC-related information at the ·8· ·appropriate time and at the appropriate venture, if ·9· ·we so decide to do that without any waiver -- 10· · · · · · ·MR. CARGILL:· And you already have and 11· ·we've objected to it, just for the record. 12· · · · · · ·MR. LEECH:· I understand.· We will have to 13· ·take further steps, as I'm sure you understand. 14· · · · · · ·But for the purposes of this deposition, I 15· ·understand your objection.· I don't necessarily 16· ·agree with it, but I understand you're instructing 17· ·him not to answer as to FDIC issues. 18· · · · · · ·I'm going to ask him, though, if there are 19· ·any nonFDIC issues, and then we'll just agree to 20· ·disagree at this point in time on the FDIC issues. 21· · · · · · ·MR. CARGILL:· Sure. 22· ·BY MR. LEECH: 23· · · · Q.· ·Other than any issues identified by the 24· ·FDIC, were there any areas that you felt the 25· ·Proficio Mortgage Ventures management was not moving Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 23 of 49 Page 86 ·1· ·quickly about? ·2· · · · A.· ·When I joined in January, the first three ·3· ·months of being a board member we lost, I believe, ·4· ·close to a million a month, and there was, I believe ·5· ·management did not have an adequate plan to stop ·6· ·losing money. ·7· · · · Q.· ·Any other issues other than issues ·8· ·identified by the FDIC? ·9· · · · A.· ·No. 10· · · · Q.· ·Why was Proficio Mortgage Ventures losing 11· ·$1 million a month? 12· · · · A.· ·There were, I mean, a plethora of reasons. 13· ·I couldn't even begin to go into each one. 14· · · · Q.· ·Can you describe generally the reasons why 15· ·they were losing so much money?· To me -- I'm not in 16· ·the mortgage business, but that sounds like a huge 17· ·amount of money. 18· · · · A.· ·They created a structure and an 19· ·organizational system that didn't adapt quickly 20· ·enough to the change in the mortgage industry 21· ·between 2013 and the end of 2014.· And as a result 22· ·had far too many employees, branches, executive 23· ·managers than they had actual originations. 24· · · · · · ·Also the value or the premiums generated 25· ·by those loans decreased significantly over that Page 87 ·1· ·period of time.· Obviously, more money was going out ·2· ·than was coming in. ·3· · · · Q.· ·Did the affiliation between North American ·4· ·Marketing and Proficio Mortgage Ventures have any ·5· ·role in Proficio Mortgage Ventures' losses? ·6· · · · A.· ·No.· I believe it was profitable -- that ·7· ·arrangement was profitable to Proficio Mortgage ·8· ·Ventures. ·9· · · · Q.· ·It was profitable even though Proficio was 10· ·only receiving 70 basis points per loan volume 11· ·production and $135 per file closed? 12· · · · · · ·MR. CARGILL:· Object to the form. 13· · · · · · ·THE WITNESS:· Yeah.· I believe that, 14· ·unlike the forward mortgage business that Proficio 15· ·was in, the reverse mortgage had the potential to -- 16· ·was making money and had the potential to make more 17· ·money for us. 18· ·BY MR. LEECH: 19· · · · Q.· ·So we've talked about the factors that led 20· ·to the board's decision to replace the management of 21· ·Proficio Mortgage Ventures in May of 2014. 22· · · · · · ·When was the first time someone spoke to 23· ·you about you becoming the acting president of 24· ·Proficio Mortgage Ventures? 25· · · · A.· ·I think after the decision to remove the Page 88 ·1· ·CEO of the bank as the president of the mortgage ·2· ·company, the board asked if I would step up for a ·3· ·short period of time. ·4· · · · Q.· ·Do you know what the bases of the board's ·5· ·decision for selecting you as the president of ·6· ·Proficio Mortgage Ventures were? ·7· · · · A.· ·No, outside the fact we felt someone on ·8· ·the board needed to take the role interim until we ·9· ·found an acceptable replacement. 10· · · · Q.· ·You were a member of the board at that 11· ·time; correct? 12· · · · A.· ·Yes. 13· · · · Q.· ·You participated in the meetings of the 14· ·board relating to the decision to appoint a new 15· ·president for Proficio Mortgage Ventures; correct? 16· · · · A.· ·Yes. 17· · · · Q.· ·Was anyone else discussed to possibly fill 18· ·the role of president of Proficio Mortgage Ventures 19· ·by the board besides yourself? 20· · · · A.· ·Yes. 21· · · · Q.· ·Who? 22· · · · A.· ·Brett Carter.· I even think potentially 23· ·some of the other board members at the time.· So 24· ·Dave Barry, Kevin -- I can't think of Kevin's last 25· ·name. Page 89 ·1· · · · Q.· ·Did anyone in the board meeting ever ·2· ·articulate why you were selected as opposed to any ·3· ·of those other members you just mentioned? ·4· · · · A.· ·Some had to do with, like, commitment of ·5· ·time, who had time actually to commit to the -- the ·6· ·mortgage company was spread across the country, so ·7· ·someone who had flexibility with time to travel. ·8· · · · · · ·Also the fact that, I believe, Brett had ·9· ·formally been the president, you know, as a negative 10· ·to some of the new board members. 11· · · · · · ·When I joined the board, three other board 12· ·members joined with me.· So there was a large 13· ·contingency of the board that was brand new, and I 14· ·was the only one that had some banking experience. 15· ·So those led to me being -- to me end up taking the 16· ·short interim role. 17· · · · Q.· ·Was this position as president of Proficio 18· ·Mortgage Ventures, was this a full-time position? 19· · · · A.· ·Yes, it was a full-time position. 20· · · · Q.· ·When you became the president of Proficio 21· ·Mortgage Ventures, how was the reverse mortgage 22· ·division structured? 23· · · · A.· ·There was an affiliate manager agreement 24· ·in place. 25· · · · Q.· ·And that's the affiliate manager agreement Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 24 of 49 Page 90 ·1· ·we've discussed? ·2· · · · A.· ·Yes. ·3· · · · Q.· ·Who at Proficio from the reverse mortgage ·4· ·division reported directly to you? ·5· · · · A.· ·Everyone.· I mean, they all in a sense ·6· ·reported to me. ·7· · · · Q.· ·I understand that as the president you ·8· ·were in charge of the entire operation, but who ·9· ·specifically reported to you personally? 10· · · · A.· ·Sarah Young, Marco, and I would say the 11· ·branch manager. 12· · · · Q.· ·And who was the branch manager? 13· · · · A.· ·I don't know -- Jesse Brewer was the 14· ·branch manager.· I don't know if there was -- prior 15· ·to that there was another one in between coming 16· ·online. 17· · · · · · ·Sarah Young might have been listed as the 18· ·branch manager for a period of time.· I don't know 19· ·exactly the transition of that. 20· · · · Q.· ·Who was in charge of supervising the loan 21· ·officers when you came aboard? 22· · · · A.· ·Well, the branch manager, to a certain 23· ·aspect, then the operational manager on the forward 24· ·side, then the operational manager on the reverse 25· ·side as well as the branch manager below that. Page 91 ·1· · · · Q.· ·Specific to the reverse side, the ·2· ·operations manager, that was Sarah Young? ·3· · · · A.· ·Correct.· Then, of course, the branch ·4· ·manager also has oversight; then compliance has ·5· ·oversight.· They review calls. ·6· · · · Q.· ·Who was the compliance officer at the ·7· ·time? ·8· · · · A.· ·When I started, it would have been Grant ·9· ·Jacks followed by Natalie Mencia, followed by Angela 10· ·Media. 11· · · · Q.· ·Who in the reverse mortgage division could 12· ·select loan officers for hiring? 13· · · · · · ·MR. CARGILL:· Object to the extent it's 14· ·been asked and answered. 15· · · · · · ·THE WITNESS:· The branch manager could 16· ·suggest a loan officer or a processor as well as 17· ·North American Marketing under the terms of the 18· ·agreement. 19· ·BY MR. LEECH: 20· · · · Q.· ·And who would be ultimately responsible 21· ·for approving that person for hire? 22· · · · A.· ·Myself and HR, human resources. 23· · · · Q.· ·Who had the authority to terminate loan 24· ·officers? 25· · · · · · ·MR. CARGILL:· Same objections. Page 92 ·1· · · · · · ·THE WITNESS:· Of course myself, human ·2· ·resources.· The branch manager could, obviously. ·3· ·There's a process to go through in the sense if ·4· ·there was an issue with the -- if the branch manager ·5· ·saw something inaccurate that they could definitely ·6· ·write them up and it would go through the HR ·7· ·process. ·8· ·BY MR. LEECH: ·9· · · · Q.· ·But the branch managers didn't have 10· ·unilateral authority to terminate loan officers on 11· ·their own? 12· · · · A.· ·I'd have to look at what the human 13· ·resources procedure was.· I don't really remember. 14· ·No, I don't believe they did. 15· · · · Q.· ·Did North American Marketing have any 16· ·ability to terminate loan officers? 17· · · · A.· ·No. 18· · · · · · ·MR. CARGILL:· Asked and answered. 19· ·BY MR. LEECH: 20· · · · Q.· ·With respect to the reverse mortgage 21· ·division located in Henderson, Nevada, do you know 22· ·who paid for the lease for that office space? 23· · · · A.· ·Yes.· North American Marketing, I believe, 24· ·paid the landlord for the lease.· I believe that to 25· ·be the case. Page 93 ·1· · · · Q.· ·Did Proficio reimburse North American ·2· ·Marketing for lease-related expenses? ·3· · · · A.· ·Yes.· I believe if -- I'd have to look at ·4· ·the P&L to make sure, but I believe so, yes. ·5· · · · Q.· ·Do you know when Proficio began ·6· ·reimbursing North American Marketing for those lease ·7· ·payments? ·8· · · · A.· ·I would assume after the date of the ·9· ·signing of the affiliate agreement. 10· · · · Q.· ·Do you know who selected the office 11· ·location for the reverse mortgage division located 12· ·in Henderson? 13· · · · A.· ·No. 14· · · · Q.· ·I believe you testified earlier that one 15· ·of your roles was to wind down these affiliate 16· ·management agreements? 17· · · · A.· ·Yes. 18· · · · Q.· ·Was that a decision made by the board of 19· ·directors at ProficioBank? 20· · · · A.· ·Yes. 21· · · · Q.· ·When was that decision made? 22· · · · A.· ·I'd having to go back and look at board 23· ·minutes to be sure.· Sometime after I joining the 24· ·board and basically prior to me becoming president. 25· ·That was my marching order as president. Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 25 of 49 Page 94 ·1· · · · · · ·As you stated, our agreements could be ·2· ·construed as a rent-a-charter.· That was not the ·3· ·indication of these agreements.· That was never the ·4· ·indication of the board to create that scenario, and ·5· ·to be honest, as board members we didn't believe we ·6· ·had created that scenario but wanted to remove any ·7· ·indication that it could be. ·8· ·BY MR. LEECH: ·9· · · · Q.· ·So the board was concerned that these 10· ·agreements were not in compliance with applicable 11· ·regulations? 12· · · · · · ·MR. CARGILL:· Objection.· Misstates 13· ·testimony. 14· · · · · · ·THE WITNESS:· No.· I think that we wanted 15· ·to remove any ambiguity or any ambiguity of the 16· ·relationship being improper. 17· ·BY MR. LEECH: 18· · · · Q.· ·So you believe the relationships were 19· ·proper? 20· · · · A.· ·I believe they were constructed as proper 21· ·at the time of signing, and there was changes to 22· ·them as regulation change to stay in compliance, but 23· ·they were never addressed in an agreement. 24· · · · Q.· ·So looking at the agreement that's in 25· ·front of you that was marked previously as Exhibit Page 95 ·1· ·20, you believe that agreement was in compliance ·2· ·with applicable federal regulations when it was ·3· ·signed in December 2013? ·4· · · · · · ·MR. CARGILL:· Objection.· Objection, to ·5· ·the extent it calls for legal conclusion and ·6· ·interpretation, and asked and answered. ·7· · · · · · ·THE WITNESS:· Like I said, I wasn't there ·8· ·at the time.· I don't know what legal advice the ·9· ·board received, but I would assume that at the time 10· ·they received advice that this was compliant. 11· ·BY MR. LEECH: 12· · · · Q.· ·Do you recall if the board directed -- 13· ·strike that. 14· · · · · · ·Who was your predecessor as president of 15· ·Proficio Mortgage Ventures, LLC? 16· · · · A.· ·Richard Holley. 17· · · · Q.· ·Do you recall if the board instructed 18· ·Richard Holley to wind down these affiliate 19· ·agreements? 20· · · · · · ·MR. CARGILL:· Object to the form. 21· · · · · · ·MR. LEECH:· What's the basis? 22· · · · · · ·MR. CARGILL:· You're asking him if the 23· ·board did something with his predecessor before he 24· ·was even there. 25· · · · · · ·MR. LEECH:· He was on the board.· I'm not Page 96 ·1· ·trying to be confusing. ·2· · · · · · ·MR. CARGILL:· Then I was the only one ·3· ·confused.· Withdrawn. ·4· ·BY MR. LEECH: ·5· · · · Q.· ·Do you recall if the board of directors ·6· ·instructed Mr. Holley to wind down these affiliate ·7· ·arrangements? ·8· · · · A.· ·Yes. ·9· · · · Q.· ·Did the board instruct Mr. Holley to wind 10· ·down the affiliate arrangements? 11· · · · A.· ·To my recollection, yes. 12· · · · Q.· ·Approximately when did they give him that 13· ·instruction? 14· · · · A.· ·Somewhere between January and my taking 15· ·over as the acting president. 16· · · · Q.· ·Between January of 2014 and your taking 17· ·over as acting president? 18· · · · A.· ·Yeah. 19· · · · Q.· ·You mentioned that one of the bases for 20· ·the board of directors's decision to wind down these 21· ·affiliate agreements was that you wanted to remove 22· ·any impropriety.· Is that a fair characterization of 23· ·your testimony? 24· · · · A.· ·I don't know if I would say impropriety. 25· ·I think that the agreements -- the agreements ceased Page 97 ·1· ·being adequately detailed to deal with the new ·2· ·oversight expectations of CFPB and regulatory ·3· ·changes, and as a result, to clarify that, the role ·4· ·of Proficio Mortgage Ventures and anyone that it did ·5· ·business with needed to be revisited, so we were ·6· ·going to wind them all down. ·7· · · · Q.· ·You mentioned earlier that these ·8· ·agreements changed when the regulations changed, but ·9· ·they were not addressed in a written document; is 10· ·that correct? 11· · · · A.· ·Yeah.· I don't know exactly what I said, 12· ·but I would say that I think that the agreements in 13· ·and of themselves were, where they lacked specific 14· ·details, the president of the mortgage company and 15· ·the affiliate reached understandings and agreements 16· ·where the agreement failed to be clear. 17· · · · · · ·So I wasn't involved in all of that other 18· ·than when I got there to say we need to exit this 19· ·and try to find a solution to exit out as quickly as 20· ·possible. 21· · · · Q.· ·Are you aware of any understandings that 22· ·aren't written down that relates to the North 23· ·American Marketing and Proficio affiliate 24· ·arrangement? 25· · · · A.· ·I know that there was quite a lot of back Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 26 of 49 Page 98 ·1· ·and forth between the CFO and the affiliate managers ·2· ·on compensation, you know.· I wasn't involved in the ·3· ·details of that.· So beyond that, no.· Other than ·4· ·knowing that conversations took place, I don't know ·5· ·any specifics. ·6· · · · Q.· ·So you don't know the specifics of the ·7· ·conversations between North American Marketing and ·8· ·the ProficioBank CFO regarding compensation? ·9· · · · A.· ·Yeah.· The payment of -- I don't remember 10· ·even what it's called -- whether the allocation of 11· ·reserves and timing of revenues and all that kind of 12· ·stuff. 13· · · · · · ·I know there was a lot of discussion about 14· ·that, but I wasn't involved in the, you know, in 15· ·those conversations. 16· · · · Q.· ·Do you know what issues were being 17· ·discussed? 18· · · · A.· ·Some of it was the identification of us 19· ·taking over the leases, and some of it was 20· ·allocation of expenses where we felt things needed 21· ·to change that were not really clarified in here, 22· ·but we felt like as regulations changed things 23· ·needed to change.· So we were having those 24· ·discussions with them as we were looking to unwind 25· ·this agreement. Page 99 ·1· · · · Q.· ·Any other issues you recall being ·2· ·discussed between the CFO and North American ·3· ·Marketing? ·4· · · · A.· ·No. ·5· · · · Q.· ·Are there any other understandings between ·6· ·North American Marketing and Proficio Mortgage ·7· ·Ventures related to that agreement that were not ·8· ·written down in that agreement other than what you ·9· ·just testified to? 10· · · · A.· ·I wasn't -- I mean, between 2012 and the 11· ·time I took over, I don't know if there were other 12· ·things not -- not written in the agreement that 13· ·ultimately were kind of -- became understood as a 14· ·component of the relationship. 15· · · · Q.· ·Were you informed -- strike that. 16· · · · · · ·When you took over as president of 17· ·Proficio Mortgage Ventures, did you come to learn 18· ·any additional understandings than what you 19· ·testified to? 20· · · · A.· ·Not specifically that I can recall. 21· · · · Q.· ·You mentioned that you were having 22· ·discussions about things that needed to change as a 23· ·result of regulatory changes.· What specific issues 24· ·do you recall discussing with North American 25· ·Marketing that needed to be changed to comply with Page 100 ·1· ·or to address, I'll say, regulations? ·2· · · · · · ·MR. CARGILL:· Just objection to the extent ·3· ·it calls for legal conclusion. ·4· · · · · · ·THE WITNESS:· I believe that the mortgage ·5· ·business ultimately was going to require all lead ·6· ·generation to be controlled by the originating ·7· ·entity.· Whether or not that was required ·8· ·immediately, I think was unclear, but I believe ·9· ·long-term that is what was going to be expected of 10· ·the originating entities, and I felt we needed to 11· ·move in that direction. 12· ·BY MR. LEECH: 13· · · · Q.· ·Any other issues you recall specifically 14· ·discussing with North American Marketing that needed 15· ·to change as a result of regulations? 16· · · · A.· ·Obviously compensation was one.· The risk 17· ·of being the originator was, I thought was 18· ·undervalued in the current arrangement, and I 19· ·thought needed to make changes. 20· · · · Q.· ·Explain to me what you mean "the risk of 21· ·being the originator"? 22· · · · A.· ·The liabilities associated with consumer 23· ·lending, compliance, marketing costs, secondary 24· ·marketing, wholesale lines, all of those things. 25· ·Some of the risk of being in the business, the risk Page 101 ·1· ·of being in the business. ·2· · · · Q.· ·Was that more of a business concern for ·3· ·ProficioBank than a regulatory concern? ·4· · · · A.· ·I think both of -- you can't separate ·5· ·them.· You're a subsidiary of a regulated entity, so ·6· ·everything you do ultimately falls under the purview ·7· ·the ultimate regulator, the bank. ·8· · · · Q.· ·I guess my question relates -- you said ·9· ·you felt the risks were undervalued in the 10· ·agreement.· Was that something you said? 11· · · · A.· ·To the extent that I believe that when 12· ·they entered into this agreement they -- the 13· ·board -- from the time of entering in this agreement 14· ·to the time of me getting involved, the regulatory 15· ·landscape had changed so dramatically that what the 16· ·bank was making in this line of business was not 17· ·commiserate with -- with the risk of originating 18· ·that loan. 19· · · · Q.· ·Do you recall any other specific issues 20· ·that you discussed with North American Marketing 21· ·that needed to be changed at this time? 22· · · · A.· ·Yeah.· The employment of the principals. 23· ·I was interested in their knowledge of the industry 24· ·and thought they could add value.· I thought it made 25· ·sense to stay in the business that you would hire Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 27 of 49 Page 102 ·1· ·someone of their caliber to, in a sense, be the ·2· ·president of the reverse mortgage division, and have ·3· ·a direct report of the operation manager. ·4· · · · · · ·I think I mentioned earlier really ·5· ·restructure the entire entity that I think could ·6· ·adapt more quickly to the environment. ·7· · · · Q.· ·So you were looking to hire Mr. Guild and ·8· ·Mr. Ohlhausen as employees of Proficio Mortgage ·9· ·Ventures? 10· · · · A.· ·Potentially.· That was one of the lines we 11· ·went down as we looked at how to exit this in a way 12· ·that allowed us to stay in the business. 13· · · · Q.· ·Exiting the arrangement between North 14· ·American Marketing that still remained in the 15· ·reverse mortgage origination business? 16· · · · A.· ·Yes. 17· · · · Q.· ·Any other issues that you discussed with 18· ·North American Marketing that needed to be changed 19· ·going forward? 20· · · · A.· ·None that I can think of. 21· · · · Q.· ·Showing you what we'll mark as Exhibit 22· ·21 -- hold on before we go there. 23· · · · · · ·And when did those discussions you've just 24· ·summarized for me, when did they begin? 25· · · · A.· ·They began the very first time I met Page 103 ·1· ·Alek. ·2· · · · · · ·MR. LEECH:· Mark this as 21. ·3· · · · · · ·(Defendant's Exhibit 21 was marked ·4· · · · · · ·for identification and as ·5· · · · · · ·Confidential for Attorneys Eyes ·6· · · · · · ·Only.) ·7· · · · · · ·(Witness reviewing document.) ·8· ·BY MR. LEECH: ·9· · · · Q.· ·Do you recognize that document Mr. 10· ·Miller? 11· · · · A.· ·Yes. 12· · · · Q.· ·What that document? 13· · · · A.· ·Proficio exercising its right to terminate 14· ·the affiliate agreement. 15· · · · Q.· ·Is that your signature as interim 16· ·president of Proficio Mortgage Ventures, LLC? 17· · · · A.· ·It is. 18· · · · Q.· ·Do you recognize the other signature on 19· ·this document? 20· · · · A.· ·I don't recognize the signature. 21· · · · Q.· ·Do you recognize the name of the other 22· ·individual? 23· · · · A.· ·Yes.· Steve Chapton. 24· · · · Q.· ·And his title at this point appears to be 25· ·interim president of the bank.· Do you recall if Page 104 ·1· ·that was his tile in August of 2014? ·2· · · · A.· ·The document would imply that it is. I ·3· ·can't remember the time of him being interim ·4· ·president. ·5· · · · Q.· ·We discussed earlier that your predecessor ·6· ·as president of Proficio Mortgage Ventures was ·7· ·Richard Holley, was also the president of ·8· ·ProficioBank? ·9· · · · A.· ·Correct. 10· · · · Q.· ·When the board decided to remove him as 11· ·president of Proficio Mortgage Ventures, did they 12· ·also remove him as president of ProficioBank? 13· · · · A.· ·No. 14· · · · Q.· ·Why did Proficio Mortgage Ventures 15· ·exercise its option to terminate the Affiliate 16· ·Manager Agreement with North American Marketing on 17· ·August 5th, 2014? 18· · · · A.· ·We felt like we had reached a point where 19· ·negotiating without terminating the affiliate 20· ·agreement was not progressing quickly enough, so we 21· ·decided to terminate the agreement and go about 22· ·running the business outside of it. 23· · · · Q.· ·Any other reasons other than the slowness 24· ·of the negotiation with North American Marketing 25· ·that led Proficio Mortgage Ventures to terminate Page 105 ·1· ·this agreement? ·2· · · · A.· ·I think -- I'm assuming each board member ·3· ·might have had individual reasons to, you know, ·4· ·advise both Steve and myself to move in this path. ·5· · · · Q.· ·What reasons were articulated -- let me ·6· ·back up. ·7· · · · · · ·Was the decision to terminate the ·8· ·Affiliate Manager Agreement in August 2014, was that ·9· ·a decision made by the board? 10· · · · A.· ·Yes. 11· · · · Q.· ·What reasons for issuing this termination 12· ·notice was discussed by the board? 13· · · · · · ·MR. CARGILL:· Object to the extent it's 14· ·been asked and answered. 15· · · · · · ·THE WITNESS:· Almost feel like I need -- I 16· ·don't know for sure what I can share minutes of the 17· ·board with a regulated company.· I don't know what 18· ·I'm allowed to share. 19· · · · · · ·MR. CARGILL:· In that case I would just 20· ·advise the witness if he feels he would breach any 21· ·sort of confidentiality obligations or anything like 22· ·that, to just be cautious with his testimony. 23· · · · · · ·MR. LEECH:· Off the record for a moment. 24· · · · · · ·MR. CARGILL:· Sure. 25· · · · · · ·(Discussion off the record.) Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 28 of 49 Page 106 ·1· ·BY MR. LEECH: ·2· · · · Q.· ·I'll ask that again. ·3· · · · A.· ·I don't feel like I can answer that ·4· ·because the information discussed by the board ·5· ·was -- some of it was provided by the FDIC, and I ·6· ·don't believe I can share that information. ·7· · · · · · ·MR. LEECH:· So other than -- and we'll, ·8· ·just for the record, have the same position.· You ·9· ·have the same position -- 10· · · · · · ·MR. CARGILL:· About the FDIC issues. 11· · · · · · ·MR. LEECH:· About the FDIC issues. 12· · · · Q.· ·So for purposes of this deposition other 13· ·than issues identified by the FDIC, what reasons for 14· ·issuing this termination notice were discussed by 15· ·the board? 16· · · · A.· ·That this is the best course of action for 17· ·us to become a profitable entity that has an ongoing 18· ·future. 19· · · · Q.· ·I thought you said this arrangement was 20· ·already profitable? 21· · · · A.· ·Yes, but long-term, based on what was the 22· ·issues presented by the FDIC, we felt like this was 23· ·the best course of action for us to maintain a good 24· ·regulatory standing and be profitable ongoing. 25· · · · Q.· ·Other than the issues we've already talked Page 107 ·1· ·about, were there any other reasons besides ·2· ·information provided by the FDIC that influenced the ·3· ·Proficio board to issue this termination notice? ·4· · · · A.· ·No. ·5· · · · Q.· ·Look at the end of paragraph 1 of this ·6· ·termination notice.· It indicates the agreement ·7· ·terminates effective November 3rd, 2014; is that ·8· ·correct? ·9· · · · A.· ·That's what that document says, yes. 10· · · · Q.· ·To your knowledge, did the -- strike that. 11· · · · · · ·Was November 3rd, 2014, the effective date 12· ·of the termination of the Affiliate Manager 13· ·Agreement between North American Marketing and 14· ·Proficio Mortgage Ventures? 15· · · · A.· ·Yes. 16· · · · Q.· ·In the second paragraph it says, "PMV will 17· ·work with you in good faith over the next seven to 18· ·ten days to develop a 90-day transition plan."· Do 19· ·you see that paragraph? 20· · · · A.· ·Yes. 21· · · · Q.· ·Do you know who at North American 22· ·Marketing received this termination notice? 23· · · · A.· ·I believe both Alek and Scott received 24· ·copies. 25· · · · Q.· ·Did you -- strike that. Page 108 ·1· · · · · · ·After the issuance of this termination ·2· ·notice, did you discuss this termination notice with ·3· ·Scott Guild? ·4· · · · A.· ·Yes. ·5· · · · Q.· ·What were the nature of those ·6· ·discussions? ·7· · · · A.· ·To try to retain him as an employee after ·8· ·the termination, as well as coming up with a ·9· ·transition plan for winding down the affiliate 10· ·agreement. 11· · · · Q.· ·Did you two discuss anything else in 12· ·connection with this termination notice? 13· · · · A.· ·Not that I recall. 14· · · · Q.· ·What about Alek Ohlhausen, did you have 15· ·any discussions with him about this termination 16· ·notice? 17· · · · A.· ·Yeah. 18· · · · Q.· ·What were the nature of those 19· ·discussions? 20· · · · A.· ·To try to figure out a transition plan for 21· ·how we were going to wind the current pipeline down. 22· · · · Q.· ·Did you discuss the possibility of him 23· ·becoming an employee of Proficio Mortgage 24· ·Ventures? 25· · · · A.· ·I think it was probably discussed, and I Page 109 ·1· ·don't think he had any interest.· I don't think the ·2· ·discussion lasted very long. ·3· · · · Q.· ·Did you discuss anything else with Alek ·4· ·Ohlhausen regarding this termination notice? ·5· · · · A.· ·Not that I remember. ·6· · · · Q.· ·What steps did you take to develop a ·7· ·90-day transition period plan for dissolving the ·8· ·affiliate relationship? ·9· · · · A.· ·I guess my role was mainly on the side of 10· ·trying to retain as much talent as I possibly could 11· ·within the sales force, and identify that even 12· ·though it may be potential that no one from North 13· ·American Marketing is involved, Proficio has an 14· ·interest in continuing the reverse mortgage and try 15· ·to -- to convey to my employees that we were going 16· ·to be in the business regardless of our lead and 17· ·generation of marketing materials was going to 18· ·change substantially. 19· · · · Q.· ·Who else was involved in developing this 20· ·90-day transition period plan? 21· · · · A.· ·Steve Chapton, Dave Pittman, Scott, Alek, 22· ·our compliance manager at the time.· Operations to a 23· ·certain degree.· I think that's the majority of the 24· ·people. 25· · · · Q.· ·Anyone else you can think of? Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 29 of 49 Page 110 ·1· · · · A.· ·No. ·2· · · · Q.· ·Who from operations was involved? ·3· · · · A.· ·Sarah Young. ·4· · · · Q.· ·Anyone else from operations? ·5· · · · A.· ·Not that I can think of.· Secondary market ·6· ·was involved as well. ·7· · · · Q.· ·And that was people who marketed the ·8· ·mortgage to secondary markets? ·9· · · · A.· ·Yes, ultimately. 10· · · · Q.· ·Do you recall who from secondary was 11· ·involved in formulating this -- 12· · · · A.· ·Marco, however, he pronounced his name. 13· · · · Q.· ·The same Marco that you referenced a 14· ·couple of times whose last name -- 15· · · · A.· ·I have a hard time pronouncing. 16· · · · Q.· ·In formulating this 90-day transition 17· ·period plan, what was decided between Proficio 18· ·Mortgage Ventures and North American Marketing 19· ·relating to the payment of compensation? 20· · · · A.· ·I don't remember the details.· There was 21· ·an agreement that was drafted to address most of the 22· ·issues that both parties felt required to be spelled 23· ·out and lettering, that I refer to that. 24· · · · · · ·MR. LEECH:· Let's mark this as Exhibit 22. 25· ·/// Page 111 ·1· · · · · · ·(Defendant's Exhibit 22 was marked ·2· · · · · · ·for identification and as ·3· · · · · · ·Confidential for Attorneys Eyes ·4· · · · · · ·Only.) ·5· · · · · · ·MR. CARGILL:· I'll note for the record, 21 ·6· ·and 22 are designated Attorney Eyes Only.· It's ·7· ·abbreviated with AEO on the bottom. ·8· ·BY MR. LEECH: ·9· · · · Q.· ·Would you review this document, please. 10· · · · · · ·(Witness reviewing document.) 11· · · · A.· ·I've reviewed it. 12· · · · Q.· ·Do you recognize this document? 13· · · · A.· ·Yes.· It looks like the agreement that we 14· ·came to with North American Marketing regarding the 15· ·transition after the termination notice. 16· · · · Q.· ·Turning to the last two pages I've handed 17· ·you, do recognize those two pages? 18· · · · A.· ·No, I don't actually. 19· · · · Q.· ·I think this is simply something that got 20· ·appended to the document, so it might just be a 21· ·photocopying error on my part.· Just to clarify are 22· ·those -- 23· · · · A.· ·They're not associated with the actual 24· ·agreement. 25· · · · · · ·MR. LEECH:· Off the record real quick. Page 112 ·1· · · · · · ·(Discussion off the record.) ·2· ·BY MR. LEECH: ·3· · · · Q.· ·Mr. Miller, now that we've removed the ·4· ·last two pages from this document that you did not ·5· ·recognize, is this document the agreement that you ·6· ·referenced earlier? ·7· · · · A.· ·Yes. ·8· · · · Q.· ·This is the transition expense agreement ·9· ·associated with a plan to wind down the pipeline 10· ·that was established with the North American 11· ·Marketing affiliate agreement? 12· · · · A.· ·Yes. 13· · · · Q.· ·Was this agreement prepared as part of the 14· ·transition period -- as part the transition period 15· ·plan referenced in Exhibit 21? 16· · · · A.· ·Yes. 17· · · · Q.· ·Were any other agreements between North 18· ·American Marketing and Proficio prepared as part of 19· ·the transition period referenced in Proficio 21? 20· · · · A.· ·No. 21· · · · Q.· ·Could you review the first paragraph of 22· ·the transition expense agreement entitled "Recital" 23· ·and let me know after you've reviewed that. 24· · · · A.· ·Starting with recitals? 25· · · · Q.· ·The paragraph just below that word. Page 113 ·1· · · · · · ·(Witness reviewing document.) ·2· · · · A.· ·Okay. ·3· · · · Q.· ·This paragraph references a transition ·4· ·period beginning November 3, 2014 and ending May ·5· ·2nd, 2015.· Do you see that provision? ·6· · · · A.· ·I do. ·7· · · · Q.· ·Can you describe for me how the ·8· ·relationship between North American Marketing and ·9· ·Proficio changed on November 3rd, 2014? 10· · · · A.· ·We stopped using North American Marketing 11· ·for all of the services described in -- in the 12· ·affiliate agreement, and Proficio began buying its 13· ·own -- buying and generating its own leads 14· ·separately as well as winding down the pipeline that 15· ·had been started under the leads and the Affiliate 16· ·Manager Agreement in place prior to that. 17· · · · Q.· ·Were there any other changes on November 18· ·3rd to the relationship between North American 19· ·Marketing and Proficio Mortgage Ventures? 20· · · · A.· ·I don't remember the date of -- I don't 21· ·remember when this was signed.· At some point I 22· ·hired Scott to come to work for Proficio Mortgage 23· ·Ventures. 24· · · · Q.· ·Were there any other changes that you can 25· ·recall? Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 30 of 49 Page 114 ·1· · · · A.· ·Not off the top of my head, no. ·2· · · · Q.· ·So North American Marketing ceased ·3· ·providing the services referenced in the Affiliate ·4· ·Manager Agreement at that time. ·5· · · · · · ·During this transition period, what ·6· ·services was North American Marketing performing for ·7· ·Proficio Mortgage Ventures, if any? ·8· · · · A.· ·Well, they still had to perform and create ·9· ·a P&L that had to be balanced versus the pipeline. 10· ·There was some -- obviously some oversight -- we 11· ·were making some operational changes after this 12· ·agreement, so they at least had to be made aware of 13· ·the changes we were making.· I think outside of 14· ·that, the budgeting P&L statement would be about the 15· ·only thing. 16· · · · · · ·We were obviously transitioning the 17· ·leases, and those kind of things had to be done. 18· ·Basically what's stated in the agreement. 19· · · · Q.· ·Other than what you testified to, can you 20· ·think of any other duties that North American 21· ·Marketing was performing for Proficio during this 22· ·transition period identified in the transition 23· ·expense agreement? 24· · · · · · ·MR. CARGILL:· Objection to the extent it 25· ·calls for a legal interpretation or conclusion. Page 115 ·1· · · · · · ·THE WITNESS:· No.· This was supposed to ·2· ·help us clarify that. ·3· ·BY MR. LEECH: ·4· · · · Q.· ·You mentioned that North American ·5· ·Marketing still had to prepare a profit and loss ·6· ·statement.· How were they earning profits and losses ·7· ·during this time? ·8· · · · A.· ·Definitely a question I would -- I would ·9· ·rather have the CFO answer about what exactly needed 10· ·to be done.· A lot had to do with how fast we were 11· ·doing, trying to establish a percentage ratio of 12· ·closing out the current pipeline versus what we were 13· ·generating on our own. 14· · · · · · ·As we were starting to generate our own 15· ·leads, there was going to be a period of time where 16· ·we would have basically no -- from the creation of a 17· ·lead to the first call, to actually closing a loan, 18· ·there's a significant amount of time.· So there was 19· ·going to be expenses that we as the mortgage company 20· ·were going to be spending that were unassociated 21· ·with closing down the old pipeline. 22· · · · · · ·So this was trying to separate those two 23· ·costs from -- and being able to pay them under the 24· ·old agreement of 70 basis points.· So there had to 25· ·be delineation of expense and, of course, revenues Page 116 ·1· ·associated with them at the end. ·2· · · · Q.· ·If you look at this first paragraph ·3· ·following the definition of "transition period," it ·4· ·reads, "During this time, two separate profit and ·5· ·loss statements will be kept in order to ·6· ·appropriately track revenues and expenses."· Do you ·7· ·see that sentence? ·8· · · · A.· ·Yes. ·9· · · · Q.· ·It further provides that, "The profit and 10· ·loss statements will be referred to as Proficio P&L 11· ·and the NAM, N-A-M, P&L in order to create a 12· ·distinction between the two for purposes of this 13· ·agreement."· Do you see that sentence? 14· · · · A.· ·Yes. 15· · · · Q.· ·What was your understanding of the 16· ·revenues that would be put on the Proficio P&L? 17· · · · A.· ·They would be fairly limited because of 18· ·the amount of time it takes to closing a loan and 19· ·ultimately selling it was going to be small, so we 20· ·were planning on having significant losses until we 21· ·had a pipeline of our own. 22· · · · Q.· ·Were you finished -- 23· · · · A.· ·Yeah.· Just a pipeline that was separate 24· ·from the affiliate agreement. 25· · · · Q.· ·So at this point Proficio is starting to Page 117 ·1· ·acquire its own leads from vendors and generate its ·2· ·own leads. ·3· · · · · · ·Were the revenues associated with any ·4· ·loans closed from those leads, were those going to ·5· ·be allocated to the Proficio P&L pursuant to this ·6· ·agreement? ·7· · · · A.· ·Correct. ·8· · · · Q.· ·And you mentioned earlier that you were ·9· ·winding down the existing pipeline, I think? 10· · · · A.· ·Correct. 11· · · · Q.· ·I think that's your language.· Would 12· ·revenues associated from -- strike that. 13· · · · · · ·And the loans in the existing pipeline, 14· ·those would have been loans that were sourced from 15· ·leads generated by North American Marketing; 16· ·correct? 17· · · · A.· ·They were generated under the affiliate 18· ·agreement purchased basically by -- under the 19· ·affiliate agreement that became the bank's, yes. 20· · · · Q.· ·That became the bank's.· What did you mean 21· ·by that? 22· · · · A.· ·There were already deals that loan 23· ·officers had taken that we were going to be -- the 24· ·bank under the affiliate agreement owed North 25· ·American Marketing as stated whatever, 70 basis Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 31 of 49 Page 118 ·1· ·points.· We got 70 basis points and they got the ·2· ·remaining. ·3· · · · Q.· ·So basically the loans in the pipeline ·4· ·that were started when the Affiliate Manager ·5· ·Agreement was in effect, were revenues of those ·6· ·loans going to be allocated to the North American ·7· ·Marketing P&L pursuant to this transition expense ·8· ·agreement? ·9· · · · A.· ·They were going to be the NAM -- NAM P&L 10· ·was going to be basically a wind down of the 11· ·affiliate agreement, and the Proficio P&L was going 12· ·to be the ongoing or, I guess, you could say startup 13· ·operations outside of the affiliate agreement. 14· ·Maybe that's a better way to look at it. 15· · · · · · ·The Proficio P&L is outside of the 16· ·affiliate agreement.· The NAM P&L is the wind-down 17· ·of the affiliate agreement. 18· · · · Q.· ·I guess I'm just asking what revenues 19· ·would be allocated to NAM pursuant to this 20· ·agreement?· Were those the revenues from the loans 21· ·that were started when the Affiliate Manager 22· ·Agreement was in effect? 23· · · · A.· ·I believe so, yes. 24· · · · Q.· ·Feel free to review this entire agreement 25· ·because I have it as a bit of source of confusion Page 119 ·1· ·for me. ·2· · · · · · ·MR. CARGILL:· I'll just restate the ·3· ·objection, if it calls for a legal determination or ·4· ·interpretation of this contract. ·5· · · · · · ·THE WITNESS:· Loans when applications were ·6· ·taken before November 3rd. ·7· · · · · · ·(Court reporter asks for clarification. ·8· · · · · · ·THE WITNESS:· I would just say pursuant to ·9· ·what NAM, what would be on the NAM balance sheet as 10· ·stated for under NAM will pay for the expenses 11· ·associated with those three bullet points on the top 12· ·of Page 3. 13· ·BY MR. LEECH: 14· · · · Q.· ·My question, though, is about revenues -- 15· · · · A.· ·That would be the trigger for -- that -- 16· ·if they qualify for them in a sense being on that 17· ·balance sheet, that P&L, that would be the revenues 18· ·associated with those. 19· · · · · · ·So where applications were taken prior to 20· ·November 3rd, that would be on the NAM P&L or the 21· ·wind down of the affiliate agreement. 22· · · · Q.· ·So just to make sure I understand you 23· ·correctly, revenues from loans where applications 24· ·were taken before November 3rd, 2014, would be 25· ·allocated to North American Marketing's P&L pursuant Page 120 ·1· ·to this agreement; is that correct? ·2· · · · A.· ·That's my understanding of the agreement. ·3· · · · Q.· ·Okay.· Other than the expenses that are ·4· ·described in this -- strike that. ·5· · · · · · ·Other than what's described in this ·6· ·agreement, were there any arrangements between ·7· ·Proficio Mortgage Ventures and North American ·8· ·Marketing dealing with the allocation of expenses ·9· ·during the transition period? 10· · · · A.· ·Not dealing with expenses that I can think 11· ·of. 12· · · · Q.· ·I'm going to ask you to go back very 13· ·briefly to the Affiliate Manager Agreement that's 14· ·previously been marked as Exhibit 20. 15· · · · A.· ·I have it. 16· · · · Q.· ·Directing your attention to the second 17· ·page, the second Romanette, "Group Margin," review 18· ·that paragraph.· Let me know when you've completed 19· ·reviewing it. 20· · · · · · ·(Witness reviewing document.) 21· · · · A.· ·Okay. 22· · · · Q.· ·There's a reference in that paragraph to a 23· ·Schedule 1.· Do you know if there was a Schedule 1 24· ·attached to this Affiliate Manager Agreement? 25· · · · A.· ·I do not.· As I mentioned before, this Page 121 ·1· ·language looks to me being taken from the forward ·2· ·affiliate agreements and not really adapted to the ·3· ·reverse agreements.· The wording doesn't seem to be ·4· ·directly related to reverse mortgages. ·5· · · · Q.· ·To your knowledge, does Schedule 1 exists ·6· ·to this agreement? ·7· · · · A.· ·No, not to my knowledge. ·8· · · · · · ·MR. LEECH:· Let's take a quick break. I ·9· ·think I've reached a convenient stopping point. 10· · · · · · · · · (Break taken.) 11· · · · · · ·MR. LEECH:· Per discussion with the 12· ·witness, the witness has a flight and another 13· ·commitment that he needs to attend. 14· · · · · · ·Accordingly the parties have agreed that 15· ·this deposition will remain open, and Mr. Miller 16· ·will sit for the remainder of his deposition at a 17· ·time mutually convenient to all the parties and to 18· ·Mr. Miller. 19· · · · · · ·Mr. Miller, we appreciate your willingness 20· ·to sit for a second deposition, and we will keep the 21· ·deposition open and we will suspend the 22· ·deposition. 23· · · · · · ·MR. CARGILL:· I agree with that. 24· · · · · · ·We reserve the right for him to review the 25· ·transcripts.· Send through counsel. Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 32 of 49 Page 122 ·1· ·(Whereupon the deposition was ·2· ·adjourned at 12:23 p.m.) ·3 ·4 ·5 ·6 ·7 ·8 ·9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 123 ·1· · · · · · ·DECLARATION UNDER PENALTY OF PERJURY ·2 ·3 ·4· · · · · · I, JOHN MILLER, do hereby certify ·5· ·under penalty of perjury that I have read the foregoing ·6· ·transcript of my deposition taken on June 24, 2016; that ·7· ·I have made such corrections as appear noted herein in ·8· ·ink, initialed by me; that my testimony as contained ·9· ·herein, as corrected, is true and correct. 10 11 12 13 14· · · · · · · · Dated this _____ day of ________________, 15 16· ·2016, at _____________________________________, 17 18· ·__________________. 19 20 21· · · · · · · · ·____________________________ · · · · · · · · · · JOHN MILLER 22 23 24 25 Page 124 ·1· ·RE:· Job No. 504126 ·2· ·PROFICIO MORTGAGE VENTURES v THE FEDERAL SAVINGS BANK ·3 ·4· · · · · · · · CERTIFICATE OF DEPONENT ·5· ·PAGE· · · LINE· · · CHANGE· · · · · · · · ·REASON ·6· ·____________________________________________________ ·7· ·____________________________________________________ ·8· ·____________________________________________________ ·9· ·____________________________________________________ 10· ·____________________________________________________ 11· ·____________________________________________________ 12· ·____________________________________________________ 13· ·____________________________________________________ 14· ·____________________________________________________ 15· ·____________________________________________________ 16· ·____________________________________________________ 17· ·____________________________________________________ 18 19· · · · · · · · · · · * * * * * 20· · · · · · I, JOHN MILLER, deponent herein, do hereby · · ·certify and declare under penalty of perjury the 21· ·within and foregoing transcription to be my · · ·deposition in said action; that I have read, 22· ·corrected, and do hereby affix my signature to said · · ·deposition. 23 24· · · · · · · · · · ___________________________________ 25· · · · · · · · · · · · · · · JOHN MILLER Page 125 ·1· · · · · · · · REPORTER'S CERTIFICATE ·2 ·3· ·STATE OF NEVADA· · ·) · · · · · · · · · · · · ·)· ss. ·4· ·COUNTY OF CLARK· · ·) ·5 ·6· · · · · · I, KENDALL D. HEATH, CCR No. 475, a · · ·Certified Court Reporter for the State of Nevada, do ·7· ·hereby certify: ·8· · · · · · That I reported the taking of the · · ·deposition of the witness, JOHN MILLER, commencing ·9· ·on the 24th day of June, 2016, at the hour of 9:37 · · ·a.m. 10 · · · · · · · That prior to being examined, the witness 11· ·was duly sworn by me to testify to the truth, the · · ·whole truth, and nothing but the truth. 12 · · · · · · · That I thereafter transcribed my said 13· ·shorthand notes into typewriting and that the · · ·typewritten transcript of said deposition is a 14· ·complete, true and accurate transcription of my said · · ·shorthand notes taken down at said time, and that a 15· ·request has been made to review the transcript. 16· · · · · · I further certify that I am not a relative · · ·or employee of an attorney or counsel of any of the 17· ·parties, nor a relative or employee of any attorney · · ·or counsel involved in said action, nor a person 18· ·financially interested in the action. 19· · · · · · ·IN WITNESS WHEREOF, I have hereunto · · ·set my signature this 4th day of July, 2016. 20 21 22· · · · · · · · _____________________________________ 23· · · · · · · · · · · · · KENDALL D. HEATH · · · · · · · · · · · · · · ·CCR No. 475 24 25 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 33 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 34 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 35 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 36 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 37 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 38 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 39 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 40 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 41 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 42 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 43 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 44 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 45 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 46 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 47 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 48 of 49 Case 2:15-cv-00510-RFB-VCF Document 89-1 Filed 01/27/17 Page 49 of 49 Exhibit B Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 1 of 102 Page 1 ·1· · · · · · ·IN THE UNITED STATES DISTRICT COURT ·2· · · · · · · · · · ·DISTRICT OF NEVADA ·3 ·4· ·PROFICIO MORTGAGE VENTURES, LLC, ·5· · · · · · · · Plaintiff, · · · · · · · · · · · · · · · · · · · · Case No. ·6· ·vs.· · · · · · · · · · · · · · · · 2:15-CV-510-RFB-(VCF) ·7· ·THE FEDERAL SAVINGS BANK, ·8· · · · · · · · Defendant. · · ·________________________________ ·9 10 11 12 13· · · · · · · · DEPOSITION OF ALEK OHLHAUSEN 14· · · · · · · · · NON-CONFIDENTIAL PORTION 15 · · · · · · · · · · ·Thursday, July 7, 2016 16 · · · · · · · · · · · · · · 9:03 a.m. 17 18· · · · ·3773 Howard Hughes Parkway, Suite 400 North 19· · · · · · · · · · · Las Vegas, Nevada 20 21 22 23· ·REPORTED BY:· Becky J. Parker, RPR, CCR No. 934 24 25 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 2 of 102 Page 2 ·1· ·APPEARANCES: ·2 ·3· · · ·For Plaintiff: ·4· · · · · · THOMAS S. CARGILL · · · · · · · FOLEY & LARDNER LLP ·5· · · · · · 111 North Orange Avenue, Suite 1800 · · · · · · · Orlando, Florida· 32801 ·6· · · · · · 407.244.7129 · · · · · · · tcargill@foley.com ·7 ·8· · · ·For Defendant: ·9· · · · · · STEVEN H. LEECH · · · · · · · GOZDECKI, DEL GIUDICE, AMERICUS, FARKAS 10· · · · · · & BROCATO LLP · · · · · · · One East Wacker Drive, Suite 1700 11· · · · · · Chicago, Illinois 60601 · · · · · · · 312.782.5010 12· · · · · · s.leech@gozdel.com 13 · · · · ·Also Present: 14 · · · · · · · JOHN CALK 15 · · · · · · · ERIC NARANJO 16 17 18 19 20 21 22 23 24 25 Page 3 ·1· · · · · · · · · · INDEX TO EXAMINATION ·2 ·3· · · · · · · · · ·WITNESS:· ALEX OHLHAUSEN ·4· ·EXAMINATION · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·PAGE ·5 · · ·By Mr. Leech· · · · · · · · · · · · · · · · · · · · · ·6 ·6 ·7 ·8 ·9 10· · · · · · · · CONFIDENTIAL EXCERPT EXCLUDED 11· · · · · · · · · · · ·Pages 260 - 262 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 4 ·1· · · · · · · · · · · INDEX TO EXHIBITS ·2· · · · · · · · · · · ·ALEK OHLHAUSEN ·3· · · · · · · Proficio Mortgage Ventures, LLC ·4· · · · · · · · · · · · · · vs. ·5· · · · · · · · · The Federal Savings Bank ·6· · · · · · · · · ·Thursday, July 7, 2016 ·7· · · · · · · Becky J. Parker, RPR, CCR No. 934 ·8 · · ·MARKED· · · · · · · · DESCRIPTION· · · · · · · · · ·PAGE ·9 · · ·Exhibit 1· ·Affiliate Manager Agreement Between· · · 124 10· · · · · · · ·Proficio Mortgage Ventures, LLC and · · · · · · · · ·North American Marketing, Inc. 11· · · · · · · ·(Bates Nos. PROFICIO0000935 - 940) 12· ·Exhibit 2· ·North American Marketing Payments· · · · 147 · · · · · · · · ·(Bates Nos. PROFICIO0008224 - 8225) 13 · · ·Exhibit 3· ·List of Borrowers· · · · · · · · · · · · 150 14 · · ·Exhibit 4· ·REFIMATH6000 Spreadsheet· · · · · · · · ·179 15 · · ·Exhibit 5· ·REFI2014Final Spreadsheet· · · · · · · · 187 16 · · ·Exhibit 6· ·Phone Lookup Spreadsheet· · · · · · · · ·190 17 · · ·Exhibit 7· ·PhoneLookup2 Spreadsheet· · · · · · · · ·191 18 · · ·Exhibit 8· ·Allen Scrub Master Spreadsheet· · · · · ·195 19 · · ·Exhibit 9· ·REFIBlackOPsNV Spreadsheet· · · · · · · ·196 20 · · ·Exhibit 10· TheNewBitch Spreadsheet· · · · · · · · · 216 21 · · ·Exhibit 11· June 18, 2014 Email and 2670a· · · · · · 219 22· · · · · · · ·Spreadsheet 23· ·Exhibit 12· Proficio Mortgage Employment Agreement· ·222 · · · · · · · · ·Eric Naranjo 24 · · ·Exhibit 13· OldH2h.dat Spreadsheet· · · · · · · · · ·230 25 Page 5 ·1· · · · · · · · · · · INDEX TO EXHIBITS ·2· · · · · · · · · · · ·ALEK OHLHAUSEN ·3· · · · · · · Proficio Mortgage Ventures, LLC ·4· · · · · · · · · · · · · · vs. ·5· · · · · · · · · The Federal Savings Bank ·6· · · · · · · · · ·Thursday, July 7, 2016 ·7· · · · · · · Becky J. Parker, RPR, CCR No. 934 ·8 · · ·MARKED· · · · · · · · DESCRIPTION· · · · · · · · · ·PAGE ·9 · · ·Exhibit 14· August 5, 2014 Termination Letter· · · · 232 10· · · · · · · ·(Bates No. PROFICIO0007883) 11· ·Exhibit 15· Transition Expense Agreement· · · · · · ·233 · · · · · · · · ·(Bates No. PROFICIO0007884 - 7888) 12 · · ·Exhibit 16· Proficio Mortgage Ventures Financial· · ·263 13· · · · · · · ·Statements as of December 31, 2014 · · · · · · · · ·and 2013 14 15 16 17 18 19 20 21 22 23 24 25 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 3 of 102 Page 6 ·1· · · · · · · · · · · LAS VEGAS, NEVADA ·2· · · · · · · THURSDAY, JULY 7, 2016, 9:03 A.M. ·3 ·4· · · · · · · · · · · ·ALEK OHLHAUSEN, ·5· · · · · · · ·having been first duly sworn, ·6· · · · · ·was examined and testified as follows: ·7 ·8· · · · · · MR. LEECH:· Let the record reflect that this is ·9· ·the deposition of Alek Ohlhausen taken in the case of 10· ·Proficio Mortgage Ventures versus The Federal Savings 11· ·Bank presently pending in the United States District 12· ·Court for the District of Nevada. 13 14· · · · · · · · · · · · ·EXAMINATION 15· ·BY MR. LEECH: 16· · · ·Q.· ·Mr. Ohlhausen, could you state and spell your 17· ·first and last name for the record, please? 18· · · ·A.· ·Sure.· It's Alek Ohlhausen.· Spelled A-L-E-K, 19· ·last name is O-H-L-H-A-U-S-E-N. 20· · · ·Q.· ·Have you ever given a deposition before? 21· · · ·A.· ·I have not. 22· · · ·Q.· ·Just a couple of basic ground rules.· As you 23· ·can see, the court reporter here is taking down 24· ·everything that I say and everything that you say.· So 25· ·it's important in order for her to be able to do her Page 7 ·1· ·job, that we refrain from talking over each other. I ·2· ·will try to let you finish your answers before I start ·3· ·my next question.· I would ask that you let me finish my ·4· ·question before you answer, that way she can get ·5· ·everything down. ·6· · · · · · Is that okay? ·7· · · ·A.· ·It is. ·8· · · ·Q.· ·Another thing to keep in mind is that the court ·9· ·reporter can only take down verbal answers, so a nod of 10· ·the head, a shake of the head, that sort of thing, she 11· ·cannot take down on the transcript.· So I would ask that 12· ·you answer out loud. 13· · · · · · You understand? 14· · · ·A.· ·I understand. 15· · · ·Q.· ·Are you on any medication that would prevent 16· ·you from testifying truthfully and accurately today? 17· · · ·A.· ·No. 18· · · ·Q.· ·What is your current home address? 19· · · ·A.· ·200 Sunset Shower Drive, Henderson, Nevada 20· ·89012. 21· · · ·Q.· ·And are you currently employed? 22· · · ·A.· ·Yes. 23· · · ·Q.· ·And who is your employer? 24· · · ·A.· ·Resolute Bank. 25· · · ·Q.· ·And are they located in Henderson? Page 8 ·1· · · ·A.· ·We have a production center in Henderson, yes. ·2· ·Corporate office is in Maumee, M-A-U-M-E-E, Ohio. ·3· · · ·Q.· ·What is the highest level of education that ·4· ·you've received? ·5· · · ·A.· ·Some college. ·6· · · ·Q.· ·And where did you go to college? ·7· · · ·A.· ·I went to a community college in Colorado, ·8· ·Front Range Community College, and then UNLV here in Las ·9· ·Vegas. 10· · · ·Q.· ·And did you get a degree from either of those 11· ·institutions? 12· · · ·A.· ·I did not, no. 13· · · ·Q.· ·Other than meeting with your attorney, did you 14· ·do anything to prepare for this deposition? 15· · · ·A.· ·What do you mean by "prepare"? 16· · · ·Q.· ·Did you review any documents -- 17· · · ·A.· ·Yes. 18· · · ·Q.· ·-- other than what you may have reviewed with 19· ·your attorney? 20· · · ·A.· ·Yes. 21· · · ·Q.· ·What documents did you review? 22· · · ·A.· ·I reviewed the Affiliate Manager Agreement 23· ·between North American Marketing and Proficio Mortgage 24· ·Ventures. 25· · · ·Q.· ·Did you review any other documents? Page 9 ·1· · · ·A.· ·Not in the last 24 hours or so. ·2· · · ·Q.· ·How about in the last, say, week or month? ·3· · · ·A.· ·Not in specific preparation for this lawsuit. ·4· ·I may have looked at something that, you know, could be ·5· ·relevant, but I didn't with the idea or the notion of ·6· ·preparing for this, no. ·7· · · ·Q.· ·What is your current position at Resolute Bank? ·8· · · ·A.· ·I'm the production manager. ·9· · · ·Q.· ·What does that entail in terms of job duties? 10· · · ·A.· ·Can you kind of restate that or ask me a more 11· ·specific question? 12· · · ·Q.· ·Sure.· What does a production manager at 13· ·Resolute Bank do? 14· · · ·A.· ·I manage production. 15· · · ·Q.· ·Okay.· Production of what? 16· · · ·A.· ·Mortgage loans.· Specifically reverse mortgage 17· ·loans. 18· · · ·Q.· ·Do you do any forward mortgage loans? 19· · · ·A.· ·No. 20· · · ·Q.· ·And how many people do you have working for 21· ·you? 22· · · · · · MR. CARGILL:· Object to the form. 23· · · · · · THE WITNESS:· I don't know off the top of my 24· ·head.· Approximately 15. 25· ·/// Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 4 of 102 Page 10 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·And what do those 15 people do? ·3· · · ·A.· ·They originate loans. ·4· · · ·Q.· ·Are any of them loan processors? ·5· · · ·A.· ·Not my direct reports, no. ·6· · · ·Q.· ·So they would just be involved in the sales ·7· ·aspect of -- ·8· · · ·A.· ·That's right. ·9· · · ·Q.· ·-- reverse mortgage lending? 10· · · ·A.· ·Yes. 11· · · ·Q.· ·And when did you first become involved in the 12· ·mortgage business? 13· · · ·A.· ·2001. 14· · · ·Q.· ·And who were you working for at that time? 15· · · ·A.· ·I believe my first job in the mortgage space 16· ·was with a company called NV Mortgage. 17· · · ·Q.· ·Is that the letter N-V? 18· · · ·A.· ·Yes. 19· · · ·Q.· ·Okay.· And what was your role at NV Mortgage? 20· · · ·A.· ·I was a loan officer. 21· · · ·Q.· ·And what did your duties as a loan officer 22· ·entail? 23· · · ·A.· ·Originating loans. 24· · · ·Q.· ·What do you mean when you use the phrase 25· ·"originate loans"? Page 11 ·1· · · ·A.· ·Helping a consumer obtain a mortgage loan. ·2· · · ·Q.· ·And how long were you at NV Mortgage? ·3· · · ·A.· ·I don't remember. ·4· · · ·Q.· ·Were those forward mortgages or were those ·5· ·reverse mortgages when you were at NV Loans (sic)? ·6· · · ·A.· ·Those were forward mortgages. ·7· · · ·Q.· ·And what was your next job in the mortgage ·8· ·industry? ·9· · · ·A.· ·First Source Financial. 10· · · ·Q.· ·Where were they located? 11· · · ·A.· ·They were in Henderson, Nevada. 12· · · ·Q.· ·Approximately when did you start working for 13· ·First Source Financial? 14· · · ·A.· ·Somewhere in the 2001 to 2002 time frame. 15· · · ·Q.· ·And what was your position there? 16· · · ·A.· ·I had a couple different positions. 17· · · ·Q.· ·Okay.· What was your first position? 18· · · ·A.· ·I was a loan officer. 19· · · ·Q.· ·And did you have the same duties at First Source 20· ·Financial that you did at NV Mortgage as a loan officer? 21· · · ·A.· ·Yes. 22· · · ·Q.· ·And what was your next position at First Source 23· ·Financial? 24· · · ·A.· ·It was a branch manager. 25· · · ·Q.· ·And what were your duties as a branch manager at Page 12 ·1· ·First Source Financial? ·2· · · ·A.· ·To manage the branch. ·3· · · ·Q.· ·And what does managing a branch entail? ·4· · · ·A.· ·Managing its employees, helping with its ·5· ·financials. ·6· · · ·Q.· ·So you were responsible for supervising all of ·7· ·the employees at the branch? ·8· · · ·A.· ·Not necessarily directly, but -- but yes, I had ·9· ·some responsibility for those employees at the branch. 10· · · ·Q.· ·And did you prepare financial statements for the 11· ·branch? 12· · · ·A.· ·I don't remember. 13· · · ·Q.· ·You mentioned that you managed or assisted with 14· ·the financials for the branch.· What did that entail? 15· · · ·A.· ·I really don't remember the specifics.· It was 16· ·over 15 years ago, you know. 17· · · ·Q.· ·Did you prepare profit and loss statements or 18· ·balance sheets or things of that nature? 19· · · ·A.· ·I'm sure I did some of that, sure. 20· · · ·Q.· ·Okay. 21· · · ·A.· ·The specifics of that or exactly which ones, I 22· ·don't recall. 23· · · ·Q.· ·Okay.· After you were a branch manager for First 24· ·Source Financial, what was your next position in the 25· ·mortgage industry? Page 13 ·1· · · ·A.· ·I can't say for certain.· But if my memory serves ·2· ·me correctly, the next job was as a branch manager for a ·3· ·company called Complete Home Loans. ·4· · · ·Q.· ·And when did you start at Complete Home Loans? ·5· · · ·A.· ·I don't recall. ·6· · · ·Q.· ·Give me your best estimate as to when you -- ·7· · · ·A.· ·2004. ·8· · · ·Q.· ·-- started at that position. ·9· · · ·A.· ·Sorry. 10· · · ·Q.· ·Go ahead. 11· · · ·A.· ·My best estimate of when I started at Complete 12· ·Home Loans was 2004.· Sometime during 2004. 13· · · ·Q.· ·And were your duties as a branch manager there 14· ·the same as they were for First Source Financial? 15· · · ·A.· ·Yes. 16· · · ·Q.· ·And after Complete Home Loans, what was your next 17· ·position in the mortgage industry? 18· · · ·A.· ·I don't recall. 19· · · ·Q.· ·What was the next position in the mortgage 20· ·industry that you do recall having? 21· · · ·A.· ·Branch manager for a company called Evofi One, 22· ·that's E-V-O-F-I.· Actually, that's not the case.· There 23· ·was another company before that called North American 24· ·Financial, I believe, in between Complete Home Loans 25· ·and -- and Evofi. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 5 of 102 Page 14 ·1· · · ·Q.· ·And approximately when did you begin working for ·2· ·North American Financial? ·3· · · ·A.· ·I've got almost no recollection.· My best guess, ·4· ·if you'd like me to offer that, is 2006. ·5· · · ·Q.· ·And what was your -- what were your duties at ·6· ·North American Financial? ·7· · · ·A.· ·I was a branch manager. ·8· · · ·Q.· ·And your duties were the same as they were in ·9· ·your previous branch manager positions? 10· · · ·A.· ·Yes. 11· · · ·Q.· ·And then you said you became a branch manager at 12· ·Evofi One; is that correct? 13· · · ·A.· ·Yes. 14· · · ·Q.· ·And approximately when did that -- approximately 15· ·when did you start at Evofi One? 16· · · ·A.· ·Yeah.· I don't know.· Again, if I'm -- if you'd 17· ·like me -- would you like me to estimate? 18· · · ·Q.· ·Give me your best estimate as to when you 19· ·started. 20· · · ·A.· ·2008, 2009. 21· · · ·Q.· ·And while you were at Evofi One, what type of 22· ·mortgage products were you selling? 23· · · ·A.· ·Reverse mortgage loans and some VA loans. 24· · · ·Q.· ·What is a VA loan? 25· · · ·A.· ·A loan for a veteran, military veteran. Page 15 ·1· · · ·Q.· ·Would that be a forward mortgage or a reverse ·2· ·mortgage? ·3· · · ·A.· ·Yeah.· It would be a forward mortgage. ·4· · · ·Q.· ·When did you first start selling reverse mortgage ·5· ·loans? ·6· · · ·A.· ·I don't recall. ·7· · · ·Q.· ·Can you give me your best estimate as to when you ·8· ·first started selling reverse mortgage loans? ·9· · · ·A.· ·Yes.· It would be in sequence during the time 10· ·line with my time at Complete Home Loans.· I started 11· ·dabbling in them at that time, and really got going in 12· ·reverse mortgage loans during my time at North American -- 13· ·I believe it was Financial. 14· · · ·Q.· ·So about 2006 then? 15· · · ·A.· ·If that's what I stated before as my -- yeah, I 16· ·started dabbling in 2006. 17· · · ·Q.· ·Have you ever heard of a company called North 18· ·American Marketing? 19· · · ·A.· ·Yes. 20· · · ·Q.· ·What is North American Marketing? 21· · · ·A.· ·That's a consulting company and a marketing 22· ·company.· Marketing and consulting company. 23· · · ·Q.· ·When was North American Marketing formed? 24· · · ·A.· ·I don't recall. 25· · · ·Q.· ·Can you give me your best estimate? Page 16 ·1· · · ·A.· ·Should be something we could figure out. I ·2· ·would -- my best guess would be 2006. ·3· · · ·Q.· ·And did you work for North American Marketing? ·4· · · ·A.· ·I founded North American Marketing. ·5· · · ·Q.· ·Were you one of the owners of North American ·6· ·Marketing? ·7· · · ·A.· ·Yes. ·8· · · ·Q.· ·What was the extent of your interest in North ·9· ·American Marketing? 10· · · · · · MR. CARGILL:· Object to the form. 11· · · · · · THE WITNESS:· At what time? 12· ·BY MR. LEECH: 13· · · ·Q.· ·When it was founded. 14· · · ·A.· ·I don't remember. 15· · · ·Q.· ·Were there any other cofounders of North American 16· ·Marketing? 17· · · ·A.· ·I don't remember. 18· · · ·Q.· ·So you don't remember if you had any partners 19· ·when North American Marketing was formed? 20· · · ·A.· ·No.· I don't remember the specifics of it, no. I 21· ·know my father, Ron Ohlhausen, was a partner at -- or 22· ·helped in forming the business.· Whether he was actually 23· ·officially a financial partner, I'd have to go back to 24· ·the -- the legal documents and recall. 25· · · ·Q.· ·What sort of services did North American Page 17 ·1· ·Marketing perform? ·2· · · ·A.· ·Marketing and consulting services. ·3· · · ·Q.· ·What type of marketing services? ·4· · · ·A.· ·It would -- it would help mortgage companies ·5· ·market to prospective mortgage clients in a variety of ·6· ·different ways. ·7· · · ·Q.· ·What specific ways did it help mortgage companies ·8· ·market to prospective mortgage clients? ·9· · · ·A.· ·Radio, television, direct mail, outbound 10· ·telemarketing, data procurement, data harvesting, 11· ·Internet-based marketing techniques.· That list is not 12· ·meant to be inclusive.· It's possible that there were many 13· ·other ways it helped.· I just can't recall. 14· · · ·Q.· ·So you don't recall any other ways it assisted in 15· ·marketing? 16· · · ·A.· ·Off the top of my head today right now, no. 17· · · ·Q.· ·When you say radio and TV, would those be 18· ·advertisements? 19· · · ·A.· ·Sure, yes. 20· · · ·Q.· ·And then I believe you also mentioned outbound 21· ·telemarketing.· Explain to me how that worked. 22· · · ·A.· ·At what point in time? 23· · · ·Q.· ·Start with '06. 24· · · ·A.· ·I don't believe we were doing any in 2006. 25· · · ·Q.· ·When you first started -- strike that. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 6 of 102 Page 18 ·1· · · · · · When did North American Marketing first start ·2· ·engaging in outside telemarketing? ·3· · · ·A.· ·I don't recall. ·4· · · ·Q.· ·You mentioned data procurement.· What type of ·5· ·data did North American Marketing procure? ·6· · · ·A.· ·Qualified -- it attempted to procure qualified ·7· ·mortgage applicants. ·8· · · ·Q.· ·What is a qualified mortgage applicant? ·9· · · ·A.· ·Somebody that qualifies for a specific mortgage 10· ·product. 11· · · ·Q.· ·And what type of mortgage products was North 12· ·American Marketing in 2006? 13· · · ·A.· ·In 2006 reverse mortgage loans and we may have 14· ·done some VA loans. 15· · · ·Q.· ·What are the qualifications to obtain a reverse 16· ·mortgage? 17· · · · · · MR. CARGILL:· Object to the form. 18· · · · · · THE WITNESS:· You have to be at least 62. 19· ·BY MR. LEECH: 20· · · ·Q.· ·Any others? 21· · · ·A.· ·There's some financial assessment qualifications 22· ·now.· You must own a home.· You must have sufficient 23· ·equity in your home or be able to pay down the equity or 24· ·pay down the loan balance that you have.· Must be a US 25· ·resident, US citizen. Page 19 ·1· · · ·Q.· ·Any other qualifications? ·2· · · ·A.· ·Not that I can think of. ·3· · · ·Q.· ·So one of the services North American Marketing ·4· ·was performing was to identify individuals who met that ·5· ·criteria that you just discussed that might be interested ·6· ·in obtaining a reverse mortgage; correct? ·7· · · ·A.· ·Yes. ·8· · · ·Q.· ·And how did North American Marketing go about ·9· ·identifying such individuals? 10· · · ·A.· ·It was a variety of ways that -- that a future 11· ·partner could speak to better than myself.· So help me -- 12· ·you know, ask a more specific question, time line for 13· ·specific loan product, et cetera, et cetera.· I think I 14· ·can try to give you an answer. 15· · · ·Q.· ·Well, let's start with 2006 for reverse mortgage 16· ·loans.· How did North American Marketing go about 17· ·identifying qualified individuals who might be interested 18· ·in that product? 19· · · ·A.· ·I don't remember exactly what our -- what our, 20· ·you know, standards were or what our approach was 11 years 21· ·ago. 22· · · ·Q.· ·Did the ownership of North American Marketing 23· ·change over time? 24· · · ·A.· ·Yes. 25· · · ·Q.· ·When did it first change? Page 20 ·1· · · ·A.· ·I don't remember. ·2· · · ·Q.· ·What was the first change in ownership that you ·3· ·do remember? ·4· · · ·A.· ·Are you asking for what the change was or the ·5· ·time -- time period, the period of time? ·6· · · ·Q.· ·For now the period of time. ·7· · · ·A.· ·I don't remember. ·8· · · ·Q.· ·What was the type of change? ·9· · · ·A.· ·Switched ownership. 10· · · ·Q.· ·Did a new partner come in?· Did you sell the 11· ·company?· What happened? 12· · · ·A.· ·A new partner came in. 13· · · ·Q.· ·Who was the new partner? 14· · · ·A.· ·Scott Guild. 15· · · ·Q.· ·Was Scott Guild ever an employee of North 16· ·American Marketing prior to becoming a partner? 17· · · ·A.· ·I don't remember. 18· · · ·Q.· ·Was North American Marketing ever licensed to 19· ·sell financial products or services? 20· · · ·A.· ·I don't remember. 21· · · ·Q.· ·At any point in time? 22· · · ·A.· ·Yeah, I don't remember.· It could have been.· It 23· ·certainly could have been, but I don't remember. 24· · · ·Q.· ·Was it ever registered as a lead generation 25· ·company in any state? Page 21 ·1· · · ·A.· ·I don't believe so. ·2· · · ·Q.· ·Was North American Marketing ever licensed to ·3· ·originate mortgage loans? ·4· · · · · · MR. CARGILL:· Just objection to the extent it ·5· ·calls for a legal interpretation. ·6· · · · · · THE WITNESS:· I think I just answered that also, ·7· ·but I don't remember. ·8· ·BY MR. LEECH: ·9· · · ·Q.· ·Did North American Marketing ever originate 10· ·mortgage loans? 11· · · ·A.· ·I don't remember. 12· · · ·Q.· ·At any time including the present? 13· · · ·A.· ·It does not today, no.· I'm certain of that.· Or 14· ·in the last five-plus years, five, six, seven years, I can 15· ·assure you that it does not or has not originated mortgage 16· ·loans. 17· · · ·Q.· ·So approximately, to the best of your 18· ·recollection, when did Scott Guild ever become -- when did 19· ·Scott Guild become a partner in North American Marketing? 20· · · ·A.· ·Again, I don't remember.· To the best of my 21· ·recollection, 2011 time frame, 2012.· Sometime in there. 22· · · ·Q.· ·Were there any other ownership changes besides 23· ·Mr. Guild coming in to the ownership group? 24· · · ·A.· ·Ronald Hausen was removed. 25· · · ·Q.· ·Approximately when was Ronald Hausen removed? Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 7 of 102 Page 22 ·1· · · ·A.· ·I don't remember.· Approximately 2012. ·2· · · ·Q.· ·Was he removed at the same time Mr. Guild came in ·3· ·as an owner or before or after? ·4· · · ·A.· ·I don't remember.· My recollection, my best guess ·5· ·is the same time. ·6· · · ·Q.· ·You mentioned that North American Marketing ·7· ·performed data harvesting.· What type of data did it ·8· ·harvest? ·9· · · ·A.· ·It harvested records of consumers in America that 10· ·may or may not have had a mortgage loan. 11· · · ·Q.· ·And how did it go about obtaining those records? 12· · · ·A.· ·Multiple ways. 13· · · ·Q.· ·What ways specifically? 14· · · ·A.· ·It would buy lead lists or -- or names from 15· ·various companies. 16· · · ·Q.· ·What were those companies? 17· · · ·A.· ·I don't remember. 18· · · ·Q.· ·Were they title companies? 19· · · ·A.· ·Could have been a title company, sure. 20· · · ·Q.· ·Other marketing companies? 21· · · ·A.· ·Yes. 22· · · ·Q.· ·Any other category of company that you remember 23· ·doing business with? 24· · · ·A.· ·Not off the top of my head.· Again, we're going 25· ·back 11 years, so I can't remember every transaction that Page 23 ·1· ·we ever did.· That was our business was to -- you know, ·2· ·one of the main things in our business was to -- to obtain ·3· ·and identify the most qualified and the most interested ·4· ·mortgage candidates.· So on a daily basis, I was looking ·5· ·into ways to try to obtain a different -- from different ·6· ·companies and different sources.· So there would have been ·7· ·other, yeah, sources that I used, but I can't recall them ·8· ·off the top of my head. ·9· · · ·Q.· ·Other than buying lead lists, how did North 10· ·American Marketing go about obtaining customer records? 11· · · ·A.· ·Again, I just answered that.· I can't recall any 12· ·other -- any other companies or any other, you know, 13· ·various ways that we obtained the raw data. 14· · · ·Q.· ·So the only method that you recall is buying lead 15· ·lists from other companies? 16· · · ·A.· ·Buying lead lists or -- yeah.· Yes. 17· · · ·Q.· ·What was your title when you worked for North 18· ·American Marketing? 19· · · ·A.· ·I was secretary. 20· · · ·Q.· ·Do you recall who the president of North American 21· ·Marketing was? 22· · · ·A.· ·I don't. 23· · · ·Q.· ·And by "secretary," I assume you mean you were 24· ·the corporate secretary? 25· · · ·A.· ·Yes. Page 24 ·1· · · ·Q.· ·Did you have any other titles or positions at ·2· ·North American Marketing at any time? ·3· · · ·A.· ·I may have, but I don't recall what they were or ·4· ·when they were. ·5· · · ·Q.· ·And as the corporate secretary, what were your ·6· ·duties at North American Marketing? ·7· · · ·A.· ·Various administrative tasks. ·8· · · ·Q.· ·What administrative tasks specifically? ·9· · · ·A.· ·Reviewing contracts and documents.· Signing them, 10· ·executing them.· I also helped with the day-to-day 11· ·management of the company. 12· · · ·Q.· ·Who else was involved in the day-to-day 13· ·management of the company? 14· · · ·A.· ·Scott Guild. 15· · · ·Q.· ·Anyone else? 16· · · ·A.· ·No. 17· · · ·Q.· ·How many people worked for North American 18· ·Marketing in 2012? 19· · · ·A.· ·I don't recall. 20· · · ·Q.· ·What's your best approximation? 21· · · ·A.· ·Two. 22· · · ·Q.· ·And would those individuals have been yourself 23· ·and Scott Guild? 24· · · ·A.· ·Yes. 25· · · ·Q.· ·How about in 2013? Page 25 ·1· · · ·A.· ·No.· No change to that. ·2· · · ·Q.· ·2014? ·3· · · ·A.· ·Same. ·4· · · ·Q.· ·Is North American Marketing currently in ·5· ·business? ·6· · · ·A.· ·No. ·7· · · ·Q.· ·When did North American Marketing cease doing ·8· ·business? ·9· · · ·A.· ·2015/2016. 10· · · ·Q.· ·In 2015/2016 how employees did North American 11· ·Marketing have? 12· · · ·A.· ·I don't know if it had any employees at that 13· ·time.· No more than Scott and myself, and I don't believe 14· ·either one of us were employees in 2015 or '16. 15· · · · · · That's only page one?· You've got all those 16· ·pages. 17· · · ·Q.· ·Now, you mentioned that you were in the business 18· ·of identifying prospective candidates who qualified, 19· ·potentially qualified for a mortgage product.· To whom did 20· ·North American Marketing sell this information to? 21· · · · · · MR. CARGILL:· Object to the form. 22· · · · · · THE WITNESS:· What time frame? 23· ·BY MR. LEECH: 24· · · ·Q.· ·Let's start with 2006. 25· · · ·A.· ·I don't recall specifically. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 8 of 102 Page 26 ·1· · · ·Q.· ·Do you recall approximately how many customers ·2· ·North American Marketing had? ·3· · · ·A.· ·In 2006? ·4· · · ·Q.· ·In 2006 for now. ·5· · · ·A.· ·No. ·6· · · ·Q.· ·How about 2007? ·7· · · ·A.· ·I don't recall. ·8· · · ·Q.· ·2008? ·9· · · ·A.· ·I don't recall. 10· · · ·Q.· ·Was it one customer, more than one customer in 11· ·the 2006-2008 time frame? 12· · · · · · MR. CARGILL:· Objection.· Asked and answered. 13· · · · · · THE WITNESS:· I don't recall. 14· ·BY MR. LEECH: 15· · · ·Q.· ·How about 2009, how many customers or clients did 16· ·North American Marketing have? 17· · · ·A.· ·I don't recall. 18· · · ·Q.· ·In 2010 how many customers or clients did North 19· ·American Marketing have, to the best of your recollection? 20· · · ·A.· ·I don't recall.· Less than -- less than a 21· ·handful.· Less than five. 22· · · ·Q.· ·In 2000 -- strike that. 23· · · · · · In 2009 or 2010 did North American Marketing 24· ·provide its services exclusively to one customer, or did 25· ·it do business with multiple customers? Page 27 ·1· · · ·A.· ·I don't recall. ·2· · · ·Q.· ·In 2011 approximately how many customers or ·3· ·clients did North American Marketing have? ·4· · · ·A.· ·I don't recall. ·5· · · ·Q.· ·And in 2011 did it deal exclusively with one ·6· ·customer, or did it have multiple customers? ·7· · · ·A.· ·I believe it had multiple customers. ·8· · · ·Q.· ·In 2012 did -- how many -- strike that. ·9· · · · · · How many customers did North American Marketing 10· ·have in 2012? 11· · · ·A.· ·I don't recall. 12· · · ·Q.· ·And did it -- did it have more than one? 13· · · ·A.· ·I don't recall.· It could have had more than one. 14· · · ·Q.· ·Do you recall whether North American Marketing 15· ·dealt exclusively with any particular customer in 2012 or 16· ·if it had multiple customers? 17· · · ·A.· ·I don't recall during that specific time frame, 18· ·no, if it was in an exclusive relationship or if it had 19· ·multiple customers. 20· · · ·Q.· ·And how about 2013, how many different customers 21· ·or clients did North American Marketing have? 22· · · ·A.· ·I don't recall. 23· · · ·Q.· ·Do you recall whether it was dealing exclusively 24· ·with one customer/client, or did it have multiple 25· ·customers or clients? Page 28 ·1· · · ·A.· ·I do not know. ·2· · · ·Q.· ·Approximately how many customers or clients did ·3· ·North American Marketing have in 2014? ·4· · · ·A.· ·I don't recall. ·5· · · ·Q.· ·Then do you recall whether it was dealing ·6· ·exclusively with one customer or with multiple customers ·7· ·in 2014? ·8· · · ·A.· ·I don't know for sure, no. ·9· · · ·Q.· ·And in 2015 how many customers did North American 10· ·Marketing have? 11· · · ·A.· ·I don't recall. 12· · · ·Q.· ·And in 2015 did it deal exclusively with any 13· ·particular customer, or did it have multiple customers? 14· · · ·A.· ·Again, I don't recall. 15· · · ·Q.· ·And do you recall if North American Marketing had 16· ·any customers in 2016? 17· · · ·A.· ·I do not believe that it had any customers in 18· ·2016. 19· · · ·Q.· ·Did North American Marketing ever provide 20· ·services for Evofi One? 21· · · ·A.· ·I don't recall. 22· · · ·Q.· ·I believe you testified earlier that you were a 23· ·branch manager while you were at Evofi One; is that 24· ·correct? 25· · · ·A.· ·Yes. Page 29 ·1· · · ·Q.· ·Did part of your duties as a branch manager at ·2· ·Evofi One include identifying prospective mortgage loan ·3· ·customers? ·4· · · ·A.· ·Yes. ·5· · · ·Q.· ·Did your activities with North American Marketing ·6· ·in any way interfere with your ability to identify ·7· ·customers for Evofi One? ·8· · · ·A.· ·I don't believe so, no. ·9· · · ·Q.· ·Now, when you were at Evofi One, what steps did 10· ·you take to identify prospective customers for Evofi One? 11· · · ·A.· ·I don't recall all the steps.· We're talking, 12· ·again, about over 10 or 11 years ago.· It would have been 13· ·similar to the stuff that we've already talked about, 14· ·television, radio, Internet.· You know, again, time frame 15· ·is limited -- or my memory is limited because the time 16· ·frame is so -- so far back.· But again, it was a large 17· ·part of my job, so it would have been anything and 18· ·everything that I could have thought of to -- to identify 19· ·potentially qualified and interested mortgage candidates. 20· · · ·Q.· ·So you were performing the same basic functions 21· ·at North American Marketing as you were doing for Evofi 22· ·One? 23· · · ·A.· ·No. 24· · · ·Q.· ·How were they different? 25· · · ·A.· ·Evofi One was much more, I believe, expansive. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 9 of 102 Page 30 ·1· ·The North American Marketing at that time or in previous ·2· ·times was limited to marketing.· You know, subsequent -- ·3· ·or after that there was some consulting going on, but at ·4· ·Evofi I had -- I had managerial and supervisor roles as ·5· ·well in addition to marketing roles. ·6· · · ·Q.· ·So focusing, though, specifically on your ·7· ·marketing role at Evofi One, the services you performed in ·8· ·that role were the same as the services you were ·9· ·performing for North American Marketing; correct? 10· · · ·A.· ·At what time frame? 11· · · ·Q.· ·While you were at Evofi One. 12· · · ·A.· ·Again, I don't know that North American Marketing 13· ·had any customers during the period that I was at Evofi 14· ·One.· Again, I don't remember.· It could have, but I don't 15· ·remember.· If it had any customers and those customers 16· ·were similar to previous customers and future customers, 17· ·then the roles would have been similar, yes. 18· · · ·Q.· ·Did you have permission from Evofi One to provide 19· ·mortgage lead information to other customers? 20· · · · · · MR. CARGILL:· Object to the form. 21· · · · · · THE WITNESS:· Can you restate the question? 22· ·BY MR. LEECH: 23· · · ·Q.· ·Sure.· Was Evofi One aware that you were -- that 24· ·you had founded and were operating a marketing company? 25· · · ·A.· ·I don't recall. Page 31 ·1· · · ·Q.· ·Did you ever tell them? ·2· · · ·A.· ·I don't recall. ·3· · · ·Q.· ·Did they ever give your permission -- or strike ·4· ·that. ·5· · · · · · Did they ever give you permission to operate -- ·6· ·to provide similar services to other customers that you ·7· ·were providing to Evofi One? ·8· · · ·A.· ·I don't recall. ·9· · · ·Q.· ·Was your employment at Evofi One full-time 10· ·employment? 11· · · ·A.· ·I don't recall. 12· · · ·Q.· ·Do you recall if you had a written contract with 13· ·Evofi One? 14· · · ·A.· ·I do not -- I believe I do, but I don't recall. 15· · · ·Q.· ·You believe you did have a written employment 16· ·contract with Evofi One but you're not certain? 17· · · ·A.· ·Yes. 18· · · ·Q.· ·Approximately how long did you work for Evofi 19· ·One? 20· · · ·A.· ·I don't recall.· Approximately, you said, you 21· ·know -- what was the dates I gave you earlier?· 2009 and 22· ·then I started at -- at -- I started at -- I don't think 23· ·you asked me what I did after Evofi One.· So 2009 until 24· ·approximately 2011.· Two years, two and a half years, 25· ·would be my best guess. Page 32 ·1· · · ·Q.· ·And after -- strike that. ·2· · · · · · Why did you stop working for Evofi One? ·3· · · ·A.· ·Career advancement. ·4· · · ·Q.· ·What was your next position in the mortgage ·5· ·industry after you stopped working at North American ·6· ·Marketing? ·7· · · ·A.· ·I was an employee.· I don't remember -- ·8· · · · · · MR. CARGILL:· Object to the form.· You said after ·9· ·he stopped at North American Marketing.· I don't know if 10· ·that's what you meant. 11· · · · · · MR. LEECH:· Strike that.· Thank you, Counsel. 12· ·BY MR. LEECH: 13· · · ·Q.· ·What was your next position in the mortgage 14· ·industry after you stopped working at Evofi One? 15· · · ·A.· ·Thank you.· I don't recall my specific position, 16· ·but I was an employee at First National Bank of Layton. 17· · · ·Q.· ·Was Evofi One still operating at the time you 18· ·went to First National Bank of Layton? 19· · · ·A.· ·Yes. 20· · · ·Q.· ·What was your -- strike that. 21· · · · · · What were your job duties at First National Bank 22· ·of Layton? 23· · · ·A.· ·Similar to previous job duties.· Marketing, 24· ·management, recruitment. 25· · · ·Q.· ·Did you have recruitment responsibilities at Page 33 ·1· ·Evofi One? ·2· · · ·A.· ·Yes. ·3· · · ·Q.· ·So you mentioned you left Evofi One for career ·4· ·advancement.· What specific -- strike that. ·5· · · · · · In what specific ways did your -- did the change ·6· ·in job to First National Bank of Layton advance your ·7· ·career? ·8· · · ·A.· ·It was a broader opportunity.· It went from a ·9· ·state chartered -- or state licensed mortgage bank that 10· ·was licensed in 18 or 19 states to a federally chartered 11· ·financial institution. 12· · · ·Q.· ·What's the difference between a state chartered 13· ·and a federal chartered financial institution, to the best 14· ·of your knowledge? 15· · · ·A.· ·There's tens of thousands of differences.· The 16· ·things that were most relevant to me at that time as an 17· ·originator, a branch manager in the mortgage business was 18· ·really threefold.· Licensing platform, a federally 19· ·chartered bank had licensing preemption.· It was 20· ·preemptive from individual states.· Whereas a state 21· ·licensed mortgage bank was not.· Cost of funds was another 22· ·big one.· A state licensed mortgage bank had to go out and 23· ·acquire warehouse lines or some sort of funding that 24· ·typically had a higher cost of funds, and the financial 25· ·institution is depositor based.· I know I said there was Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 10 of 102 Page 34 ·1· ·three main differences, but those are the two that I can ·2· ·recall off the top of my head or that I focused on and ·3· ·that I have focused on. ·4· · · ·Q.· ·Any other major differences that you can recall? ·5· · · ·A.· ·No.· Those are the two biggest ones. ·6· · · ·Q.· ·Did North American Marketing provide services to ·7· ·First National Bank of Layton? ·8· · · ·A.· ·I believe it did, yes. ·9· · · ·Q.· ·Did it have a written contract with First 10· ·National Bank of Layton? 11· · · ·A.· ·I don't recall. 12· · · ·Q.· ·What services did North American Marketing 13· ·provide for First National Bank of Layton? 14· · · ·A.· ·I don't recall specifically.· But, you know, top 15· ·of my head, it would have been marketing-related services. 16· · · ·Q.· ·Did it provide management services? 17· · · ·A.· ·No. 18· · · ·Q.· ·But you personally provided management services 19· ·to First National Bank of Layton? 20· · · · · · MR. CARGILL:· Object to the form. 21· · · · · · THE WITNESS:· Can you ask -- so can you clarify 22· ·that?· In other words, did I provide that as an employee 23· ·of North American or as an employee of First National 24· ·Bank? 25· ·/// Page 35 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·As an employee of First National Bank, did you ·3· ·provide management services for First National Bank of ·4· ·Layton? ·5· · · ·A.· ·Yes, I did. ·6· · · ·Q.· ·Did North American Marketing identify prospective ·7· ·customers for First National Bank of Layton? ·8· · · ·A.· ·I believe it did, yes. ·9· · · ·Q.· ·Was that one of your roles as an employee of 10· ·First National Bank of Layton? 11· · · ·A.· ·I don't understand your question. 12· · · ·Q.· ·Was identifying prospective customers one of your 13· ·duties as an employee of First National Bank of Layton? 14· · · ·A.· ·Sure, yes. 15· · · ·Q.· ·So how was North American Marketing performing 16· ·those duties? 17· · · ·A.· ·My job as a -- you know, as a manager at First 18· ·National Bank of Layton was to obtain mortgage leads, you 19· ·know, by any legal means necessary.· North American 20· ·Marketing, a marketing and consulting company, was one of 21· ·those means.· There are multiple other means as well. 22· · · ·Q.· ·What other means were available to identify 23· ·prospective mortgage customers? 24· · · ·A.· ·There were thousands of other mortgage-based lead 25· ·generation companies.· There were individual loan officers Page 36 ·1· ·that would go out and network through their sphere of ·2· ·influence.· Referral partners, contacts, you know, ·3· ·financial consulting firms, real estate agents, et cetera, ·4· ·et cetera. ·5· · · ·Q.· ·You mentioned thousands of other mortgage lead ·6· ·companies.· What sort of information could be obtained ·7· ·from those companies? ·8· · · ·A.· ·I don't know what companies specifically you're ·9· ·talking about. 10· · · ·Q.· ·Let's say title companies. 11· · · ·A.· ·Are you asking me to speculate or trying to 12· ·remember, to the best of my memory, what specific title 13· ·company?· I mean, the question is so broad.· Can you reask 14· ·it and I'll do my best job to answer it? 15· · · ·Q.· ·Sure.· To the best of your recollection, what 16· ·type of mortgage lead information could be obtain from 17· ·title companies when you worked at First National Bank of 18· ·Layton? 19· · · ·A.· ·To the best of my recollection, it would be 20· ·fairly, you know, public information, name, address, 21· ·certain information about when the loan was originated, 22· ·where the loan was originated, certain mortgage details, 23· ·mortgage facts in terms of, you know, how much the 24· ·original mortgage was for.· I think that's about it. 25· · · ·Q.· ·Okay.· Anything else that you can remember? Page 37 ·1· · · ·A.· ·From title companies, no. ·2· · · ·Q.· ·What about from other sources besides title ·3· ·companies? ·4· · · ·A.· ·Sure.· So other sources, that would be more of ·5· ·a -- kind of a raw individual.· Other sources could be ·6· ·things like they've expressed some sort of interest. ·7· ·They've filled out some sort of form online or in person ·8· ·where they've expressed an interest in a specific product. ·9· ·So you could get to a customer's better, you know, 10· ·interest, ability, interest and ability.· There might be 11· ·other -- other information from various lead companies 12· ·that have harvested that raw data from a title company and 13· ·whittled it down to finding more qualified people as well. 14· · · ·Q.· ·And all of that was available from lead 15· ·generation companies that you would do business with? 16· · · ·A.· ·No.· Some of that was available from various 17· ·different lead generation companies, sure.· They all have 18· ·a specific service or ability.· Some would say that they 19· ·could do certain things and then after purchasing leads 20· ·from them, we would prove, you know, it wasn't the case. 21· ·Either leads weren't qualified or the consumers weren't 22· ·interested.· It was a constant -- unfortunately, it was a 23· ·constant game of trying to find good lead vendors, 24· ·something that, you know, started early in my career and 25· ·really hasn't stopped to this day. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 11 of 102 Page 38 ·1· · · ·Q.· ·Did North American Marketing provide lead lists ·2· ·to First National Bank of Layton? ·3· · · ·A.· ·What do you mean by "lead lists"? ·4· · · ·Q.· ·Lists of prospective mortgage customers. ·5· · · ·A.· ·I don't know if they provided lists.· It ·6· ·certainly provided individual, you know, names and records ·7· ·and things along those lines.· Whether that was in a list ·8· ·form or not, I don't recall. ·9· · · ·Q.· ·What other form could it have been in? 10· · · ·A.· ·An individual name.· Potentially a phone calling 11· ·or a piece of mail out, so a consumer could have called 12· ·out.· North American could have -- and I don't recall if 13· ·it did, but North American could have originated a piece 14· ·of mail on First National Bank's behalf and that customer 15· ·could have called me. 16· · · ·Q.· ·Did North American Marketing provide any 17· ·recruitment services for First National Bank of Layton? 18· · · ·A.· ·Not that I recall. 19· · · ·Q.· ·Could it provide any loan processing services -- 20· · · ·A.· ·Not that I recall. 21· · · ·Q.· ·-- to -- strike that.· Sorry.· I'm going to have 22· ·to reask it so we're clear. 23· · · · · · Did North American Marketing provide any loan 24· ·processing services to First National Bank of Layton? 25· · · ·A.· ·Not that I can recall. Page 39 ·1· · · ·Q.· ·Did North American Marketing directly solicit ·2· ·customers for First National Bank of Layton? ·3· · · · · · MR. CARGILL:· Object to the form. ·4· · · · · · THE WITNESS:· Not that I can recall. ·5· ·BY MR. LEECH: ·6· · · ·Q.· ·And did North American Marketing provide -- ·7· ·strike that. ·8· · · · · · Did North American Marketing work to place closed ·9· ·mortgage loans in the secondary market on behalf of First 10· ·National Bank of Layton? 11· · · ·A.· ·Elaborate on that question.· What do you mean by 12· ·"work to place"?· What does that mean? 13· · · ·Q.· ·Let me back up.· Once a loan is closed, what did 14· ·First National Bank of Layton do with that loan?· Did it 15· ·carry it on its books, or did it sell it to investors on 16· ·the secondary market? 17· · · ·A.· ·It sold it to investors on the secondary market 18· ·most of the time, if not all the time. 19· · · ·Q.· ·Did North American Marketing play any role in 20· ·those sales? 21· · · ·A.· ·No, it did not. 22· · · ·Q.· ·So the sole services that North American 23· ·Marketing provided to First National Bank of Layton would 24· ·have been lead identification? 25· · · ·A.· ·To the best of my memory, yes. Page 40 ·1· · · ·Q.· ·Was First National Bank of Layton aware that you ·2· ·had an ownership interest in North American Marketing? ·3· · · ·A.· ·I believe it was, yes. ·4· · · ·Q.· ·Did it give you permission to operate the ·5· ·separate consulting company that provided the same ·6· ·services that you were obligated to provide to First ·7· ·National Bank of Layton? ·8· · · · · · MR. CARGILL:· Object to the form. ·9· · · · · · THE WITNESS:· Ask me the question again, please. 10· ·Can you repeat it? 11· ·BY MR. LEECH: 12· · · ·Q.· ·Your role at First National Bank of Layton -- 13· · · ·A.· ·Yes. 14· · · ·Q.· ·-- included lead identification, identifying 15· ·prospective mortgage customers; correct? 16· · · ·A.· ·Yes. 17· · · ·Q.· ·North American Marketing provided that same 18· ·service; correct? 19· · · ·A.· ·Yes. 20· · · ·Q.· ·Did First National Bank of Layton give you 21· ·permission to operate a company that provided the same 22· ·service that you were already in theory providing to them 23· ·as an employee of First National Bank of Layton? 24· · · · · · MR. CARGILL:· Object to the form. 25· · · · · · THE WITNESS:· I don't recall. Page 41 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·Do you think First National Bank of Layton would ·3· ·have had a problem with you essentially outsourcing duties ·4· ·to yourself that you were already obliged to perform? ·5· · · · · · MR. CARGILL:· Object to the form. ·6· · · · · · THE WITNESS:· I don't know what they think.· You ·7· ·know, I don't know what they would or wouldn't have.· So ·8· ·no, I don't -- but I don't believe they would have. ·9· ·BY MR. LEECH: 10· · · ·Q.· ·Did you expressly disclose that you had an 11· ·interest in this company that was doing business with 12· ·First National Bank of Layton? 13· · · ·A.· ·I don't know. 14· · · · · · MR. CARGILL:· Objection.· Asked and answered. 15· · · · · · MR. LEECH:· Can we take a quick break, Tom? 16· · · · · · MR. CARGILL:· Yeah.· Let's take a few minutes. 17· · · · · · (Recess taken 9:55 a.m. to 10:03 a.m.) 18· ·BY MR. LEECH: 19· · · ·Q.· ·When you worked at First National Bank of Layton, 20· ·who was the person that you reported to? 21· · · ·A.· ·Jonathan Pocock. 22· · · ·Q.· ·What was Mr. Pocock's job title? 23· · · ·A.· ·I don't remember. 24· · · ·Q.· ·When you transitioned from Evofi One to First 25· ·National Bank of Layton, did you bring any lead Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 12 of 102 Page 42 ·1· ·information from Evofi One to First National Bank of ·2· ·Layton? ·3· · · ·A.· ·Not that I can recall. ·4· · · ·Q.· ·Was there anything that would refresh your ·5· ·recollection on that point? ·6· · · · · · MR. CARGILL:· Object to the form. ·7· · · · · · THE WITNESS:· Sure.· If you showed me something ·8· ·showing me that I did, that would refresh my recollection. ·9· ·BY MR. LEECH: 10· · · ·Q.· ·Anything else? 11· · · ·A.· ·No. 12· · · ·Q.· ·Did North American Marketing provide First 13· ·National Bank of Layton with any lead information that it 14· ·had previously provided to Evofi One? 15· · · ·A.· ·No. 16· · · ·Q.· ·You're certain of that? 17· · · · · · MR. CARGILL:· Object to the form. 18· · · · · · THE WITNESS:· So to clarify, it's possible that 19· ·North American Marketing provided to Evofi if it was -- if 20· ·it even did any business with Evofi, which I don't recall, 21· ·a specific customer that may have been on a list of 22· ·customers that may have already also been produced -- the 23· ·single customer may have been produced to First National 24· ·Bank of Layton.· But I -- I don't recall any specifics of 25· ·that and that's only a possibility.· I don't believe that Page 43 ·1· ·ever happened. ·2· ·BY MR. LEECH: ·3· · · ·Q.· ·Was it North American Marketing's practice to ·4· ·provide the same customer information to multiple ·5· ·customers of North American Marketing? ·6· · · ·A.· ·It was not, no. ·7· · · · · · MR. CARGILL:· Object to the form. ·8· ·BY MR. LEECH: ·9· · · ·Q.· ·But it's possible that it did? 10· · · ·A.· ·It's possible that it did what? 11· · · ·Q.· ·Provide the same customer infor- -- the same -- 12· ·strike that. 13· · · · · · It's possible that it provided the same 14· ·prospective customer information to other -- to multiple 15· ·North American Marketing customers? 16· · · · · · MR. CARGILL:· Objection.· That misstates 17· ·testimony. 18· · · · · · THE WITNESS:· Unintentionally it's possible, 19· ·sure. 20· ·BY MR. LEECH: 21· · · ·Q.· ·Did North American Marketing take any steps to 22· ·make sure it wouldn't provide the same prospective lead 23· ·information to different customers? 24· · · · · · MR. CARGILL:· Object to the form.· Are you 25· ·talking about different customers at the same time? Page 44 ·1· · · · · · MR. LEECH:· Different customers, period. ·2· · · · · · MR. CARGILL:· Okay. ·3· ·BY MR. LEECH: ·4· · · ·Q.· ·You can answer. ·5· · · ·A.· ·The question was what?· Can you repeat it, ·6· ·please? ·7· · · · · · MR. LEECH:· Can you read the question back? ·8· · · · · · (Record read) ·9· · · · · · THE WITNESS:· Yes. 10· ·BY MR. LEECH: 11· · · ·Q.· ·What steps did it take? 12· · · ·A.· ·I don't remember all the steps. 13· · · ·Q.· ·What steps do you remember? 14· · · ·A.· ·At least one step would be that North American 15· ·Marketing was constantly refreshing customer information. 16· · · ·Q.· ·North American Marketing was constantly 17· ·refreshing its prospective lead information? 18· · · ·A.· ·Its customer information.· Prospective lead 19· ·information, customer information, yes.· Prospective 20· ·customer information. 21· · · ·Q.· ·And how would that preclude the same customer 22· ·information from being shared with other North American 23· ·Marketing customers? 24· · · ·A.· ·Because it would be a new raw data set.· We would 25· ·go out and procure raw data that would not have all the Page 45 ·1· ·same information that the whole raw data had in it.· Then ·2· ·we would extract and identify multiple other ways to ·3· ·determine if that lead was more qualified and more ·4· ·interested than it was when we first obtained that raw ·5· ·data set. ·6· · · ·Q.· ·But would the raw -- would there be any overlap ·7· ·between the raw data sets? ·8· · · ·A.· ·There could be, sure. ·9· · · ·Q.· ·So if there's overlap, then the same prospective 10· ·customer information could be provided -- 11· · · ·A.· ·It's possible. 12· · · ·Q.· ·-- to multiple customers? 13· · · ·A.· ·It's possible. 14· · · · · · MR. CARGILL:· Object to the form. 15· ·BY MR. LEECH: 16· · · ·Q.· ·Did it take any other steps to make sure that 17· ·cus- -- that prospective lead information was only 18· ·provided to one North American Marketing customer? 19· · · · · · MR. CARGILL:· Object to the form. 20· · · · · · THE WITNESS:· Yes. 21· ·BY MR. LEECH: 22· · · ·Q.· ·What other steps? 23· · · ·A.· ·Naming conventions and data storage conventions. 24· · · ·Q.· ·What's a naming convention? 25· · · ·A.· ·Obtaining, you know, for instance, a naming Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 13 of 102 Page 46 ·1· ·convention, as I used it, it might be something like lead ·2· ·list for Evofi One, or lead list for First National Bank ·3· ·of Layton. ·4· · · ·Q.· ·You mentioned data storage conventions. ·5· · · ·A.· ·Same. ·6· · · ·Q.· ·Explain. ·7· · · ·A.· ·A folder on a computer labeled "Evofi One." A ·8· ·folder on a computer labeled "Proficio" or -- or whatever ·9· ·company North American Marketing was working at the time 10· ·or that Alek Ohlhausen, as an individual, was working for 11· ·at the time. 12· · · ·Q.· ·But what steps did you take to make sure that the 13· ·data in those files was different? 14· · · · · · MR. CARGILL:· Objection.· Asked and answered. 15· · · · · · THE WITNESS:· Yeah.· Thank you for qualifying 16· ·that or clarifying that.· I don't -- I wouldn't be the 17· ·best to answer that.· My business partner, Scott Guild, 18· ·was more in line with the actual marketing, so he -- I 19· ·don't want to speculate as to what he did.· I can't think 20· ·of any other steps that I took as an individual.· There 21· ·may be other steps that our company took that Scott could 22· ·speak to, not myself. 23· · · · · · And that would be a good question, Tom, for you 24· ·to ask Scott as well, because... 25· ·/// Page 47 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·So how long did you work at First National Bank ·3· ·of Layton? ·4· · · ·A.· ·I don't recall specifically or exactly. ·5· · · ·Q.· ·What was your next employer in the mortgage ·6· ·industry after First National Bank of Layton? ·7· · · ·A.· ·I believe it was Resolute Bank. ·8· · · ·Q.· ·And when did you start working at Resolute Bank? ·9· · · ·A.· ·I believe it was November of 2014. 10· · · ·Q.· ·Have you ever worked for Nations Funding Source? 11· · · ·A.· ·I don't recall.· I recall the company name, but I 12· ·don't know if I was actually an employee or not. 13· · · ·Q.· ·Did you ever provide them with any services 14· ·either -- 15· · · ·A.· ·Yeah. 16· · · ·Q.· ·-- individually or through North American 17· ·Marketing? 18· · · ·A.· ·I recall a relationship with them, the extent of 19· ·it I don't remember.· And I believe it to be inside of a 20· ·month or two. 21· · · ·Q.· ·Do you recall what services you performed for 22· ·them? 23· · · ·A.· ·I don't.· Not specifically. 24· · · ·Q.· ·Were you ever employed by Proficio Mortgage 25· ·Ventures? Page 48 ·1· · · ·A.· ·I don't believe so. ·2· · · ·Q.· ·Did you ever provide services for Proficio ·3· ·Mortgage Ventures? ·4· · · ·A.· ·I believe I did through my company North American ·5· ·Marketing, yes. ·6· · · ·Q.· ·What services did North American Marketing ·7· ·provide to Proficio Mortgage Ventures? ·8· · · ·A.· ·There was a myriad of them, four or five pages' ·9· ·worth.· It was contained on a -- on a document called the 10· ·Affiliate Management -- Affiliate Management Agreement. 11· ·Some of them included marketing, consulting, business 12· ·development/recruitment.· Yeah, that's what I can recall 13· ·off the top of my head. 14· · · ·Q.· ·Did North American Marketing provide management 15· ·services to Proficio Mortgage Ventures? 16· · · ·A.· ·What is "management services"? 17· · · ·Q.· ·Did it provide any management consulting to 18· ·Proficio Mortgage Ventures? 19· · · ·A.· ·Sure, yes. 20· · · ·Q.· ·What type of management consulting services did 21· ·it provide? 22· · · ·A.· ·A variety.· Lots of different management 23· ·consulting services.· An example of a couple would be it 24· ·would help recruit prospective employees.· It would help 25· ·identify and consummate -- contemplate compensation plans. Page 49 ·1· ·It would motivate employees.· It would help consult on ·2· ·policies and procedures.· There's probably hundreds of ·3· ·other management oversights that North American Marketing ·4· ·helped or assisted with.· I can't recall all of them off ·5· ·the top of my head. ·6· · · ·Q.· ·Any others that you do recall? ·7· · · ·A.· ·No, not off the top of my head. ·8· · · ·Q.· ·And is there anything that would refresh your ·9· ·recollection as to what management services North American 10· ·Marketing provided to Proficio Mortgage Ventures? 11· · · · · · MR. CARGILL:· Object to the form. 12· · · · · · THE WITNESS:· Sure, yeah. 13· ·BY MR. LEECH: 14· · · ·Q.· ·What would -- what would refresh your 15· ·recollection? 16· · · ·A.· ·Lots of things could.· Emails, documents, the 17· ·Affiliate Management Agreement.· Any recollection, any 18· ·daily logs that I had.· Any task management, you know, 19· ·stuff that I -- I'd ever done or -- or, you know, 20· ·reminders of what I did on a daily basis would remind me 21· ·of some of those responsibilities and roles that I had. 22· ·Or manag- -- specifically management consulting services 23· ·that we had to perform. 24· · · ·Q.· ·And did North American Marketing provide lead 25· ·information to Proficio Mortgage Ventures? Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 14 of 102 Page 50 ·1· · · ·A.· ·Yes, I believe it did. ·2· · · ·Q.· ·Did it provide specific lead lists to Proficio ·3· ·Mortgage Ventures? ·4· · · ·A.· ·I believe it did, yes. ·5· · · ·Q.· ·Did North American Marketing provide any loan ·6· ·processing services to Proficio Mortgage Ventures? ·7· · · ·A.· ·No, not specifically.· It consulted in the ·8· ·management and oversight of processing.· It helped develop ·9· ·and recruit processors, but it did not actually process 10· ·loans for Proficio Mortgage Ventures. 11· · · ·Q.· ·Did North American Marketing directly contact 12· ·customers on behalf of Proficio Mortgage Ventures? 13· · · ·A.· ·As North American Marketing? 14· · · ·Q.· ·As North American Marketing or Proficio Mortgage 15· ·Ventures. 16· · · ·A.· ·I don't think so, no. 17· · · ·Q.· ·And did North American Marketing participate in 18· ·selling any mortgages on the secondary market on behalf of 19· ·Proficio Mortgage Ventures? 20· · · ·A.· ·I don't understand that question.· I'm sorry. 21· · · ·Q.· ·When a loan closed at Proficio Mortgage Ventures, 22· ·what did Proficio Mortgage Ventures do with the loan?· Did 23· ·it carry the loan on its books, or did it sell it on the 24· ·secondary market to an investor? 25· · · ·A.· ·It sold it on the secondary market to an Page 51 ·1· ·investor. ·2· · · ·Q.· ·Did North American Marketing participate in that ·3· ·process at all? ·4· · · ·A.· ·What does "participate" mean? ·5· · · ·Q.· ·Did it have any role in that sale? ·6· · · ·A.· ·No financial or legal role.· It certainly helped ·7· ·consult with Proficio Mortgage executives and team members ·8· ·to ensure and -- and develop processes and procedures to ·9· ·effectively sell those loans in the secondary market. 10· ·That was -- that was one of my responsibilities as a -- as 11· ·an affiliate manager and that was one of the roles that 12· ·was contemplated in the agreement between Proficio and 13· ·North American Marketing, sure.· But it didn't have any 14· ·specific financial interest or role. 15· · · ·Q.· ·Had Proficio Mortgage Ventures -- strike that. 16· · · · · · Did North American Marketing fund any mortgage 17· ·loans as part of its relationship with Proficio Mortgage 18· ·Ventures? 19· · · ·A.· ·What does "fund" mean? 20· · · ·Q.· ·Provide the borrower with money. 21· · · ·A.· ·No. 22· · · ·Q.· ·And how was North American Marketing compensated 23· ·by First National Bank of Layton? 24· · · ·A.· ·It's all in that agreement.· I'd have to refer to 25· ·that to give you the specifics. Page 52 ·1· · · ·Q.· ·How was North American Marketing compensated by ·2· ·Proficio Mortgage Ventures? ·3· · · ·A.· ·I think I just answered that.· It was all -- ·4· · · ·Q.· ·My prior question dealt with First National Bank ·5· ·of Layton. ·6· · · ·A.· ·Oh, I'm sorry.· I misunderstood that.· So First ·7· ·National Bank of Layton I don't believe had a -- so can ·8· ·you restate that question about First National Bank of ·9· ·Layton? 10· · · ·Q.· ·Certainly.· How was North American Marketing 11· ·compensated by First National Bank of Layton? 12· · · ·A.· ·As a marketing company.· So I believe that, to 13· ·the best of my recollection, it would invoice First 14· ·National Bank of Layton.· First National Bank of Layton 15· ·would pay that invoice if and when it ever did business 16· ·with -- with First National Bank of Layton.· That is North 17· ·American Marketing and First National Bank of Layton. 18· · · ·Q.· ·And how was North American Marketing compensated 19· ·by Proficio Mortgage Ventures? 20· · · ·A.· ·Again, it would be in that Affiliate Management 21· ·Agreement, all the details of that would be contained 22· ·within that. 23· · · ·Q.· ·Do you recall approximately when North American 24· ·Marketing began talking with Proficio about providing 25· ·services to Proficio? Page 53 ·1· · · ·A.· ·I don't recall exactly. ·2· · · ·Q.· ·Do you recall approximately? ·3· · · ·A.· ·No.· Well, approximately 2011.· Middle to end of ·4· ·2011, approximately. ·5· · · ·Q.· ·Why did you decide to leave First National Bank ·6· ·of Layton? ·7· · · ·A.· ·We were notified that they wanted to shut down ·8· ·the reverse mortgage group. ·9· · · ·Q.· ·Did they provide you with any reason why? 10· · · ·A.· ·They did provide us a reason.· I don't recall 11· ·exactly what it was.· One of them, I believe, was 12· ·reputational issues that the board was concerned about. 13· · · ·Q.· ·What reputational issues? 14· · · ·A.· ·Just in -- on reverse mortgages in general.· They 15· ·got cold feet.· They were worried that, you know, a 16· ·consumer was going to wind up on 60 Minutes, you know, for 17· ·getting kicked out of a home or something like that. 18· ·Again, that's to the best of my recollection, several 19· ·years ago. 20· · · ·Q.· ·Were there any other issues that were identified 21· ·to you? 22· · · ·A.· ·Not that I recall, no. 23· · · ·Q.· ·Was Proficio Mortgage Ventures involved in 24· ·reverse mortgage lending when you began discussions with 25· ·them? Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 15 of 102 Page 54 ·1· · · ·A.· ·I think they were, but I don't recall ·2· ·specifically. ·3· · · ·Q.· ·Do you recall approximately how large they were? ·4· · · ·A.· ·How large the reverse mortgage component was? ·5· · · ·Q.· ·Yes. ·6· · · ·A.· ·Tiny.· Less than five units a month is my best ·7· ·recollection. ·8· · · ·Q.· ·Did they have any customized lead information ·9· ·processes at the time you began discussions with them? 10· · · ·A.· ·Not that I was aware of. 11· · · ·Q.· ·Did they have any mortgage loan -- strike that. 12· · · · · · Did they have any reverse mortgage loan 13· ·processing infrastructure at that time? 14· · · ·A.· ·I don't know. 15· · · ·Q.· ·Did they have any specific software that -- 16· ·strike that. 17· · · · · · Did they have any software that was specific for 18· ·reverse mortgage origination? 19· · · ·A.· ·I don't know. 20· · · ·Q.· ·Did you participate -- you personally participate 21· ·in discussions with Proficio about North American 22· ·Marketing's affiliation with Proficio? 23· · · ·A.· ·Yes. 24· · · ·Q.· ·Who else participated in those discussions? 25· · · ·A.· ·At that time it would have been Scott Guild, a Page 55 ·1· ·gentleman named Elliott Jacobs.· He was at a consulting ·2· ·company I forget the name of.· A gentleman named Brett ·3· ·Carter was a president at Proficio Mortgage Ventures. ·4· ·Stephen Bennett was like a project manager at Proficio ·5· ·Mortgage Ventures.· The only other person I can think of ·6· ·was Richard Holley, who was president at Proficio Bank. ·7· · · ·Q.· ·What were the nature of those discussions? ·8· · · · · · MR. CARGILL:· Object to the form. ·9· · · · · · THE WITNESS:· It's too vague.· I mean, what 10· ·discussion?· What conversation?· Which time?· Give me a 11· ·specific and I can answer it. 12· ·BY MR. LEECH: 13· · · ·Q.· ·All right.· Well, how did it -- how did North 14· ·American Marketing first come to know of Proficio Mortgage 15· ·Ventures? 16· · · ·A.· ·Sure.· Elliott Jacobs told us about them. 17· · · ·Q.· ·Okay.· And Mr. Jacobs worked at a consulting 18· ·company that you don't know the name of? 19· · · ·A.· ·I don't remember it, no.· I believe it had 20· ·something to do with North American, ironically.· No 21· ·affiliation to North American Marketing. 22· · · ·Q.· ·So he was not an employee or contracted with 23· ·North American Marketing? 24· · · ·A.· ·He may have been a contractor that we contracted 25· ·him to help us find another bank to go work for when First Page 56 ·1· ·National Bank of Layton let us know that they wanted to ·2· ·wind down their reverse mortgage operations. ·3· · · ·Q.· ·Now, who is "us"? ·4· · · ·A.· ·Myself and Scott.· And then I believe First ·5· ·National Bank of Layton actually notified -- it was a ·6· ·really good wind down.· They notified, I believe, all the ·7· ·employees that we were working with, that we were ·8· ·coworkers of at First National Bank.· And I believe there ·9· ·was a letter that was sent out to the customers as well 10· ·notifying them of the change to Proficio Mortgage 11· ·Ventures, I believe.· They did a good job of notifying. 12· ·It was a good transition plan for First National Bank to 13· ·Proficio, ultimately to Proficio.· We weren't sure where 14· ·we were going to go when they let us know that we needed 15· ·to wind stuff down.· They gave us about 90 days, and they 16· ·told us they would help assist us, you know, in moving 17· ·stuff out. 18· · · ·Q.· ·So did you -- were you -- who was the person who 19· ·first reached out to Proficio Mortgage Ventures about 20· ·possibly affiliating with Proficio? 21· · · ·A.· ·I believe it was Elliott Jacobs. 22· · · ·Q.· ·And when was the first meeting that you had with 23· ·Proficio Mortgage Ventures? 24· · · ·A.· ·I don't -- I don't remember.· It would have been 25· ·somewhere in that time frame, 2011, 2012. Page 57 ·1· · · ·Q.· ·Who did you meet with initially? ·2· · · ·A.· ·I don't remember for sure, but I believe it was ·3· ·phone calls, multiple phone calls with Brett Carter was ·4· ·the first interaction with Proficio Mortgage Ventures. ·5· ·That was my recollection. ·6· · · ·Q.· ·And what was discussed in those phone calls? ·7· · · ·A.· ·I mean, anything and everything.· I mean, it was ·8· ·hours and hours of phone calls talking about us, our ·9· ·operation, you know, why we were leaving, what we needed, 10· ·who we were, you know, our reputation.· He certainly 11· ·wanted to know more about why First National Bank wanted 12· ·to wind down their reverse mortgage operation, so we 13· ·talked to him about that.· I believe he hopped on the 14· ·phone with the president of First National Bank to kind 15· ·of, you know, check character and reference on us. 16· · · · · · So there's multiple conversations that -- that 17· ·covered multiple topics.· Certainly compensation, you 18· ·know, opportunities, state licensing.· They had a slightly 19· ·different licensing structure than First National Bank of 20· ·Layton.· Reporting channels, you know, what they were and 21· ·were not allowed to do pertaining to their existing 22· ·business plan, their history, what their vision and 23· ·mission for the company was. 24· · · ·Q.· ·Anything else that you can think of? 25· · · ·A.· ·Not that I can think of.· There's certainly other Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 16 of 102 Page 58 ·1· ·things, though. ·2· · · ·Q.· ·You mentioned what they were and were not allowed ·3· ·to do.· Can you elaborate on what they were allowed to do? ·4· ·And by "they," do -- ·5· · · ·A.· ·You know, you're refreshing my memory on one of ·6· ·the reasons that First National Bank had to get out of the ·7· ·space.· They did not have it in their business -- again, ·8· ·this is my recollection.· This is secondhand.· But it was ·9· ·expressed to us that First National Bank of Layton did not 10· ·have a wide enough approval in their business plan that 11· ·was registered with the OCC at the time to contemplate the 12· ·size and scope of the mortgage division that it ultimately 13· ·had grown to, and so regulators put some pressure on them 14· ·to wind it down.· It wasn't just the reputation-wise. 15· ·So thank you for helping me refresh my memory on that. 16· · · · · · That got us paranoid about the next bank we went 17· ·to.· We wanted to make sure that we had -- so it was 18· ·always -- it was -- none of that was ever told to us or 19· ·communicated that to us.· When I say "us," I mean myself 20· ·or Scott.· We didn't have experience with banks, with 21· ·business plans.· We had always, you know, owned, operated 22· ·or worked for smaller companies that, you know, we just 23· ·had to follow certain state-specific and federal rules and 24· ·we were able to do business and grow it as large as we 25· ·wanted as long as our finances could afford it.· It was Page 59 ·1· ·our first experience with actually having to follow a ·2· ·prescribed business plan and even understand that there ·3· ·was such a thing at First National Bank.· That came back ·4· ·to, you know, bite us in the behind as -- even though we ·5· ·were doing great stuff at First National Bank.· We grew ·6· ·too fast or whatever.· It wasn't part of their business ·7· ·plan. ·8· · · · · · So when we went to Proficio, we wanted to make ·9· ·sure that their business plan contemplated, number one, 10· ·reverse mortgages and, number two, the size and scope that 11· ·we were going to be or that we were or that we would be 12· ·bringing with us from First National Bank to Proficio. 13· · · ·Q.· ·And how many people were you contemplating 14· ·bringing with you from First National Bank? 15· · · ·A.· ·I don't recall a specific number. 16· · · ·Q.· ·Approximately how many people did you 17· ·contemplate? 18· · · ·A.· ·100, 120. 19· · · ·Q.· ·When you went from Evofi One to First National 20· ·Bank of Layton, did you bring any people with you? 21· · · ·A.· ·Yes. 22· · · ·Q.· ·How many people did you bring with you? 23· · · ·A.· ·I don't recall. 24· · · ·Q.· ·To the best of your recollection, your best 25· ·estimate? Page 60 ·1· · · ·A.· ·You know, it's much smaller.· 15, 20.· 10.· 10 to ·2· ·20. ·3· · · ·Q.· ·When you had these phone conversations with ·4· ·Proficio Mortgage Ventures, did you discuss Proficio's ·5· ·existing reverse mortgage operations at all? ·6· · · ·A.· ·We may have, yes. ·7· · · ·Q.· ·What do you recall of those discussions? ·8· · · ·A.· ·Who are they, what are they doing.· We ran into ·9· ·problems at First National Bank where there were other 10· ·folks that were doing or wanted to do reverse mortgages 11· ·and they would do them, you know, in our opinion the wrong 12· ·way, we weren't comfortable with. 13· · · · · · Ironically, one of the gentlemen there at First 14· ·National Bank was Rob Balmer, who I think is at The 15· ·Federal Savings Bank.· But anyway, we ran into problems 16· ·with people like Rob Balmer at The Federal Savings -- at 17· ·First National Bank that we didn't want to have to deal 18· ·with again.· We had a thorough vetting process for our 19· ·people.· We thought that we, you know, did a good job of 20· ·making sure that only experienced, seasoned, really savvy 21· ·reverse mortgage professionals were working with us, and 22· ·we didn't want to have to deal with other folks that 23· ·weren't that way that could ultimately present problems 24· ·for us and our organization. 25· · · ·Q.· ·Did North American Marketing conduct the vetting Page 61 ·1· ·process? ·2· · · ·A.· ·At what company? ·3· · · ·Q.· ·At First National Bank of Layton. ·4· · · ·A.· ·No. ·5· · · ·Q.· ·Did they consult on the vetting process in any ·6· ·way? ·7· · · ·A.· ·No, not in any way. ·8· · · ·Q.· ·So when you say "we had a thorough vetting ·9· ·process," who are you referring to? 10· · · ·A.· ·The managers in the reverse mortgage division at 11· ·First National Bank. 12· · · ·Q.· ·And who were those managers? 13· · · ·A.· ·There was multiple managers.· Myself, Scott Guild 14· ·was one, Sarah Young was another.· Those are the three 15· ·main managers.· There were other managers as well that 16· ·certainly had influence and -- and not necessarily 17· ·decision-making ability but had influence. 18· · · ·Q.· ·What type of problems did you have with Rob 19· ·Balmer at First National Bank of Layton? 20· · · ·A.· ·I don't recall.· Sarah was more involved in that. 21· ·She would be able to answer that, I think, in pretty good 22· ·detail.· I believe there was compliance concerns. 23· · · ·Q.· ·What types of compliance concerns? 24· · · ·A.· ·I don't recall. 25· · · ·Q.· ·You recall that there were compliance concerns? Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 17 of 102 Page 62 ·1· · · ·A.· ·Yeah. ·2· · · ·Q.· ·What were the nature of those concerns? ·3· · · · · · MR. CARGILL:· Objection.· Asked and answered. ·4· · · · · · THE WITNESS:· Yeah.· I don't recall. ·5· ·BY MR. LEECH: ·6· · · ·Q.· ·Was North American Marketing represented by an ·7· ·attorney when it negotiated with Proficio Mortgage ·8· ·Ventures? ·9· · · ·A.· ·Was North American Marketing represented by an 10· ·attorney when it... 11· · · ·Q.· ·Negotiated with Proficio Mortgage Ventures. 12· · · ·A.· ·Define "represented." 13· · · ·Q.· ·Did North American Marketing have a lawyer that 14· ·was providing services to it in connection with its 15· ·negotiations with Proficio Mortgage Ventures? 16· · · ·A.· ·We had a couple lawyers look at the contract at 17· ·various times, yes. 18· · · ·Q.· ·Were these -- were these lawyers involved in 19· ·actually negotiating with Proficio Mortgage Ventures?· And 20· ·I'm not asking about private conversations that you had 21· ·with those attorneys. 22· · · · · · MR. CARGILL:· Yeah, but you're asking about the 23· ·actual services that the attorneys provided to North 24· ·American Marketing which is privileged.· I let the 25· ·question go, Were they represented?· I think whether or Page 63 ·1· ·not they were represented is not privileged, so he ·2· ·answered that.· But any questions directed to the actual ·3· ·services that were performed, I will object to based on ·4· ·attorney-client privilege and instruct him not to divulge ·5· ·any attorney-client privileged information. ·6· ·BY MR. LEECH: ·7· · · ·Q.· ·Who were the attorneys that represented North ·8· ·American Marketing? ·9· · · ·A.· ·I don't recall -- 10· · · · · · MR. CARGILL:· At that time; right? 11· · · · · · MR. LEECH:· At that time, yeah. 12· · · · · · THE WITNESS:· I don't recall all of them.· At 13· ·least one of them was a guy named Gary Lax, L-A-X, I 14· ·believe. 15· ·BY MR. LEECH: 16· · · ·Q.· ·Any other attorneys that you can recall? 17· · · ·A.· ·Not that I can recall, no.· I do believe there 18· ·was another one, though, but I'm not certain of his -- I 19· ·don't recall and I don't remember his name. 20· · · ·Q.· ·Do you know if Proficio Mortgage Ventures was 21· ·represented by an attorney in its negotiations with North 22· ·American Marketing? 23· · · ·A.· ·I don't know. 24· · · ·Q.· ·Did you ever deal with an attorney representing 25· ·Proficio Mortgage Ventures when you were negotia- -- when Page 64 ·1· ·you were negotiating a possible affiliation with Proficio? ·2· · · ·A.· ·Not to the best of my recollection, no. ·3· · · ·Q.· ·When you had discussions with Proficio Mortgage ·4· ·Ventures about the possibility of an affiliation, did you ·5· ·discuss specifically the types of services North American ·6· ·Marketing would provide Proficio? ·7· · · ·A.· ·Yes. ·8· · · ·Q.· ·What specific services was North American ·9· ·Marketing to provide that you recall discussing? 10· · · ·A.· ·I think I've answered that a couple times. 11· · · · · · MR. CARGILL:· Objection.· Asked and answered. 12· · · · · · THE WITNESS:· And it's all contemplated in that 13· ·Affiliate Management Agreement. 14· ·BY MR. LEECH: 15· · · ·Q.· ·Was there anything that you discussed that would 16· ·not be in that Affiliate Manager Agreement? 17· · · ·A.· ·Is there anything we discussed that would not be 18· ·in the Affiliate Manager Agreement? 19· · · ·Q.· ·Strike the question. 20· · · · · · Are there any services that North American 21· ·Marketing discussed providing to Proficio Mortgage 22· ·Ventures that was not in the Affiliate Manager Agreement? 23· · · ·A.· ·I don't believe so. 24· · · ·Q.· ·Did you discuss what services Proficio would be 25· ·performing in connection with this contemplated Page 65 ·1· ·affiliation? ·2· · · ·A.· ·Yes. ·3· · · ·Q.· ·What services was Proficio to provide? ·4· · · ·A.· ·Same thing.· It's all contemplated in that ·5· ·agreement.· Yeah, I don't recall off the top of my head, ·6· ·but it is all contemplated in that agreement if you'd like ·7· ·to look at it. ·8· · · ·Q.· ·So there's nothing outside of the agreement that ·9· ·you discussed with Proficio Mortgage Ventures -- 10· · · ·A.· ·Not that I can recall. 11· · · ·Q.· ·-- about their role? 12· · · ·A.· ·No. 13· · · ·Q.· ·So First National Bank of Layton wound down its 14· ·reverse mortgage operation, and then North American 15· ·Marketing transitioned to Proficio Mortgage Ventures; is 16· ·that correct? 17· · · ·A.· ·No.· First National Bank of Layton wound down its 18· ·reverse mortgage operations.· At the same time North 19· ·American Marketing formed a relationship with Proficio 20· ·Mortgage Ventures. 21· · · ·Q.· ·As part of that -- as part of North American 22· ·Marketing's transition, did it transfer employees from 23· ·First National Bank of Layton to Proficio Mortgage 24· ·Ventures? 25· · · ·A.· ·North American Marketing didn't transition. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 18 of 102 Page 66 ·1· ·Employees of First National Bank transitioned to become ·2· ·employees of Proficio Mortgage Ventures. ·3· · · ·Q.· ·Did you have any role in that transition? ·4· · · ·A.· ·Yes. ·5· · · ·Q.· ·What was your role? ·6· · · · · · MR. CARGILL:· Objection.· Asked and answered. ·7· · · · · · THE WITNESS:· Yeah.· I mean, we've talked about ·8· ·phone calls and vetting and all kinds of different things. ·9· ·We talked about me being notified by First National Bank 10· ·that the wind down needed to occur.· We talked about what 11· ·happened when that wind down occurred.· You know, letters 12· ·to customers, notification to employees.· And then, you 13· ·know, the role in terms of -- we've talked about some of 14· ·the role of me discussing potential relationship with 15· ·Proficio. 16· ·BY MR. LEECH: 17· · · ·Q.· ·Yes.· But did you recruit any of these First 18· ·National Bank of Layton employees for Proficio Mortgage 19· ·Ventures? 20· · · ·A.· ·Yes. 21· · · ·Q.· ·And of the people that you talked to about 22· ·working for Proficio Mortgage Ventures, approximately how 23· ·many said yes and how many said no, roughly? 24· · · ·A.· ·So of the First National Bank employees? 25· · · ·Q.· ·Yes. Page 67 ·1· · · ·A.· ·I can't recall any of them saying no, but it's ·2· ·possible. ·3· · · ·Q.· ·All of the First National Bank employees went ·4· ·with you, to the best of your recollection? ·5· · · ·A.· ·To the best of my recollection, yes.· And ·6· ·remember, to clarify, all of the First National Bank ·7· ·employees that were working with me in the reverse ·8· ·mortgage group. ·9· · · ·Q.· ·You mentioned that letters of -- strike that. 10· · · · · · You mentioned that letters to customers went out 11· ·as part of First National Bank of Layton's winding down of 12· ·its reverse mortgage operation. 13· · · · · · What happened to customers who were working with 14· ·First National Bank of Layton to obtain a mortgage loan 15· ·when First National Bank of Layton shut down its reverse 16· ·mortgage operation? 17· · · ·A.· ·They were notified that -- so it was -- again, 18· ·this is to the best of my recollection.· There was 19· ·approximately a 90-day transition period between the date 20· ·First National Bank notified me that they wanted to wind 21· ·this down and the stop date for the last time a loan could 22· ·be either closed or funded.· I don't remember if it was 23· ·closed or funded. 24· · · · · · So in that 90-day period, there were a variety of 25· ·different actions that happened.· Loans that were far Page 68 ·1· ·enough long, you know, went through the normal course of ·2· ·business and closed at First National Bank of Layton.· For ·3· ·those loans that remained at First National Bank of Layton ·4· ·in an unclosed status at the time of that drop dead date, ·5· ·which I believe was extended once or twice by, you know, ·6· ·five days here or five days there to try to account for -- ·7· ·try to make it as easy as possible on any customers, those ·8· ·loans were then, I believe, transferred to -- or ·9· ·reoriginated at Proficio.· I don't believe they were 10· ·actually transferred.· I believe they were reoriginated. 11· · · ·Q.· ·And what's the difference between a transfer and 12· ·a reorigination? 13· · · ·A.· ·I don't know that you could do a transfer.· So in 14· ·my mind what I meant by -- what I would contemplate a 15· ·transfer to be would be literally taking paperwork from 16· ·one company and then closing it in another company's name. 17· ·I don't believe that's possible.· Reoriginated would be, 18· ·you know, an employee at the new company calling a 19· ·customer and saying, Hey, you know, I was working with you 20· ·over at First National Bank of Layton.· We had to close 21· ·our doors.· You got a letter from them.· Here's why.· Do 22· ·you want to work with me?· I've got a new home.· I've got 23· ·a new place I can get the loan done for you. 24· · · · · · I believe there was a letter that went to those 25· ·customers as well from First National Bank to Page 69 ·1· ·Proficio's -- or to the customers at Proficio. ·2· · · ·Q.· ·And did First National Bank suggest that they go ·3· ·with Proficio or -- ·4· · · ·A.· ·I think they did.· I don't remember what was ·5· ·exactly said in that letter.· Certainly, First National ·6· ·Bank knew about our -- certainly, First National Bank ·7· ·knew about winding down the division.· They knew about ·8· ·employees and customers, prospects and whatever moving to ·9· ·another prospective mortgage company that could facilitate 10· ·them, which happened -- which happened to be Proficio. 11· · · · · · MR. LEECH:· Can we go off the record for a 12· ·minute? 13· · · · · · MR. CARGILL:· Sure. 14· · · · · · (Recess taken 10:45 a.m. to 10:46 a.m.) 15· ·BY MR. LEECH: 16· · · ·Q.· ·When you transitioned from First National Bank of 17· ·Layton to Proficio Mortgage Ventures, did you -- strike 18· ·that. 19· · · · · · You generated lead information about prospective 20· ·mortgage customers both as a First National Bank of Layton 21· ·employee and as a North American Marketing employee; is 22· ·that correct? 23· · · ·A.· ·Yes. 24· · · ·Q.· ·When you transitioned from First National Bank of 25· ·Layton to Proficio Mortgage Ventures, what happened to the Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 19 of 102 Page 70 ·1· ·lead information you developed as an employee of First ·2· ·National Bank of Layton? ·3· · · ·A.· ·I don't recall specifically. ·4· · · ·Q.· ·Were you able to transition -- were you able to ·5· ·use that lead information in your new role at Proficio? ·6· · · ·A.· ·I don't recall.· I don't believe we were ·7· ·precluded from doing it, but I don't know how relevant it ·8· ·would have been.· I mean, elaborate.· The lead information ·9· ·goes stale pretty quickly, so in the time we were notified 10· ·that First National Bank wanted to wind down, we certainly 11· ·didn't market any more at that point.· So there was a 12· ·period of at least 90 days before we did any marketing. 13· ·At least 90 days.· So I don't believe that same data would 14· ·have been used, but I can't -- I can't say for sure one 15· ·way or the other. 16· · · ·Q.· ·How about the lead information generated by North 17· ·American Marketing? 18· · · ·A.· ·Same.· I can't say one way or the other. 19· · · ·Q.· ·Would North American Marketing have stopped 20· ·generating lead information during that 90-day transition 21· ·period? 22· · · ·A.· ·Yes, most likely, which may have started again 23· ·once the -- the relationship, at least in principle, had 24· ·been consummated with Proficio.· But in that intermediary 25· ·gap where there was no customer, you know, my, Alek Page 71 ·1· ·Ohlhausen as an individual, sole focus was on finding a ·2· ·new home for the employees and the customers at First ·3· ·National Bank. ·4· · · ·Q.· ·So you were looking basically to move the entire ·5· ·reverse mortgage unit to a different bank? ·6· · · ·A.· ·Yeah.· Yeah.· The entire group of people at least ·7· ·that we managed, yeah. ·8· · · ·Q.· ·And when you transitioned from Evofi One to First ·9· ·National Bank, was that your same plan, to move the entire 10· ·unit of people? 11· · · ·A.· ·I don't remember the plan at Evofi as much. I 12· ·don't remember.· It certainly wasn't as large or as well 13· ·organized of a group at that point either. 14· · · ·Q.· ·Were you aware of any restrictions on North 15· ·American Marketing's ability to use lead information it 16· ·generated for First National Bank of Layton at Proficio? 17· · · ·A.· ·No. 18· · · ·Q.· ·You're not aware of anything or were there any 19· ·restrictions? 20· · · ·A.· ·I'm not aware of any restrictions. 21· · · ·Q.· ·You mentioned that the lead information grows 22· ·stale quickly.· About how quickly does lead information 23· ·grow stale? 24· · · ·A.· · It's too broad of a question.· You know, each 25· ·lead type and, you know, each way that we obtain that lead Page 72 ·1· ·would have different time periods of effectiveness. ·2· · · ·Q.· ·So the time periods differ by the type of lead? ·3· · · ·A.· ·By the type of lead, by the way the lead was ·4· ·obtained, by what was done to obtain that lead.· All those ·5· ·things, sure. ·6· · · ·Q.· ·Give me an example of a type of lead. ·7· · · ·A.· ·A lead that we bought off of a company that had a ·8· ·television ad that advertised for reverse mortgages with a ·9· ·television spokesperson and a likely qualified, likely 10· ·motivated customer called them or filled out a form online 11· ·and applied for some information.· That company then gave 12· ·that lead to us or sold that lead to us and we went to 13· ·work on that lead, either by way of a live transfer or we 14· ·just picked up the phone and called that person or we sent 15· ·them an email. 16· · · ·Q.· ·And what would be the time period before a lead 17· ·of that type went stale? 18· · · ·A.· ·After a day or two it would be less effective 19· ·than it would be the next day. 20· · · ·Q.· ·When in your mind would that lead no longer be 21· ·effective? 22· · · ·A.· ·It would always have value, almost in perpetuity. 23· ·If we knew for sure that the loan had closed or that that 24· ·lead had closed -- that lead had become a loan and 25· ·ultimately closed, theoretically that lead would have Page 73 ·1· ·almost zero value at that point. ·2· · · ·Q.· ·When you said "live transfers," can you explain ·3· ·to me what a live transfer is? ·4· · · ·A.· ·Sure.· So a lead company, a customer calls in to ·5· ·a phone number, an operator, a person on the phone.· Then ·6· ·that person on the phone transfers it to one of our sales ·7· ·agents, introduces the caller and then transfers the call. ·8· ·And the sales agent and caller, you know, start a ·9· ·conversation. 10· · · ·Q.· ·And other than TV ads, what other types of leads 11· ·did North American Marketing deal with while it was 12· ·working with First National Bank of Layton? 13· · · ·A.· ·I think we've talked about this.· I mean, all the 14· ·same stuff that I already said earlier. 15· · · ·Q.· ·Okay.· I believe you mentioned leads from the 16· ·radio.· Is that a type of lead that you worked with while 17· ·you were with First National Bank of Layton? 18· · · ·A.· ·I don't think so, no.· But it's possible. I 19· ·certainly contemplated agreements with various radio 20· ·stations.· I don't know if we ever executed one or entered 21· ·into one during that time period. 22· · · ·Q.· ·How long before radio leads went stale? 23· · · ·A.· ·What do you mean by "stale"? 24· · · ·Q.· ·You used the term earlier in connection with the 25· ·transition that the lead information went stale. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 20 of 102 Page 74 ·1· · · ·A.· ·Sure. ·2· · · ·Q.· ·About how long would radio leads take before they ·3· ·went stale? ·4· · · ·A.· ·Again, a lead would be less valuable the second ·5· ·or third day after we received it as it was the first day, ·6· ·but it would still have value until we could prove that ·7· ·that loan was closed by -- you know, until we could prove ·8· ·that that consumer was either no longer interested in the ·9· ·mortgage or had closed the loan with somebody else, had 10· ·sold their home, et cetera, et cetera.· Had some other 11· ·terminating event that would make that prospect ineligible 12· ·for the loan that we were contemplating -- that we were 13· ·contemplating for them. 14· · · ·Q.· ·When you say the loan -- the lead would be less 15· ·valuable, how much less value? 16· · · ·A.· ·I can't speculate.· You know, I could say that I 17· ·would be willing to pay less for that lead, but the end 18· ·resolve of the revenue generated by a loan may be no less. 19· · · ·Q.· ·How about Internet leads, how long would they -- 20· ·how long was it before they went stale? 21· · · ·A.· ·There was lots of different types of Internet 22· ·leads.· I can't recall a specific, you know, Internet-type 23· ·or lead.· In general, it would be -- it would follow a 24· ·similar time line.· The lead would be less valuable, you 25· ·know, minutes or certainly hours after it was originated Page 75 ·1· ·or consummated.· After the customer typed in that ·2· ·information, the lead on its own would be less valuable. ·3· ·But the loan -- the lead would still have value until ·4· ·there was some sort of terminating event where that ·5· ·customer no longer qualified or no longer was eligible to ·6· ·obtain a mortgage. ·7· · · ·Q.· ·So would it be fair to say that North American ·8· ·Marketing was refreshing its lead information on a ·9· ·consistent day-to-day basis? 10· · · ·A.· ·I don't know about day to day, but certainly a 11· ·consistent basis you could say. 12· · · ·Q.· ·About what frequency did it update its lead 13· ·information? 14· · · ·A.· ·I don't recall. 15· · · · · · What time frame are you referencing? 16· · · ·Q.· ·Approximately the transition between First 17· ·National Bank of Layton and Proficio Mortgage Ventures. 18· · · ·A.· ·During those 90 days, I don't have any 19· ·recollection at all.· We probably weren't refreshing very 20· ·much at that point. 21· · · ·Q.· ·How about in the period leading up to that 22· ·transition? 23· · · ·A.· ·I don't recall.· Scott was handling more of the 24· ·marketing side of stuff.· I was doing more negotiations 25· ·with the bank and that type of stuff. Page 76 ·1· · · ·Q.· ·So ultimately you signed the Affiliate Manager ·2· ·Agreement and you moved the First National Bank of Layton ·3· ·unit over to Proficio Mortgage Ventures.· Is that what ·4· ·happened? ·5· · · ·A.· ·In that order?· I mean -- ask me the question ·6· ·another way or restate it maybe. ·7· · · · · · MR. LEECH:· Can you read the question back? ·8· · · · · · (Record read) ·9· ·BY MR. LEECH: 10· · · ·Q.· ·I'll rephrase it. 11· · · · · · Ultimately, you came to some sort of agreement 12· ·with Proficio Mortgage Ventures when you moved the First 13· ·National Bank of Layton employees over; is that correct? 14· · · ·A.· ·Yes. 15· · · ·Q.· ·Now, was there -- did you physically change 16· ·locations at that time? 17· · · ·A.· ·I don't think so, no.· But I don't -- I don't 18· ·recall specifically, but I don't think so.· We did -- we 19· ·were at one place at First National and ultimately we were 20· ·at a different place at Proficio, same building, different 21· ·suites.· But I don't know that those moves coincided with 22· ·that transition.· I don't recall.· A lot of it just had to 23· ·do with expansion over the years. 24· · · ·Q.· ·When you arrived at Proficio, how was the reverse 25· ·mortgage division structured? Page 77 ·1· · · · · · MR. CARGILL:· Object to the form. ·2· · · · · · THE WITNESS:· I think we've already talked about ·3· ·this.· But yeah, I don't recall who was there doing ·4· ·reverse mortgages.· I think you asked me if they had ·5· ·processors or if they had originators or how many they ·6· ·did, maybe that was at First National Bank.· But my ·7· ·recollection was that there was next to nothing existing ·8· ·at Proficio on their reverse mortgage side. ·9· ·BY MR. LEECH: 10· · · ·Q.· ·And then you brought in approximately 100 or so 11· ·people from First National Bank? 12· · · ·A.· ·I think I said that, yeah.· It was 100 to 120 I 13· ·think was my answer. 14· · · ·Q.· ·So after you arrived with the First National Bank 15· ·of Layton employees, how did the reverse mortgage division 16· ·structure at Proficio change? 17· · · ·A.· ·The structure was ultimately created at that 18· ·point. 19· · · ·Q.· ·Right.· So what was the -- so can you describe 20· ·the structure to me? 21· · · ·A.· ·Yeah.· Myself and Scott, North American 22· ·Marketing, consulted with Proficio, their executive team, 23· ·Brett Carter, Steve Bennett, Richard Holley, Grant Jex was 24· ·a compliance officer at the bank that also worked at the 25· ·mortgage company.· Those are the main individuals.· And Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 21 of 102 Page 78 ·1· ·then we recommended certain people be appointed to certain ·2· ·positions.· They were ultimately hired at those certain ·3· ·positions, and then, you know, business operations ·4· ·started. ·5· · · ·Q.· ·So who were the individuals that you recommended ·6· ·for certain positions? ·7· · · ·A.· ·Sure.· So ultimately every one of those 100 to ·8· ·120 people, you know, ultimately. ·9· · · ·Q.· ·Who did you recommend for management positions? 10· · · ·A.· ·I don't recall off the top of my head.· Sarah 11· ·Young was a -- was a manager.· We had some business 12· ·development managers.· We had some consumer direct 13· ·managers.· We had some branch managers.· Consumer direct 14· ·managers, Eric Naranjo was certainly one of those. I 15· ·believe Jesse Brewer, James Guiry were the other managers 16· ·on the consumer direct side.· We had some distributor 17· ·retail, some outside sales force managers.· I believe that 18· ·was John Metcalf and Joe Rizzo.· But it could have been 19· ·John Fromme.· I don't recall. 20· · · · · · And then we had operations managers.· Sarah Young 21· ·was operations manager and branch manager.· And then we 22· ·had some processing managers.· I don't recall who was in 23· ·place as a processing manager at that time.· We had a 24· ·secondary guy, Marco Barucchieri.· We had a closing and 25· ·post-closing manager, his name was Mitchell Chadwick that Page 79 ·1· ·we recommended.· And then we had branch managers.· We had ·2· ·several different branch managers as well that ran outside ·3· ·branches or other physical locations. ·4· · · ·Q.· ·So with respect to the outside branches, were you ·5· ·based in Henderson or Las Vegas when you worked for First ·6· ·National Bank of Layton? ·7· · · ·A.· ·Yes.· Henderson. ·8· · · ·Q.· ·And you -- Henderson. ·9· · · · · · And you opened a Henderson office, then, for 10· ·Proficio Mortgage Ventures when you transitioned over to 11· ·Proficio Mortgage Ventures at the same location; is that 12· ·correct? 13· · · ·A.· ·I believe we assigned the lease that First 14· ·National Bank had, I believe, to Proficio Mortgage 15· ·Ventures.· I didn't have -- you know, I wasn't on that 16· ·lease, no.· Or it may have been -- it may have been a 17· ·lease in my name that I assigned to First National Bank 18· ·and then I assigned to Proficio, but ultimately the lease 19· ·was assigned to Proficio. 20· · · ·Q.· ·And I believe you mentioned other outside 21· ·branches that you recommended branch managers for. 22· · · ·A.· ·Uh-huh. 23· · · ·Q.· ·Did those branches exist at Proficio prior to 24· ·your arrival there, or were they something that you 25· ·created as part of your transition going over? Page 80 ·1· · · ·A.· ·Something that was created -- something that was ·2· ·new, post the transition from First National Bank. ·3· · · ·Q.· ·Where were those branches located? ·4· · · ·A.· ·I don't recall.· I can tell you a couple of them. ·5· · · ·Q.· ·Please do. ·6· · · ·A.· ·Yeah.· I believe we had one in Missouri. I ·7· ·believe we had one in Georgia.· And I know we had four or ·8· ·five more, and I'm kind of embarrassed because I had a ·9· ·decent amount to do with that, but I can't remember where 10· ·they were.· Certainly there's got to be documentation out 11· ·there you could provide me to refresh my memory on that, I 12· ·could tell you yes or no.· But off the top of my head 13· ·right now, I can't remember any other locations or other 14· ·managers. 15· · · ·Q.· ·Who at Proficio Mortgage Ventures reported 16· ·directly to you? 17· · · ·A.· ·I don't believe -- nobody did. 18· · · ·Q.· ·And to whom did you report at Proficio Mortgage 19· ·Ventures on a day-to-day basis? 20· · · ·A.· ·We would consult with a variety of people.· All 21· ·the managers we just mentioned and then the executive team 22· ·that we mentioned -- that I mentioned before as well, 23· ·Brett Carter, Stephen Bennett.· Worked really closely with 24· ·Stephen Bennett.· He was the driver of the transition 25· ·between First National Bank and Proficio.· Richard Holley. Page 81 ·1· ·New management came in after a period of time.· John ·2· ·Miller was an individual.· Steve Chapton. ·3· · · ·Q.· ·Who supervised the loan officers that you brought ·4· ·over from First National Bank of Layton? ·5· · · ·A.· ·I just answered that.· All the various managers. ·6· · · ·Q.· ·The managers that you recommended that we talked ·7· ·about earlier? ·8· · · ·A.· ·Yes. ·9· · · ·Q.· ·Who was responsible for selecting loan officers 10· ·for hiring? 11· · · ·A.· ·Ultimately, the branch manager was the person I 12· ·believe needed to sign off on their hire.· I helped. 13· ·Scott helped.· Various business development people helped 14· ·recruit and identify potential loan officers.· Certainly 15· ·individual managers helped, people like Eric Naranjo, 16· ·Jesse Brewer, James Guiry.· Other branch managers helped 17· ·recommend people.· But ultimately the branch manager, and 18· ·then I believe even an HR resource.· Maybe the HR resource 19· ·didn't need to sign off, but they needed to at least pass, 20· ·you know, background checks and et cetera, et cetera. 21· · · ·Q.· ·Did Proficio ever hire a loan officer that was 22· ·not recommended by you or one of the managers that you 23· ·recommended? 24· · · · · · MR. CARGILL:· Object to the form. 25· · · · · · THE WITNESS:· Of course, yeah. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 22 of 102 Page 82 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·Who at Proficio is responsible for terminating ·3· ·the loan officers? ·4· · · · · · MR. CARGILL:· Object to the form. ·5· · · · · · THE WITNESS:· It would be the same management ·6· ·structure we just talked about would have the same ·7· ·responsibility. ·8· ·BY MR. LEECH: ·9· · · ·Q.· ·The branch manager would have the authority to 10· ·terminate employees? 11· · · ·A.· ·If it was somebody that reported to them, yes, I 12· ·believe they would have. 13· · · ·Q.· ·How about the sales managers and the processing 14· ·managers, would they have the ability to terminate 15· ·employees who reported to them? 16· · · ·A.· ·I believe so.· They may have needed to get their 17· ·direct report's permission, but in theory they should have 18· ·had the ability to terminate them.· It might have been a 19· ·consensus discussion. 20· · · ·Q.· ·Did you have authority to terminate loan officers 21· ·at Proficio? 22· · · ·A.· ·No.· You know, not on my own.· I needed 23· ·permission from them.· I may have actually terminated 24· ·somebody, but I would need permission from somebody at 25· ·Proficio to do so. Page 83 ·1· · · ·Q.· ·Did you ever recommend anyone for termination ·2· ·that Proficio ultimately decided not to terminate? ·3· · · ·A.· ·Not to my recollection, no. ·4· · · ·Q.· ·Who was responsible for making payments for the ·5· ·lease on your -- on the office space that your group ·6· ·operated out of? ·7· · · ·A.· ·I believe Proficio, if you're talking about the ·8· ·Proficio time period. ·9· · · ·Q.· ·Correct.· Who selected that location? 10· · · ·A.· ·I believe I did. 11· · · ·Q.· ·Do you recall approximately when Proficio took 12· ·over paying for the lease? 13· · · ·A.· ·I do not. 14· · · ·Q.· ·So what -- strike that. 15· · · · · · When the First National Bank employees 16· ·transitioned over to Proficio Mortgage Ventures, what 17· ·steps did Proficio Mortgage Ventures take to get them 18· ·prepared to do their jobs? 19· · · · · · MR. CARGILL:· Object to the form. 20· · · · · · THE WITNESS:· Yeah.· So Proficio's executive 21· ·team -- I mean, there was all kinds of orientations that 22· ·went on.· Stephen Bennett helped with a lot of that.· He 23· ·provided, you know, oversight of information to -- to the 24· ·managers that we talked about.· Some other things took 25· ·place as well.· Brett Carter came down to the Henderson Page 84 ·1· ·area, and I believe he ultimately touched each branch as ·2· ·well.· Introduced himself, spoke to everybody, let them ·3· ·know how welcome they are at Proficio.· How excited he was ·4· ·to have them as an employee. ·5· · · · · · Grant Jex, the compliance officer at the bank, ·6· ·gave a nice welcome introductory speech, introduced ·7· ·himself, let everybody know if they had any questions. ·8· ·And individual employees had to go through, you know, ·9· ·whatever background checks Proficio's HR required, fill 10· ·out a job application, transfer their NMLS licensing if 11· ·they were so registered, attend, again, the orientations 12· ·or trainings that were required or mandated both pre- -- 13· ·pre- -- both prehire and post-hire on a continuing 14· ·education basis. 15· ·BY MR. LEECH: 16· · · ·Q.· ·Did Proficio take any other steps to equip the 17· ·new employees to perform their respective job duties? 18· · · ·A.· ·Probably. 19· · · ·Q.· ·What steps would those be? 20· · · ·A.· ·I don't recall any additional ones. 21· · · ·Q.· ·Did Proficio have to update -- strike that. 22· · · · · · Did Proficio have to upgrade its IT capabilities 23· ·to handle these new employees? 24· · · ·A.· ·I can't speculate as to what Proficio had before 25· ·that or not.· We certainly had conversations about IT as Page 85 ·1· ·part of the transition and post-transition.· Throughout ·2· ·the -- throughout the entire course of the relationship ·3· ·there were conversations about IT and proper security ·4· ·services and all that type of stuff. ·5· · · ·Q.· ·And when you -- I'm talking about the period at ·6· ·and immediately following the transition from First ·7· ·National Bank of Layton to Proficio.· What specific ·8· ·conversations did you have about the IT needs for your ·9· ·operation? 10· · · ·A.· ·I don't recall. 11· · · ·Q.· ·Do you recall if Proficio needed to upgrade any 12· ·of its computer software to accommodate your -- the 13· ·100-plus people you were bringing over? 14· · · ·A.· ·I don't.· I really wasn't very much on the tech 15· ·side.· That was another area that really Scott handled 16· ·more so than myself.· I remember, you know, broad 17· ·conversations where, you know, technological 18· ·infrastructure came up.· I remember our secondary guy had 19· ·some technological background.· He consulted with 20· ·consultants that the bank brought in to discuss stuff, but 21· ·I don't remember the details of that. 22· · · ·Q.· ·Did Proficio provide the new employees with 23· ·computer systems when they transitioned from First 24· ·National Bank of Layton? 25· · · ·A.· ·No, not -- not Proficio -- not new Proficio Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 23 of 102 Page 86 ·1· ·equipment, no. ·2· · · ·Q.· ·What equipment were they using? ·3· · · ·A.· ·They were using the same stuff that they were ·4· ·using while at First National Bank of Layton. ·5· · · ·Q.· ·When you transitioned from Evofi One to First ·6· ·National Bank of Layton, did First National Bank of Layton ·7· ·provide you with new computers? ·8· · · ·A.· ·No. ·9· · · ·Q.· ·So what computers were you using at that time? 10· · · ·A.· ·The computers that people -- personal computers 11· ·of people or computers that we purchased for them at Evofi 12· ·One. 13· · · ·Q.· ·So you brought the computers from Evofi One to 14· ·First National Bank of Layton? 15· · · ·A.· ·Yes, I believe so.· Or we may have purchased some 16· ·new equipment in between the transition.· I don't recall 17· ·specifically. 18· · · ·Q.· ·And were those same computers, then, ultimately 19· ·transferred to Proficio Mortgage Ventures? 20· · · ·A.· ·They could have.· I don't know that -- you know, 21· ·they could have.· That's a long life span for a computer. 22· ·So I would imagine that most of them had been upgraded 23· ·between the time Evofi One and, you know, the end of -- 24· ·the days at Proficio, but I can't be certain of that. 25· · · ·Q.· ·What happened to the data that was on the Page 87 ·1· ·computers when the transition from First National Bank of ·2· ·Layton to Proficio Mortgage Ventures? ·3· · · ·A.· ·What -- what data specifically? ·4· · · ·Q.· ·Any of the data that was on it. ·5· · · ·A.· ·I don't recall. ·6· · · ·Q.· ·Were any steps taken to remove First National ·7· ·Bank of Layton data from those computers? ·8· · · ·A.· ·I think there was, but I don't recall exactly ·9· ·what they were.· Sarah may be able to -- to testify more 10· ·to that than I.· She was more of our compliance, kind of, 11· ·arm.· But I know that one of the major steps was 12· ·ReverseVision access, which was our loan origination 13· ·software for the -- that contained, if not all, most of 14· ·the customer information was shut down at First National 15· ·Bank of Layton and then a new instance of ReverseVision 16· ·needed to be purchased and obtained at Proficio.· And we 17· ·did not, to the best of my knowledge, transfer data from 18· ·one system to the other.· So I believe there was two new 19· ·systems. 20· · · ·Q.· ·Did Proficio have ReverseVision in place when you 21· ·arrived there? 22· · · ·A.· ·I think you asked me that before.· And I don't 23· ·think I knew the answer then and I still don't know for 24· ·certain.· I don't believe they did, but I'm speculating 25· ·now.· It's my best -- my best guess is, you know, that no, Page 88 ·1· ·they did not. ·2· · · ·Q.· ·When the First National Bank of Layton employees ·3· ·transitioned over to Proficio Mortgage Ventures, did they ·4· ·bring customer information from First National Bank of ·5· ·Layton? ·6· · · · · · MR. CARGILL:· Objection to the extent it calls ·7· ·for speculation. ·8· · · · · · THE WITNESS:· I can't say for certain what an ·9· ·individual employee did or didn't do. 10· ·BY MR. LEECH: 11· · · ·Q.· ·Did you give them any instruction about how 12· ·customer information from First National Bank of Layton 13· ·customers was to be handled as part of the transition to 14· ·Proficio? 15· · · ·A.· ·Certainly, yes. 16· · · ·Q.· ·What were the nature of those instructions? 17· · · ·A.· ·I don't recall. 18· · · ·Q.· ·You recall giving them, but you don't recall what 19· ·they were? 20· · · ·A.· ·I do, yes.· And/or authorizing them. 21· · · ·Q.· ·Authorizing them to do what? 22· · · ·A.· ·Authorizing the instructions.· So, you know, a 23· ·management team discussed how we were going to handle that 24· ·stuff and I was part of that conversation.· In terms of 25· ·how that was exactly disseminated down to the team, I Page 89 ·1· ·don't recall; or exactly what was described or discussed, ·2· ·I don't recall. ·3· · · ·Q.· ·Do you recall if First National Bank prohibited ·4· ·the transfer of customer information to Proficio? ·5· · · ·A.· ·I don't know.· In fact -- no, I don't want to ·6· ·speculate, I don't recall. ·7· · · ·Q.· ·Did they authorize the former First National Bank ·8· ·of Layton employees to take customer information when they ·9· ·went over to Proficio? 10· · · · · · MR. CARGILL:· Objection to the extent this has 11· ·already been discussed and answered. 12· · · · · · THE WITNESS:· I don't recall specifically. 13· ·BY MR. LEECH: 14· · · ·Q.· ·How about lead information, did the First 15· ·National Bank of Layton employees bring lead information 16· ·with them when they transitioned over to Proficio? 17· · · ·A.· ·I don't -- I don't know.· I -- yeah. 18· · · ·Q.· ·Did you bring lead information for yourself 19· ·personally when you transitioned over to Proficio Mortgage 20· ·Ventures? 21· · · ·A.· ·I don't recall specifically.· I certainly 22· ·imagined that we would have had some, sure.· I mean, I 23· ·believe that was permitted by First National Bank of 24· ·Layton, but I don't recall specifics. 25· · · ·Q.· ·Were there any individuals who worked for Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 24 of 102 Page 90 ·1· ·Proficio Mortgage Ventures who also worked for North ·2· ·American Marketing during the time that North American ·3· ·Marketing was affiliated with Proficio Mortgage Ventures? ·4· · · ·A.· ·Did you just say were there any employees that ·5· ·were at one point employed at Proficio also employed at ·6· ·North American? ·7· · · ·Q.· ·Correct. ·8· · · ·A.· ·I don't think so.· It's possible that our IT guy ·9· ·for a period of time was -- started off as a North 10· ·American Marketing like employee, I believe, Shad 11· ·Mickelberry.· I think he ultimately became an employee of 12· ·Proficio.· And I thought there was one other individual, 13· ·but I don't remember a name and I don't remember time 14· ·period. 15· · · ·Q.· ·Was there ever a time where he was an employee of 16· ·both Proficio Mortgage Ventures and North American 17· ·Marketing? 18· · · ·A.· ·I don't think so, no. 19· · · ·Q.· ·Did Proficio have any control over who North 20· ·American Marketing hired? 21· · · ·A.· ·No. 22· · · ·Q.· ·Did Proficio have any control over who performed 23· ·services for Proficio at North American Marketing? 24· · · · · · MR. CARGILL:· Object to the form. 25· · · · · · THE WITNESS:· Yeah.· I think there was some Page 91 ·1· ·notions for that contemplated in the agreement, but you'd ·2· ·have to refer to that. ·3· ·BY MR. LEECH: ·4· · · ·Q.· ·The only such restrictions would be obtained in ·5· ·the Affiliate Manager Agreement? ·6· · · ·A.· ·Yes. ·7· · · ·Q.· ·Did Proficio have any ownership interest in North ·8· ·American Marketing? ·9· · · ·A.· ·No. 10· · · ·Q.· ·So other than the affiliation agreement, was 11· ·North American Marketing independent from Proficio? 12· · · ·A.· ·Yes. 13· · · ·Q.· ·When did you first meet Eric Naranjo? 14· · · ·A.· ·I don't recall. 15· · · ·Q.· ·Can you give me an approximate year? 16· · · ·A.· ·Yeah.· Well, it was in the Evofi era.· Early on 17· ·in the Evofi era.· Within the first, call it, 18 months I 18· ·was at Evofi. 19· · · ·Q.· ·And what was his role at Evofi? 20· · · ·A.· ·I don't know. 21· · · ·Q.· ·Did he ever work for North American Marketing? 22· · · ·A.· ·I don't recall. 23· · · ·Q.· ·Did he ever provide services in any way to North 24· ·American Marketing? 25· · · ·A.· ·I don't recall. Page 92 ·1· · · ·Q.· ·Let me be clearer.· I'm talking about throughout ·2· ·the time period that you knew him. ·3· · · ·A.· ·Yeah.· I don't recall any specific periods of ·4· ·time or any specific payments or anything like that ·5· ·specifically that was paid to him, yeah.· Or any time ·6· ·periods when he was employed by North American Marketing, ·7· ·I don't recall.· It's possible. ·8· · · ·Q.· ·You don't recall one way or the other whether he ·9· ·was a North American Marketing employees? 10· · · ·A.· ·I do not, no. 11· · · ·Q.· ·You don't recall whether he ever received any 12· ·compensation from North American Marketing? 13· · · ·A.· ·I don't know.· I was in his deposition where I 14· ·believe he testified that he did, or maybe it wasn't his 15· ·but it was Shawn.· Somebody said they received some income 16· ·from North American.· So it's likely that happened.· I'm 17· ·not disputing that, but I don't recall.· I certainly 18· ·wasn't writing the checks or handling the finances. 19· · · ·Q.· ·Who was handling the finances at North American 20· ·Marketing? 21· · · ·A.· ·At what period of time? 22· · · ·Q.· ·I'll start with the Evofi era. 23· · · ·A.· ·Evofi would have probably been myself.· Maybe 24· ·Scott.· No, would have been myself.· Scott would not have 25· ·had anything to do with North American at that period of Page 93 ·1· ·time. ·2· · · ·Q.· ·And how about at First National? ·3· · · ·A.· ·I think I might have had an outside accounting ·4· ·person too while I was at Evofi. ·5· · · · · · At First National, myself or Scott or we hired ·6· ·some accounting people at that point.· One person's name ·7· ·was Ben Sillitoe.· I believe he had a couple of accounting ·8· ·people that worked for him as well.· I don't recall their ·9· ·names. 10· · · ·Q.· ·Who handled the finances for North American 11· ·Marketing at Proficio? 12· · · ·A.· ·While at the time period, sure.· So Ben Sillitoe, 13· ·Amber Foard, Jessica Cabasug, spelling and pronunciation 14· ·may be off on her.· And there were at least two or three 15· ·other accounting people in the accounting department. 16· · · ·Q.· ·And these individuals handled the finances for 17· ·North American Marketing? 18· · · ·A.· ·They handled paying the bills and -- yeah. 19· · · ·Q.· ·Were these individuals employed by North American 20· ·Marketing? 21· · · ·A.· ·No. 22· · · ·Q.· ·Were they -- who were they employed by? 23· · · ·A.· ·Proficio. 24· · · ·Q.· ·So Proficio employees were handling the finances 25· ·for North American Marketing? Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 25 of 102 Page 94 ·1· · · ·A.· ·Yes. ·2· · · ·Q.· ·Did North American Marketing have a written ·3· ·contract with Eric Naranjo? ·4· · · ·A.· ·Not to my recollection, no. ·5· · · · · · Did you say North American Marketing? ·6· · · ·Q.· ·Yes. ·7· · · ·A.· ·Yes, not to my recollection. ·8· · · ·Q.· ·Do you recall what positions, if any, Eric ·9· ·Naranjo had at North American Marketing? 10· · · ·A.· ·No.· I already stated that I don't think he was 11· ·ever an employee of North American Marketing. 12· · · ·Q.· ·Do you recall what positions Eric Naranjo had at 13· ·First National Bank of Layton? 14· · · ·A.· ·I believe he was a sales manager. 15· · · · · · (Mr. Naranjo joins the proceedings) 16· · · · · · MR. CARGILL:· Let the record reflect that Eric 17· ·Naranjo has joined the deposition. 18· · · · · · THE WITNESS:· Looking dapper. 19· ·BY MR. LEECH: 20· · · ·Q.· ·And do you recall what position Eric Naranjo held 21· ·at Proficio? 22· · · ·A.· ·Sales manager. 23· · · ·Q.· ·Did he work for you or under your supervision at 24· ·Evofi One? 25· · · ·A.· ·Yes. Page 95 ·1· · · ·Q.· ·And did he follow you to First National Bank of ·2· ·Layton? ·3· · · ·A.· ·Yes. ·4· · · ·Q.· ·And from there did he follow you to Proficio ·5· ·Mortgage Ventures? ·6· · · ·A.· ·Yes. ·7· · · ·Q.· ·Did Eric Naranjo have any role in preparing lead ·8· ·lists for North American Marketing or any of its ·9· ·affiliates? 10· · · ·A.· ·Not to my recollection. 11· · · · · · But can you define "preparing"? 12· · · ·Q.· ·We've talked about -- a number of times about how 13· ·North American Marketing went about identifying 14· ·prospective mortgage loan customers; correct? 15· · · ·A.· ·Yes. 16· · · ·Q.· ·Did Eric Naranjo have any role in identifying 17· ·those customers? 18· · · ·A.· ·At what period of time? 19· · · ·Q.· ·Let's start with the Evofi era. 20· · · ·A.· ·I don't recall. 21· · · ·Q.· ·How about at First National Bank of Layton? 22· · · ·A.· ·I don't recall. 23· · · · · · Now, are you asking specifically at North 24· ·American Marketing, or as his role as the sales manager in 25· ·those companies? Page 96 ·1· · · ·Q.· ·I'm asking for North American Marketing. ·2· · · ·A.· ·Okay. ·3· · · ·Q.· ·Do you know? ·4· · · ·A.· ·I don't recall on that.· Probably want to check ·5· ·with Scott on that.· He worked most -- much closer with ·6· ·Scott than with me on marketing lists and data and things ·7· ·along those lines. ·8· · · ·Q.· ·Did he have -- did -- strike that. ·9· · · · · · Did Eric Naranjo have any role in preparing 10· ·customer lead information for North American Marketing 11· ·while North American Marketing was affiliated at Proficio? 12· · · ·A.· ·I don't recall. 13· · · ·Q.· ·Did Eric Naranjo have access to any -- strike 14· ·that. 15· · · · · · Did Eric Naranjo have access to any North 16· ·American Marketing lead lists? 17· · · ·A.· ·I don't recall. 18· · · ·Q.· ·Did you ever have any discussions with Eric 19· ·Naranjo regarding the confidentiality of potential 20· ·customer information? 21· · · ·A.· ·I'm sure it was contemplated in various 22· ·agreements, but I don't -- I don't recall specifically 23· ·what it was. 24· · · ·Q.· ·Did North American -- 25· · · ·A.· ·Certainly we had overall conversations with every Page 97 ·1· ·employee at Proficio, as did Proficio executives having ·2· ·those conversations, which contained things like ·3· ·restricted covenants, confidentiality reminders, et ·4· ·cetera, et cetera.· Whether I had a specific conversation ·5· ·with Eric or not myself personally, I can't -- I can't be ·6· ·certain and I don't recall. ·7· · · ·Q.· ·I'm talking about in connection with the customer ·8· ·lead information that was generated at North American ·9· ·Marketing.· Did you have any -- 10· · · ·A.· ·Not that I can recall. 11· · · ·Q.· ·I have to ask the question. 12· · · · · · Did you have any conversations with Eric Naranjo 13· ·about the confidentiality of potential customer lead 14· ·information that was prepared for North American 15· ·Marketing? 16· · · ·A.· ·I don't recall any specific conversations. 17· · · ·Q.· ·Do you know Russ Riddle? 18· · · ·A.· ·Yes. 19· · · ·Q.· ·When did you first meet Mr. Riddle? 20· · · ·A.· ·I don't recall. 21· · · ·Q.· ·Approximately when did you first meet Mr. Riddle? 22· · · ·A.· ·I think it was while at First National Bank, but 23· ·I'm not certain.· You could check his employee agreements 24· ·and see if he was an employed at First National Bank or 25· ·not. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 26 of 102 Page 98 ·1· · · ·Q.· ·Was he ever an employee of North American ·2· ·Marketing? ·3· · · ·A.· ·I don't believe so. ·4· · · ·Q.· ·Was he ever an employee of Evofi One? ·5· · · ·A.· ·I don't believe so. ·6· · · ·Q.· ·What was his position at First National Bank of ·7· ·Layton? ·8· · · ·A.· ·I don't know if he ever worked there.· If he did, ·9· ·it would have been a loan officer. 10· · · ·Q.· ·Do you remember if he followed you from First 11· ·National Bank of Layton to Proficio? 12· · · ·A.· ·I don't know. 13· · · ·Q.· ·Do you remember if he -- strike that. 14· · · · · · What was his position at Proficio? 15· · · ·A.· ·He was a loan officer. 16· · · · · · I need a restroom break anytime in the next five, 17· ·ten minutes.· I don't need it this second.· Do you want to 18· ·do it now? 19· · · · · · MR. CARGILL:· Yeah. 20· · · · · · MR. LEECH:· Yeah.· Now is a good time. 21· · · · · · (Recess taken 11:29 a.m. to 11:41 a.m.) 22· ·BY MR. LEECH: 23· · · ·Q.· ·Did North American Marketing have a contract with 24· ·Russ Riddle? 25· · · ·A.· ·Not that I'm aware of. Page 99 ·1· · · ·Q.· ·Did you have any specific discussions with ·2· ·Mr. Riddle regarding confidentiality of prospective ·3· ·customer information? ·4· · · ·A.· ·Related to North American Marketing or his roles ·5· ·at Proficio and/or First National? ·6· · · ·Q.· ·Related to North American Marketing. ·7· · · ·A.· ·Not that I'm aware of. ·8· · · ·Q.· ·How about related to his role at First National ·9· ·Bank of Layton? 10· · · ·A.· ·Certainly those discussions would have been had. 11· ·Whether I had them with him or not I'm not aware. 12· · · ·Q.· ·And how about at Proficio Mortgage Ventures? 13· · · ·A.· ·Same answer. 14· · · ·Q.· ·Did Mr. Riddle have access to North American 15· ·Marketing lead lists? 16· · · ·A.· ·Did Mr. Riddle have access to North American 17· ·Marketing lead lists?· I don't believe so, no. 18· · · ·Q.· ·Did he have access to lead lists provided to 19· ·First National Bank of Layton by North American Marketing? 20· · · ·A.· ·I'm foggy whether or not he was ever an employee 21· ·of First National Bank of Layton, so I can't speculate. I 22· ·don't know. 23· · · ·Q.· ·Did he have access to lead lists provided to 24· ·Proficio by North American Marketing? 25· · · ·A.· ·He would have had access to lead lists at Page 100 ·1· ·Proficio, yes. ·2· · · ·Q.· ·Did he perform any work in assembling lead lists ·3· ·for North American Marketing? ·4· · · ·A.· ·I don't believe so. ·5· · · ·Q.· ·How about for Proficio? ·6· · · ·A.· ·I don't believe so. ·7· · · ·Q.· ·How about for First National Bank of Layton? ·8· · · ·A.· ·I don't believe so, if he was ever an employee ·9· ·there. 10· · · ·Q.· ·Was Mr. Riddle ever paid by North American 11· ·Marketing? 12· · · ·A.· ·I don't recall. 13· · · ·Q.· ·When did you first meet Shawn O'Brien? 14· · · ·A.· ·Same time frame as I met Eric Naranjo, which was 15· ·within the first year of my employment at Evofi. 16· · · ·Q.· ·Mr. O'Brien ever work for North American 17· ·Marketing? 18· · · ·A.· ·I don't recall. 19· · · ·Q.· ·What was his role at Evofi One? 20· · · ·A.· ·I don't recall.· Yeah, I don't recall. 21· · · ·Q.· ·Did he follow you from Evofi One to First 22· ·National Bank of Layton? 23· · · ·A.· ·He did. 24· · · ·Q.· ·What was his role at First National Bank of 25· ·Layton? Page 101 ·1· · · ·A.· ·I believe he was a processor or processing ·2· ·manager at that point. ·3· · · ·Q.· ·Did he have any other roles at First National ·4· ·Bank of Layton? ·5· · · ·A.· ·Not that I recall. ·6· · · ·Q.· ·Did he -- ·7· · · ·A.· ·He may have, but not that I recall. ·8· · · ·Q.· ·Did he follow you from First National Bank of ·9· ·Layton to Proficio? 10· · · ·A.· ·Yes. 11· · · ·Q.· ·And what was his role at Proficio? 12· · · ·A.· ·Same.· Processor/processing manager.· One or the 13· ·both of them. 14· · · ·Q.· ·And what are the duties of a processor or 15· ·processing manager? 16· · · ·A.· ·They would all be contained in the job 17· ·descriptions, the various job descriptions. 18· · · ·Q.· ·What do you understand the job duties of a 19· ·processor or processing manager to be? 20· · · ·A.· ·They're numerous.· There's probably hundreds of 21· ·duties.· But, you know, quick overview would be taking the 22· ·loan -- taking the information that a customer provides 23· ·from a loan application and working on that -- working on 24· ·that -- gathering that information, verifying that 25· ·information, collecting additional supporting information Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 27 of 102 Page 102 ·1· ·to make up and create a loan file.· And then ultimately ·2· ·submitting that loan file to underwriting and then helping ·3· ·ensure that that loan comes out of underwriting and any ·4· ·conditions are met satisfying the loan is then closed and ·5· ·funded. ·6· · · ·Q.· ·Did you have any discussions with him regarding ·7· ·confidentiality of lead list information? ·8· · · ·A.· ·For what company? ·9· · · ·Q.· ·For North American Marketing. 10· · · ·A.· ·Not that I can recall. 11· · · ·Q.· ·How about for Evofi One? 12· · · ·A.· ·Not that I can recall. 13· · · ·Q.· ·How about for First National Bank of Layton? 14· · · ·A.· ·There would have been stuff in his employment 15· ·agreement.· And do I recall specific conversation between 16· ·him and I?· No. 17· · · ·Q.· ·How about at Proficio? 18· · · ·A.· ·Same answer.· I don't recall specific 19· ·conversation, but it would have been contemplated in his 20· ·employment agreement. 21· · · ·Q.· ·Did he have access to lead lists generated by 22· ·North American Marketing? 23· · · ·A.· ·I don't -- I don't know. 24· · · ·Q.· ·Did he have access to lead lists provided to 25· ·Proficio by North American Marketing? Page 103 ·1· · · ·A.· ·I believe his role as a processor or processing ·2· ·manager would have enabled him to access various customer ·3· ·data or lead lists.· But I don't know specifically what he ·4· ·had or didn't have. ·5· · · ·Q.· ·How about when he was at First National Bank of ·6· ·Layton, did he have access to customer -- to lead list ·7· ·information provided by North American Marketing and First ·8· ·National Bank of Layton? ·9· · · ·A.· ·The actual lead list, I'm not certain.· The data 10· ·that was contained once the lead became a prospect or a 11· ·customer, he certainly would have had access to that 12· ·information as a processor and/or processing manager. 13· · · ·Q.· ·Explain how the data goes from being on a lead 14· ·list to being a prospect. 15· · · ·A.· ·Explain how the data goes from being on the lead 16· ·list to being a prospect? 17· · · ·Q.· ·I think you just -- 18· · · ·A.· ·I don't understand. 19· · · ·Q.· ·And the question is bad probably, because I'm not 20· ·sure I understand. 21· · · · · · You referenced that he wouldn't have access to 22· ·the lead lists themselves.· But once the lead was 23· ·converted into a prospect, he would have had access to 24· ·that. 25· · · ·A.· ·Yeah. Page 104 ·1· · · ·Q.· ·What is the process by which a lead is converted ·2· ·to a prospect? ·3· · · ·A.· ·So it could be a variety of different ways.· But ·4· ·the way that I was envisioning a lead list as we've been ·5· ·talking about to this date is a bunch of leads that are on ·6· ·a piece of paper or electronically, an Excel file, et ·7· ·cetera, et cetera, that is comprised and that's made up of ·8· ·a lead list.· An individual customer would be an actual ·9· ·customer that was no longer a lead.· A customer that 10· ·consummated a proposal or an application document and -- 11· ·and started working with whatever bank or mortgage company 12· ·that was at the time. 13· · · ·Q.· ·And how did they go from one being on the list to 14· ·being a prospective customer? 15· · · ·A.· ·Well, when somebody did more than -- when 16· ·somebody expressed interest in a loan product, it became a 17· ·prospect.· And when that prospect filled out a loan 18· ·application, that's probably when we would consider that 19· ·person, as I just defined it, a customer for the purpose 20· ·of that conversation. 21· · · ·Q.· ·Okay.· Did Mr. O'Brien have any role in 22· ·assembling lead lists? 23· · · ·A.· ·Not to my knowledge, no. 24· · · ·Q.· ·Was Mr. O'Brien ever paid by North American 25· ·Marketing? Page 105 ·1· · · ·A.· ·Not to my knowledge, no. ·2· · · ·Q.· ·When did you first meet Eddie Gomez? ·3· · · ·A.· ·I don't remember. ·4· · · ·Q.· ·Can you give me an approximate time frame? ·5· · · ·A.· ·I think he worked with us at First National Bank ·6· ·of Layton, but I'm not certain. ·7· · · ·Q.· ·Did he ever work for North American Marketing? ·8· · · ·A.· ·No. ·9· · · ·Q.· ·Did he ever provide -- 10· · · ·A.· ·Not to my knowledge. 11· · · ·Q.· ·Did he ever provide services to North American 12· ·Marketing? 13· · · ·A.· ·Not to my knowledge.· Not to my recollection. 14· · · ·Q.· ·What was his role at First National Bank of 15· ·Layton? 16· · · ·A.· ·I don't know that he was an employee at First 17· ·National Bank of Layton.· If he was, it would have been a 18· ·loan officer. 19· · · ·Q.· ·And did he follow you from First National Bank of 20· ·Layton to Proficio? 21· · · ·A.· ·If he was at First National Bank of Layton, then 22· ·yes, he followed us to Proficio. 23· · · ·Q.· ·And what was his role at Proficio? 24· · · ·A.· ·A loan officer. 25· · · ·Q.· ·Did you have any discussions with him regarding Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 28 of 102 Page 106 ·1· ·the confidentiality of lead list information? ·2· · · ·A.· ·Of North American Marketing's lead list or ·3· ·Proficio's or First National Bank's or whose? ·4· · · ·Q.· ·North American Marketing's. ·5· · · ·A.· ·No, not to my knowledge.· Not to my recollection. ·6· · · ·Q.· ·Did you have any discussions with him regarding ·7· ·confidentiality of lead list information for First ·8· ·National Bank of Layton? ·9· · · ·A.· ·Not specifically, but it would have been 10· ·contained the same way that we discussed with the other 11· ·people you just asked me about.· Employment agreements, 12· ·trainings, confidentiality reminders, et cetera, et 13· ·cetera. 14· · · ·Q.· ·How about Proficio? 15· · · ·A.· ·Same answer.· No specific recollection. 16· · · ·Q.· ·When did you first meet Diane Stevens? 17· · · ·A.· ·I don't remember. 18· · · ·Q.· ·Can you give me an approximate time period? 19· · · ·A.· ·Less so on her.· '13, '14.· 2013, 2014. 20· · · ·Q.· ·So at Proficio? 21· · · ·A.· ·Yes. 22· · · ·Q.· ·Do you recall if she worked with you at First 23· ·National Bank of Layton? 24· · · ·A.· ·I don't think she did, no.· It's possible, but I 25· ·don't think she did. Page 107 ·1· · · ·Q.· ·Did she ever work for North American Marketing ·2· ·and provide services for North American Marketing? ·3· · · ·A.· ·Not to my recollection, no. ·4· · · ·Q.· ·What was her role at Proficio? ·5· · · ·A.· ·I believe she was a loan officer. ·6· · · ·Q.· ·North American Marketing have any written ·7· ·agreements with her? ·8· · · ·A.· ·I don't believe so, no. ·9· · · ·Q.· ·Did you have any discussions with her regarding 10· ·the confidentiality of North American Marketing lead list 11· ·information? 12· · · ·A.· ·Not that I can recall. 13· · · ·Q.· ·How about Proficio lead list information? 14· · · ·A.· ·Specific conversations with Diane, I do not 15· ·recall.· She would have executed employment agreements 16· ·that would have contained that information, though, 17· ·certainly. 18· · · ·Q.· ·Did she have access to North American Marketing 19· ·lead lists that were provided to Proficio? 20· · · ·A.· ·She should not have, no. 21· · · ·Q.· ·Did she have any role in putting lead lists 22· ·together? 23· · · ·A.· ·Not that I'm aware of. 24· · · ·Q.· ·Was she ever paid by North American Marketing? 25· · · ·A.· ·Not that I'm aware of. Page 108 ·1· · · ·Q.· ·When did you first meet Steve Munoz? ·2· · · ·A.· ·I don't remember. ·3· · · ·Q.· ·Can you give me an approximate time frame? ·4· · · ·A.· ·I believe it was at the period of time -- at ·5· ·first I believe he worked at First National Bank.· I would ·6· ·speculate end of '10, beginning of '11. ·7· · · ·Q.· ·Did he ever provide services to North American ·8· ·Marketing? ·9· · · ·A.· ·Not that I remember. 10· · · ·Q.· ·Did he ever work for North American Marketing? 11· · · ·A.· ·Not that I remember. 12· · · ·Q.· ·What was his role at First National Bank of 13· ·Layton? 14· · · ·A.· ·I believe he was a loan officer. 15· · · ·Q.· ·Did he follow you from First National Bank of 16· ·Layton to Proficio? 17· · · ·A.· ·I believe so, yes. 18· · · ·Q.· ·What was his role at Proficio? 19· · · ·A.· ·I believe he was a loan officer. 20· · · ·Q.· ·And can you give me a brief summary of the duties 21· ·of a loan officer? 22· · · ·A.· ·To originate loans. 23· · · ·Q.· ·Did North American Marketing have a written 24· ·agreement with him? 25· · · ·A.· ·I don't believe so. Page 109 ·1· · · ·Q.· ·Did you have any specific discussions with Steve ·2· ·Munoz regarding the confidentiality of North American ·3· ·Marketing lead list information? ·4· · · ·A.· ·Not that I can recall. ·5· · · ·Q.· ·How about at First National Bank of Layton? ·6· · · ·A.· ·I don't recall any specific conversation.· He ·7· ·would have executed employment agreements that would have ·8· ·had confidentiality reminders in them at both First ·9· ·National and at Proficio. 10· · · ·Q.· ·Did Steve Munoz have access to lead list 11· ·information? 12· · · ·A.· ·What lead list information? 13· · · ·Q.· ·Strike that. 14· · · · · · While at First National Bank of Layton, did Steve 15· ·Munoz have access to lead lists provided by North American 16· ·Marketing to First National Bank of Layton? 17· · · ·A.· ·So lead list -- so First National Bank lead 18· ·lists? 19· · · · · · MR. LEECH:· Can you read the question back? 20· · · · · · THE WITNESS:· Is that the question? 21· · · · · · MR. LEECH:· Can you read the question back? 22· · · · · · (Record read) 23· · · · · · THE WITNESS:· I don't know. 24· ·BY MR. LEECH: 25· · · ·Q.· ·Did Steve Munoz have access to lead lists North Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 29 of 102 Page 110 ·1· ·American Marketing provided to Proficio? ·2· · · ·A.· ·Have access to lead list information North ·3· ·American provided -- I don't know. ·4· · · ·Q.· ·Who would know? ·5· · · ·A.· ·I don't know.· Probably Scott Guild.· He was our ·6· ·marketing arm for -- for that type of stuff. ·7· · · ·Q.· ·Did Steve Munoz play any role in putting lead ·8· ·lists together? ·9· · · ·A.· ·Not that I'm aware of. 10· · · ·Q.· ·Was Steve Munoz paid by North American Marketing? 11· · · ·A.· ·Not that I'm aware of. 12· · · ·Q.· ·Did North American Marketing -- strike that. 13· · · · · · Did anyone at North American Marketing work 14· ·specifically on secondary marketing, secondary market 15· ·marketing? 16· · · ·A.· ·What do you mean by the question?· Did North 17· ·American -- I mean, North American Marketing, as we've 18· ·already talked about, had various consulting and 19· ·managerial oversight decisions -- not decisions but roles 20· ·in Proficio's secondary marketing strategy, sure. 21· · · ·Q.· ·And was there a specific person at North American 22· ·Marketing who was in that role? 23· · · ·A.· ·It wasn't defined, no.· The kind of order of 24· ·operations from the two owners of North American Marketing 25· ·was Alek, I had more to do with that stuff.· Scott had Page 111 ·1· ·more to do with technology and marketing. ·2· · · ·Q.· ·So who at Proficio did you supervise with respect ·3· ·to the secondary marketing? ·4· · · ·A.· ·Well, consult with?· I wasn't their supervisor. ·5· ·They were their own employees.· But Marco Barucchieri ·6· ·would be the primary contact.· Then he coordinated -- we ·7· ·worked diligently with, gosh, Stephen Bennett.· There was ·8· ·a forward secondary guy or gal, I don't remember who it ·9· ·was.· And then finance at the bank, Dave Pittman on 10· ·occasion, would work on, you know, trading and liquidity 11· ·at the bank. 12· · · ·Q.· ·How many people -- strike that. 13· · · · · · When you were at First National Bank of Layton, 14· ·how many people had North American Marketing emails? 15· · · ·A.· ·When I was where? 16· · · ·Q.· ·At First National Bank of Layton. 17· · · ·A.· ·I don't remember. 18· · · ·Q.· ·Can you give me an approximate number? 19· · · ·A.· ·I don't remember.· If there was -- how many 20· ·employees were there?· I would say a large percentage of 21· ·the employees.· Greater than 50 percent of the employees. 22· · · ·Q.· ·Employees of North American Marketing? 23· · · ·A.· ·No.· Employees of First National Bank. 24· · · ·Q.· ·So greater than 50 percent of the -- 25· · · ·A.· ·Of the reverse mortgage people that we worked Page 112 ·1· ·with at First National Bank of Layton had North American ·2· ·Marketing emails. ·3· · · ·Q.· ·And why did they have North American Marketing ·4· ·emails? ·5· · · ·A.· ·I don't remember. ·6· · · ·Q.· ·Did they have First National Bank of Layton ·7· ·emails? ·8· · · ·A.· ·Yes. ·9· · · ·Q.· ·So why did they need a second email? 10· · · ·A.· ·I don't remember. 11· · · ·Q.· ·Are you aware of any banking regulations that 12· ·govern the use of -- strike that. 13· · · · · · To your knowledge, were there any banking 14· ·regulations in effect during the time you were affiliated 15· ·with First National Bank of Layton that governed the use 16· ·of emails by mortgage loan originators? 17· · · · · · MR. CARGILL:· Objection just to the extent it 18· ·calls for a legal interpretation. 19· · · · · · THE WITNESS:· Yeah.· I can't answer that.· I'm 20· ·not an expert. 21· ·BY MR. LEECH: 22· · · ·Q.· ·While you were at First National Bank of Layton, 23· ·did any of the employees in the reverse mortgage division 24· ·use personal emails for work purposes? 25· · · ·A.· ·Yes. Page 113 ·1· · · ·Q.· ·Approximately how many? ·2· · · ·A.· ·I don't know. ·3· · · ·Q.· ·Do you know why they used personal emails for ·4· ·work purposes? ·5· · · ·A.· ·I don't know a specific.· There's probably ·6· ·different reasons for different events or different ·7· ·occurrences. ·8· · · ·Q.· ·Did you use a personal email address for work ·9· ·purposes while you worked at First National Bank of 10· ·Layton? 11· · · ·A.· ·Yes. 12· · · ·Q.· ·And why did you do that? 13· · · ·A.· ·Better access.· I was able to access the 14· ·information from my home computer or from my telephone. 15· ·There were specifically -- I think one of the main reasons 16· ·that we did the North American Marketing email, now that 17· ·it's coming to my memory, is there's size limitations. 18· ·The corporate email accounts at First National Bank had 19· ·size limitations, so we were limited in terms of 20· ·attachments.· Things like appraisals or large data exports 21· ·weren't able to go through and oftentimes they would get 22· ·lost or stuck in the cloud somewhere, so we wanted to 23· ·facilitate that.· So accounts like Gmail and our North 24· ·American Marketing server were good work-arounds for that. 25· · · ·Q.· ·Any other reasons why you would provide First Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 30 of 102 Page 114 ·1· ·National Bank of Layton employees with North American ·2· ·Marketing emails? ·3· · · ·A.· ·Not that I can recall, no. ·4· · · ·Q.· ·Did anyone at First National Bank of Layton have ·5· ·any communications with you about storing potential ·6· ·customer information or customer information in North ·7· ·American Marketing email accounts or personal email ·8· ·accounts? ·9· · · ·A.· ·Not that I can recall. 10· · · ·Q.· ·Are you aware of anything that would prohibit you 11· ·from storing such information in North American Marketing 12· ·accounts or personal email accounts? 13· · · ·A.· ·What do you mean by "aware of anything that would 14· ·prohibit"?· Like legally am I allowed to do that or not? 15· · · ·Q.· ·A Regulation, an employment rule.· Anything that 16· ·would prohibit you from doing so. 17· · · ·A.· ·I think I already answered that.· Wasn't that the 18· ·same objection?· Legally I don't know.· I'm not aware of 19· ·anything. 20· · · · · · MR. CARGILL:· Objection to the extent it's 21· ·calling for a legal interpretation or conclusion. 22· ·BY MR. LEECH: 23· · · ·Q.· ·I'm just asking to the extent of your knowledge. 24· · · ·A.· ·No, not to the extent of my knowledge. 25· · · ·Q.· ·Did anyone at Proficio Mortgage Ventures have a Page 115 ·1· ·North American email account? ·2· · · ·A.· ·Yes. ·3· · · ·Q.· ·Who? ·4· · · ·A.· ·I don't recall. ·5· · · ·Q.· ·Approximately how many people at Proficio ·6· ·Mortgage -- strike that. ·7· · · · · · Of the people who worked in reverse mortgages at ·8· ·Proficio Mortgage Ventures, approximately how many of ·9· ·those individuals had North American Marketing email 10· ·accounts? 11· · · ·A.· ·Again, approximately 50 percent or more of the 12· ·reverse mortgage employees. 13· · · ·Q.· ·And why were those employees provided with North 14· ·American Marketing accounts? 15· · · ·A.· ·Yeah.· Per my recollection, at least one of the 16· ·reasons was the same size constraints, file size 17· ·constraints. 18· · · ·Q.· ·Any other reasons why Proficio employees -- 19· · · ·A.· ·Not that I can recall of, no. 20· · · ·Q.· ·I've got to finish the question. 21· · · · · · Any other reasons why the Proficio employees were 22· ·provided with North American Marketing email addresses? 23· · · ·A.· ·Not that I can recall, no. 24· · · ·Q.· ·Did Proficio Mortgage Ventures employees use 25· ·their personal email accounts in connection with their Page 116 ·1· ·business at Proficio Mortgage Ventures? ·2· · · ·A.· ·I can't speculate as to what each and every ·3· ·Proficio Mortgage employee did or didn't do. ·4· · · ·Q.· ·I'm not asking you to speculate. ·5· · · · · · To your knowledge, did any Proficio Mortgage ·6· ·Ventures employee use their personal email accounts in the ·7· ·course of their business? ·8· · · ·A.· ·Did any?· Yeah, I think so. ·9· · · ·Q.· ·Who? 10· · · ·A.· ·I don't know off the top of my head. 11· · · ·Q.· ·Did you have any discussions -- strike that. 12· · · · · · Did you use a personal email account when you 13· ·were providing services to -- 14· · · ·A.· ·Yes. 15· · · ·Q.· ·-- Proficio Mortgage Ventures? 16· · · ·A.· ·Yes. 17· · · ·Q.· ·And why did you do that? 18· · · ·A.· ·Why wouldn't I do that? 19· · · ·Q.· ·Why did you do that?· You need to answer the 20· ·question. 21· · · ·A.· ·Because I wanted to email somebody. 22· · · ·Q.· ·Did you have a Proficio Mortgage Ventures email 23· ·account? 24· · · ·A.· ·I did. 25· · · ·Q.· ·You also had a North American Marketing email Page 117 ·1· ·account? ·2· · · ·A.· ·I did. ·3· · · ·Q.· ·Why didn't you use one of those accounts if you ·4· ·wanted to email someone? ·5· · · ·A.· ·I did, yeah, on numerous occasions. ·6· · · ·Q.· ·You also testified that you used a personal email ·7· ·account to email -- ·8· · · ·A.· ·Sure. ·9· · · ·Q.· ·-- people.· Why -- 10· · · ·A.· ·There -- is there a specific, you know, email you 11· ·want me to explain why I emailed from one account to the 12· ·other?· Again, each email might have a separate reason 13· ·or there could be a file shortage limitation.· It could 14· ·have something to do with one account was easier to set up 15· ·on my telephone than the other.· Could have something to 16· ·do with I remembered a password one day on one account. 17· ·It could be as simple as I had multiple email accounts in 18· ·my Outlook -- in my Outlook Exchange mailbox and when I 19· ·went to originate a message, I didn't remember which one 20· ·of those two or three accounts I originated from. 21· · · ·Q.· ·Any other reason why you might have used a 22· ·personal email account? 23· · · ·A.· ·Not that I can think of. 24· · · ·Q.· ·Was anyone that you worked with at -- strike 25· ·that. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 31 of 102 Page 118 ·1· · · · · · Were any of the executives that you consulted for ·2· ·at Proficio Mortgage Ventures aware that you were using -- ·3· ·that you and other Proficio Mortgage Ventures employees ·4· ·were using North American Marketing email accounts or ·5· ·personal email accounts in the conduct of Proficio's ·6· ·business? ·7· · · ·A.· ·I don't know. ·8· · · ·Q.· ·Were you aware of any rules or restriction -- ·9· ·strike that. 10· · · · · · Were you aware of anything that restricted you 11· ·from using a North American Marketing email account or a 12· ·Proficio Mortgage Ventures email account while you -- 13· ·strike -- during the time frame that you were working at 14· ·Proficio Mortgage Ventures or affiliated with Proficio 15· ·Mortgage Ventures? 16· · · ·A.· ·Do you want to say it again? 17· · · ·Q.· ·Yeah.· Let me try that again. 18· · · · · · Was there any -- strike that. 19· · · · · · Were you aware of anything that restricted your 20· ·ability to use a North American Marketing account or a 21· ·personal email account during the time you were affiliated 22· ·with Proficio Mortgage Ventures? 23· · · ·A.· ·No, nothing that restricted my ability.· No. 24· · · ·Q.· ·When you transitioned from First National Bank of 25· ·Layton to Proficio Mortgage Ventures, was Dixie Gilby a Page 119 ·1· ·person who followed you from First National Bank of Layton ·2· ·to Proficio Mortgage Ventures? ·3· · · ·A.· ·Yes, she was. ·4· · · ·Q.· ·And what was her role at First National Bank of ·5· ·Layton? ·6· · · ·A.· ·I don't recall her job title. ·7· · · ·Q.· ·Well, what services did she perform? ·8· · · ·A.· ·What we would probably all agree on is officer ·9· ·manager-type functions. 10· · · ·Q.· ·And what was her role at Proficio? 11· · · ·A.· ·Same. 12· · · ·Q.· ·As part of the transition, was she ever 13· ·instructed to destroy records? 14· · · ·A.· ·I don't think so. 15· · · ·Q.· ·You don't think so, or are you -- she may have 16· ·been? 17· · · · · · MR. CARGILL:· Object to the form. 18· · · · · · THE WITNESS:· I can't speculate as to what 19· ·somebody or someone in Dixie's life told her to do. I 20· ·didn't instruct her, though. 21· ·BY MR. LEECH: 22· · · ·Q.· ·You're certain you did not instruct her to 23· ·destroy records? 24· · · ·A.· ·Yes.· I do not recall instructing Dixie to -- 25· ·destroying records. Page 120 ·1· · · ·Q.· ·Do you recall if she did destroy any records? ·2· · · ·A.· ·I do not. ·3· · · ·Q.· ·When did you first meet Sarah Young? ·4· · · ·A.· ·Very early days at Proficio.· Excuse me.· Very ·5· ·early days at Evofi.· I think we concluded that was about ·6· ·2006, but I could be off on my time line. ·7· · · ·Q.· ·Did she ever work for North American Marketing? ·8· · · ·A.· ·I don't think so. ·9· · · ·Q.· ·Did she ever provide services to North American 10· ·Marketing? 11· · · ·A.· ·I don't think so. 12· · · ·Q.· ·What was her role at Evofi One? 13· · · ·A.· ·She had multiple roles. 14· · · ·Q.· ·What were they? 15· · · ·A.· ·I don't know.· I don't remember.· I know at least 16· ·two of them. 17· · · ·Q.· ·Okay.· What are those? 18· · · ·A.· ·She was a processing manager for one of their 19· ·subsidiary companies called a Better Groups Processing or 20· ·Better Processing Service.· And she did something related 21· ·to finance. 22· · · ·Q.· ·Do you recall any other roles that she had at 23· ·Evofi One? 24· · · ·A.· ·I do not. 25· · · ·Q.· ·And did she follow you from Evofi One to First Page 121 ·1· ·National Bank of Layton? ·2· · · ·A.· ·Define what you mean by "follow" me. ·3· · · ·Q.· ·Did she go with you? ·4· · · ·A.· ·Immediately? ·5· · · ·Q.· ·Yeah. ·6· · · ·A.· ·No. ·7· · · ·Q.· ·Did she ultimately go with you to -- strike that. ·8· · · · · · Did she ultimately become employed by First ·9· ·National Bank of Layton? 10· · · ·A.· ·She did, yes. 11· · · ·Q.· ·Approximately how long after you transitioned to 12· ·First National Bank of Layton did she come on board? 13· · · ·A.· ·I don't remember exactly.· I would estimate it 18 14· ·months.· Maybe two years.· Could have been soon. 15· · · ·Q.· ·And what was her role at First National Bank of 16· ·Layton? 17· · · ·A.· ·Ultimately she was the operations manager -- 18· · · ·Q.· ·What was -- 19· · · ·A.· ·Excuse me.· -- in the reverse mortgage division 20· ·or group or unit, whatever it was defined as. 21· · · ·Q.· ·What was her initial role? 22· · · ·A.· ·I don't remember.· It was something less than 23· ·that. 24· · · ·Q.· ·Do you recall any other roles that she had at 25· ·First National Bank of Layton? Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 32 of 102 Page 122 ·1· · · ·A.· ·I have no idea. ·2· · · ·Q.· ·And did she follow you from First National Bank ·3· ·of Layton to Proficio? ·4· · · ·A.· ·She did, yes. ·5· · · ·Q.· ·And what was her role at Proficio? ·6· · · ·A.· ·She was reverse mortgage branch manager, ·7· ·Henderson branch manager and operations manager. ·8· · · ·Q.· ·Was she an operations manager just for the ·9· ·Henderson branch or for other branches as well? 10· · · ·A.· ·For the reverse mortgage division.· The entire 11· ·reverse mortgage division. 12· · · ·Q.· ·Nationwide? 13· · · ·A.· ·Yes. 14· · · ·Q.· ·Including the branches that we referenced earlier 15· ·that were not in Henderson? 16· · · ·A.· ·Yes.· Processor of other outside branches would 17· ·have reported to Sarah. 18· · · ·Q.· ·Did she have a contract with North American 19· ·Marketing? 20· · · ·A.· ·I don't believe so. 21· · · ·Q.· ·Did you have any specific discussions with her 22· ·regarding confidentiality of North American Marketing lead 23· ·list information? 24· · · ·A.· ·I don't believe so. 25· · · ·Q.· ·How about First National Bank of Layton lead list Page 123 ·1· ·information? ·2· · · ·A.· ·I don't believe I had any specific conversations. ·3· ·I don't recall them.· Would have been contemplated in her ·4· ·employment agreement, though, in her employment agreement ·5· ·at both First National Bank of Layton and at Proficio. ·6· ·Confidentiality reminders and et cetera. ·7· · · ·Q.· ·Do you have any specific discussions with her ·8· ·regarding confidentiality of lead list information ·9· ·provided to Proficio by North American Marketing? 10· · · ·A.· ·Can you restate the question? 11· · · · · · MR. LEECH:· Can you read that back? 12· · · · · · (Record read) 13· · · · · · THE WITNESS:· I don't remember. 14· ·BY MR. LEECH: 15· · · ·Q.· ·Was Sarah Young ever paid by North American 16· ·Marketing? 17· · · ·A.· ·I don't remember. 18· · · ·Q.· ·Would there be any documents that would reflect 19· ·whether or not she was paid by North American Marketing? 20· · · ·A.· ·I don't know.· I don't remember her ever being 21· ·paid. 22· · · ·Q.· ·If she was paid, would there be documents that 23· ·would reflect that? 24· · · ·A.· ·I would assume so.· If she was given a paycheck, 25· ·that paycheck would be somewhere. Page 124 ·1· · · ·Q.· ·Show you what we marked as Exhibit 1. ·2· · · · · · (Exhibit 1 marked) ·3· · · · · · THE WITNESS:· Thank you. ·4· ·BY MR. LEECH: ·5· · · ·Q.· ·Go ahead and review this document and let me know ·6· ·when you're finished. ·7· · · ·A.· ·Okay. ·8· · · ·Q.· ·Do you recognize this document? ·9· · · ·A.· ·Yes. 10· · · ·Q.· ·What is this document? 11· · · ·A.· ·An Affiliate Manager Agreement. 12· · · ·Q.· ·Who is this Affiliate Manager Agreement between? 13· · · ·A.· ·Proficio Bank and/or Proficio Mortgage Ventures 14· ·and North American Marketing. 15· · · ·Q.· ·Is this the Affiliate Manager Agreement you 16· ·referred to earlier in your testimony today? 17· · · ·A.· ·I believe so, yes. 18· · · ·Q.· ·Turning to the last page, do you recognize the 19· ·name Scott Guild -- 20· · · ·A.· ·I do. 21· · · ·Q.· ·-- on that page? 22· · · ·A.· ·I do, yes. 23· · · ·Q.· ·Is that his signature to the left of his name? 24· · · ·A.· ·I don't know. 25· · · ·Q.· ·Are you familiar with his signature? Page 125 ·1· · · ·A.· ·No. ·2· · · ·Q.· ·He's purportedly signing on behalf of North ·3· ·American Marketing, Inc. ·4· · · · · · Were you aware that North American Marketing, ·5· ·Inc., was going to enter into this Affiliate Manager ·6· ·Agreement? ·7· · · ·A.· ·Yes, I was. ·8· · · ·Q.· ·Did you authorize Mr. Guild to enter into the ·9· ·agreement? 10· · · ·A.· ·Yes. 11· · · ·Q.· ·Explain to me how the decision-making process 12· ·worked.· What was Mr. Guild's role in deciding whether or 13· ·not to enter into this agreement? 14· · · ·A.· ·It was a mutual, you know, discussion between the 15· ·two of us, and ultimately we -- we mutually agreed to -- 16· ·to -- to enter into it. 17· · · ·Q.· ·And what were the factors that led you to enter 18· ·into this agreement? 19· · · ·A.· ·That's overly broad.· I mean, there's thousands 20· ·of different decision points, you know, that -- the 21· ·main -- we talked about a lot of this.· You know, Proficio 22· ·had the ability in their business -- we felt they had the 23· ·ability in their business plan to house a large operation 24· ·like ours.· We were attracted to their executive team.· We 25· ·were attracted to their president.· Understood mortgages Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 33 of 102 Page 126 ·1· ·and specifically understood reverse mortgages.· We had a ·2· ·couple other options, but they didn't feel like they were ·3· ·as good as options as Proficio.· We were satisfied with ·4· ·the financial arrangement between North American Marketing ·5· ·and Proficio.· Those would be the four or five largest ·6· ·data points I can think of, but there were certainly other ·7· ·things as well that I'm just not recalling. ·8· · · ·Q.· ·And turning to the first page of the agreement, ·9· ·first section where it says Duties of Affiliate Manager. 10· ·In particular, I'm looking at the second little Roman that 11· ·says Lead Generation & Marketing Services. 12· · · · · · Do you see that paragraph? 13· · · ·A.· ·Yes. 14· · · ·Q.· ·It states, The Affiliate Manager will assist the 15· ·Group in identifying prospective customers with a high 16· ·likelihood of being able to benefit from home mortgage 17· ·products offered by PMV. 18· · · · · · Do you see that language? 19· · · ·A.· ·Yes. 20· · · ·Q.· ·How did the affiliate manager go about 21· ·identifying such prospective customers? 22· · · ·A.· ·I think we've talked about that. 23· · · · · · MR. CARGILL:· Objection to the extent it's been 24· ·asked and answered. 25· ·/// Page 127 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·So there's nothing else other than what we've ·3· ·talked about? ·4· · · ·A.· ·Not that I can think of.· Some of the specifics, ·5· ·Scott was -- was much more attuned to.· You should talk to ·6· ·him about those -- those specifics.· But at a high level, ·7· ·the things we talked about is really all the things I can ·8· ·speak to or really all I can remember. ·9· · · ·Q.· ·And then the next item down where it references 10· ·Sales Training, what sales and leadership training did you 11· ·provide to employees of Proficio? 12· · · · · · MR. CARGILL:· Object to the form. 13· ·BY MR. LEECH: 14· · · ·Q.· ·Strike that. 15· · · · · · What sales and leadership training did North 16· ·American Marketing provide to employees of Proficio? 17· · · ·A.· ·What sales and leadership training?· There was 18· ·lots of stuff.· Towards the end of the relationship, we 19· ·engaged a third-party consultant to help with kind of 20· ·executive and organizational management.· Throughout the 21· ·entire relationship, we were helping facilitating 22· ·trainings, development by Proficio's management team, 23· ·consulting with Proficio's managers to produce training 24· ·materials, et cetera, et cetera, et cetera.· And there's 25· ·probably lots of things there that I'm not thinking of. Page 128 ·1· · · ·Q.· ·Is there anything else that you can remember ·2· ·sitting here today? ·3· · · ·A.· ·Not off the top of my head, no. ·4· · · ·Q.· ·Next item down referencing Budgeting and Expense ·5· ·Management, where it states that, The Affiliate Manager ·6· ·will provide recommendations for appropriate budgeting ·7· ·decisions for each branch assigned to the Group and will ·8· ·endeavor to identify opportunities to reduce expenses and ·9· ·increase branch profitability. 10· · · · · · What specific steps did North American Marketing 11· ·take to fulfill that item? 12· · · ·A.· ·So everything from the operational expenses 13· ·related to a branch to the labor-related expenses. 14· ·Operational expenses would include your furniture, 15· ·fixtures, equipment.· Your operation expenses and 16· ·budgeting would include your labor costs, staffing 17· ·efficiencies, you know, et cetera, et cetera.· Anything it 18· ·takes to effectively run a business from a financial 19· ·budgeting and expense management perspective. 20· · · ·Q.· ·So what did North American Marketing do in 21· ·connection with those things for Proficio? 22· · · ·A.· ·Sure.· Evaluated different opportunities. 23· ·Provided recommendations for, you know, which road to go 24· ·down.· Staffing recommendations, staffing cut 25· ·recommendations.· Equipment, furniture, fixture, equipment Page 129 ·1· ·recommendations.· All of the above.· And certainly ·2· ·numerous other things. ·3· · · ·Q.· ·Who at Proficio decided whether or not to accept ·4· ·North American Marketing's recommendations? ·5· · · ·A.· ·That depends on the specific recommendation. ·6· · · ·Q.· ·I would say staffing recommendations. ·7· · · ·A.· ·I believe it would have been the branch -- the ·8· ·specific manager, the hiring manager for that department. ·9· · · ·Q.· ·Do you recall any instances where Proficio 10· ·rejected North American Marketing's recommendations? 11· · · ·A.· ·I don't, no.· I believe there were a few, though, 12· ·but I don't recall the specifics.· Background checks, some 13· ·issues like that. 14· · · ·Q.· ·Outside of background check issues that flag 15· ·something that you hadn't contemplated before, were there 16· ·any instances that you can recall Proficio Mortgage 17· ·Ventures rejecting one of your recommendations? 18· · · ·A.· ·Not off the top of my head, no. 19· · · ·Q.· ·And then stepping down to Operational Workflow 20· ·Management. 21· · · ·A.· ·Uh-huh. 22· · · ·Q.· ·States that, The Affiliate Manager will provide 23· ·recommendations for improving processes, procedures, and 24· ·workflows in PMV's mortgage fulfillment centers. 25· · · · · · Do you see that language? Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 34 of 102 Page 130 ·1· · · ·A.· ·I do. ·2· · · ·Q.· ·What -- what steps did North American Marketing ·3· ·take to fulfill its obligations under this paragraph? ·4· · · ·A.· ·Sure.· We provided recommendations. ·5· · · ·Q.· ·What type of recommendations? ·6· · · ·A.· ·Recommendations for improving the processes, ·7· ·procedures and workflows in PMV's mortgage fulfillment ·8· ·centers. ·9· · · ·Q.· ·Specific to reverse mortgages, what specific 10· ·recommendations did you make to improve their processes, 11· ·procedures and workflows? 12· · · ·A.· ·All kinds of different things.· On a daily basis, 13· ·that's what we were doing was working with the managers at 14· ·each level, operations at each level, sales at each level 15· ·to try to improve the processes, procedures and workflows. 16· · · ·Q.· ·Can you give me specific examples of specific 17· ·recommendations that you made to improve these processes, 18· ·procedures and workflows? 19· · · ·A.· ·Sure.· So there's various policies and procedures 20· ·that relate to reverse mortgages.· There was several 21· ·hundred of them.· We would work with the compliance and 22· ·operations management teams at Proficio in their reverse 23· ·mortgage division.· And we would consult with them and 24· ·obtain and develop best practices, best policies and best 25· ·procedures to recommend to the board level at Proficio. Page 131 ·1· · · · · · We would work with sales managers to evaluate -- ·2· ·to work with them on scripting, to work with them on -- on ·3· ·staffing decisions, to work with them on budgeting from a ·4· ·lead management perspective.· We would work with ·5· ·accounting to ensure that, you know, that -- well, that ·6· ·was already answered in the budgeting expense management. ·7· ·But those would be the main ones. ·8· · · · · · In general, there was a workflow document we ·9· ·helped put together that was 60 steps from originating a 10· ·loan to funding the loan and post-closing.· And we helped 11· ·work with the team at Proficio to develop that document 12· ·and all of the supporting pieces of information that came 13· ·with that. 14· · · ·Q.· ·And who at North American Marketing performed 15· ·these services? 16· · · ·A.· ·Both Scott and myself. 17· · · ·Q.· ·Anyone else? 18· · · ·A.· ·I don't believe there was anybody else there, no. 19· ·We may have hired a consultant or two along the way. 20· · · ·Q.· ·Do you recall who those consultants were? 21· · · ·A.· ·There was a guy named Bob Emerling.· I don't know 22· ·if he was hired by North American Marketing or by 23· ·Proficio, but he consulted with us for a time at Proficio. 24· · · ·Q.· ·Do you recall the approximate time that he 25· ·consulted? Page 132 ·1· · · ·A.· ·No, I don't.· It was the second half of our life ·2· ·at Proficio.· So, you know, within a year of me leaving ·3· ·Proficio.· It was toward the end. ·4· · · · · · You know, the other consultant that I mentioned a ·5· ·little while ago, I forget whether he was paid by North ·6· ·American Marketing or Proficio, but his name was David ·7· ·Chavez.· That was an organizational management consultant ·8· ·that we hired. ·9· · · ·Q.· ·And do you recall the approximate time that he 10· ·was consulting for Proficio? 11· · · ·A.· ·Similar time frame as Bob Emerling.· And again, I 12· ·don't know that he was consulting for Proficio.· He was 13· ·either consulting for us at North American or for 14· ·Proficio.· I don't recall which one. 15· · · ·Q.· ·Go down to paragraph 2 where it says the duties 16· ·of Proficio Mortgage Ventures.· There's a section or 17· ·paragraph entitled Employment of Originators and Branches. 18· · · ·A.· ·Uh-huh. 19· · · ·Q.· ·You see that paragraph? 20· · · ·A.· ·Yes. 21· · · ·Q.· ·There's a reference here to PMV's standard 22· ·employment qualifications and requirements.· What were 23· ·those standard employment qualifications and requirements? 24· · · ·A.· ·I don't recall specifically.· Certainly there was 25· ·background check requirements, but I don't recall exactly Page 133 ·1· ·what they were. ·2· · · ·Q.· ·Did Proficio have to hire or employ loan ·3· ·originators of branches recruited by North American ·4· ·Marketing if they met the standard employment ·5· ·qualifications and requirements? ·6· · · ·A.· ·From a legal opinion or what? ·7· · · ·Q.· ·From your understanding. ·8· · · ·A.· ·No.· No.· I would have been okay if they would ·9· ·have said, No, you can't hire somebody.· I might have 10· ·argued with them, but I didn't feel it was my right or 11· ·that I had some sort of act of God to say, Hey, hire this 12· ·person. 13· · · ·Q.· ·Do you recall PMV ever refusing to hire a loan 14· ·originator that met standard employment qualifications and 15· ·requirements that you recommended? 16· · · · · · MR. CARGILL:· Objection to the extent that these 17· ·have been asked and answered. 18· · · · · · THE WITNESS:· I do not recall that they did 19· ·not -- I do not recall, no. 20· · · · · · MR. LEECH:· It's about 12:30, Tom.· I think now 21· ·is a good time to break for lunch. 22· · · · · · MR. CARGILL:· It's good with me. 23· · · · · · MR. LEECH:· Good with the court reporter? 24· · · · · · THE REPORTER:· Yes. 25· · · · · · MR. LEECH:· Let's go off the record and take a Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 35 of 102 Page 134 ·1· ·lunch break. ·2· · · · · · (Recess taken 12:27 p.m. to 1:38 p.m.) ·3· ·BY MR. LEECH: ·4· · · ·Q.· ·All right, Mr. Ohlhausen.· Turning to Exhibit 1, ·5· ·paragraph 3 where it says, Affiliate Manager Compensation. ·6· · · · · · Do you see that provision? ·7· · · ·A.· ·Yes. ·8· · · ·Q.· ·Can you tell me how North American Marketing was ·9· ·compensated by Proficio for the services that it provided? 10· · · · · · MR. CARGILL:· Objection to the extent the 11· ·document speaks for itself. 12· · · · · · THE WITNESS:· I mean, do you want me to read to 13· ·you from the document, or is there a specific -- 14· ·BY MR. LEECH: 15· · · ·Q.· ·Just describe your -- describe your own 16· ·understanding of what the compensation terms were. 17· · · ·A.· ·Proficio was -- or excuse me.· North American 18· ·Marketing was paid 100 percent of the remaining profit 19· ·less the provisions in -- at the top of page 3 and -- yep, 20· ·at the top of page 3.· So whatever that income was 21· ·generated minus the provisions at the top of page 3 minus 22· ·any reserve funding or -- or payroll reserve. 23· · · ·Q.· ·Was that revenue, was that net of the expenses 24· ·associated with operating your group? 25· · · ·A.· ·That's right. Page 135 ·1· · · ·Q.· ·So that would include commissions for the loan ·2· ·officers that worked under your supervision? ·3· · · ·A.· ·Yes. ·4· · · ·Q.· ·That would be -- if you turn back to page 2 and ·5· ·look at section (b) where it lists Group Expenses, were ·6· ·these the expenses that were used to come to the monthly ·7· ·group profit? ·8· · · ·A.· ·Yes. ·9· · · ·Q.· ·Were there any other expenses that were taken 10· ·into account other than what's in this subparagraph (b) 11· ·that goes on to page 3 here? 12· · · ·A.· ·Not that I can think of, like you said, other 13· ·than the top of page 3.· If there was any loan 14· ·deficiencies, like you've seen -- looks like paragraph 4, 15· ·you know, that would be there, but that's it. 16· · · ·Q.· ·Going back to paragraph 2, the sub-Roman (ii) 17· ·where it says Group Margin near the top of the page. 18· · · · · · Do you see that provision? 19· · · ·A.· ·Top of page 2?· Yes. 20· · · ·Q.· ·There's a reference in there to a Schedule 1.· Do 21· ·you know what that is referring to? 22· · · ·A.· ·I do not. 23· · · ·Q.· ·Do you know if there was ever a Schedule 1 24· ·prepared for this agreement? 25· · · ·A.· ·I do not. Page 136 ·1· · · ·Q.· ·Can you explain to me what is meant here by Group ·2· ·Margin? ·3· · · ·A.· ·I cannot. ·4· · · · · · MR. CARGILL:· And I'll object to the extent the ·5· ·document defines it or speaks for itself. ·6· ·BY MR. LEECH: ·7· · · ·Q.· ·So turning to the top of page 3, little sub-Roman ·8· ·(iii) where it says, PMV Management Fees, a sentence ·9· ·followed by a chart. 10· · · · · · Do you see that provision? 11· · · ·A.· ·Yes. 12· · · ·Q.· ·Were these the fees -- strike that. 13· · · · · · Were these fees paid to Proficio Mortgage 14· ·Ventures as a part of its affiliation with North American 15· ·Marketing? 16· · · ·A.· ·I don't quite understand the question.· Will you 17· ·ask it -- sorry. 18· · · ·Q.· ·Does this chart reflect the services Proficio 19· ·Mortgage Ventures provided as part of -- strike that. 20· · · · · · Does this chart represent the services that 21· ·Proficio Mortgage Ventures provided as a part of the 22· ·relationship between North American Marketing and Proficio 23· ·Mortgage Ventures? 24· · · ·A.· ·Some of the services that had a financial 25· ·component to it, sure. Page 137 ·1· · · ·Q.· ·And there's a column in this chart that lists ·2· ·fees.· Were those fees paid to Proficio Mortgage Ventures ·3· ·as part of the affiliation arrangement between North ·4· ·American Marketing and Proficio Mortgage Ventures? ·5· · · · · · MR. CARGILL:· I'm going to object to the form. ·6· ·And then it misstates the document. ·7· · · · · · THE WITNESS:· They were paid to or net of.· In ·8· ·other words, North American was paid net of these expenses ·9· ·plus other related expenses.· I think you're getting at 10· ·the same thing, but it could be an important 11· ·distinguishment. 12· ·BY MR. LEECH: 13· · · ·Q.· ·The first line of the chart refers to -- below 14· ·the headings refers to Employee Boarding. 15· · · · · · What was your understanding of what constituted 16· ·employee boarding, and what was Proficio's role in 17· ·connection with that? 18· · · ·A.· ·Proficio's role was -- was all inclusive of 19· ·whatever it took to board an employee.· Background, 20· ·employment application, processing that application, you 21· ·know, et cetera, et cetera.· From the time an employee 22· ·was -- was conceptualized to -- or a potential employee 23· ·was conceptualized to actually being boarded, started 24· ·working. 25· · · ·Q.· ·And for each -- strike that. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 36 of 102 Page 138 ·1· · · · · · And then if I go to the next column, it says ·2· ·there was a one-time $100 fee per employee. ·3· · · · · · Was that the amount of money that Proficio was ·4· ·entitled to take as compensation for its employee boarding ·5· ·services? ·6· · · ·A.· ·Yes. ·7· · · ·Q.· ·The next line down refers to payroll processing ·8· ·expenses.· What did those expenses entail? ·9· · · ·A.· ·Payroll processing expenses. 10· · · ·Q.· ·Were those the costs associated with actually 11· ·making the payroll? 12· · · ·A.· ·I believe so, yes. 13· · · ·Q.· ·Were there any other expenses that fell into this 14· ·category? 15· · · ·A.· ·Not to my knowledge. 16· · · ·Q.· ·If I go to the next column, I see that the fee 17· ·for that service is the actual cost estimated at $35 per 18· ·employee per month if/when a payroll is run. 19· · · · · · Is that the amount of money that Proficio was 20· ·entitled to receive as compensation for its payroll 21· ·processing expenses? 22· · · ·A.· ·Yes, that's my understanding. 23· · · ·Q.· ·Then if we go down to the next line where it 24· ·reads Email, Licensing, & Help Desk Services, I see that 25· ·that is crossed out along with the fee associated for Page 139 ·1· ·that. ·2· · · · · · Did Proficio provide any email, licenses or help ·3· ·desk services as part of its affiliation relationship with ·4· ·North American Marketing? ·5· · · ·A.· ·Did Proficio pay any? ·6· · · ·Q.· ·Did Proficio provide any such services? ·7· · · ·A.· ·Yes. ·8· · · ·Q.· ·What services did it provide? ·9· · · ·A.· ·It provided emails for employees. 10· · · ·Q.· ·Any other services? 11· · · ·A.· ·Sure.· It provided licensing for -- for various 12· ·branches and employees when and where needed. 13· · · ·Q.· ·Anything else? 14· · · ·A.· ·You know, help desk as indicated by this 15· ·department -- or this document would probably be something 16· ·like they answer questions.· If somebody had a question, 17· ·they would answer it. 18· · · ·Q.· ·Any other services that they provided that fell 19· ·under these categories? 20· · · ·A.· ·Not that I can think of, no. 21· · · ·Q.· ·Do you know -- and if we go to the next column 22· ·over, we see it's $100 per employee per month, but that's 23· ·crossed out. 24· · · · · · Do you know if Proficio received $100 per 25· ·employee per month? Page 140 ·1· · · ·A.· ·I do not believe they did, no, for those ·2· ·functions. ·3· · · ·Q.· ·And then the next -- the next row is Loan ·4· ·Fulfillment/Quality Control. ·5· · · · · · What loan fulfillment and quality control ·6· ·services did Proficio provide as part of its affiliation ·7· ·relationship with North American Marketing? ·8· · · ·A.· ·They fulfilled every loan, and they did quality ·9· ·control on every loan.· Members or employees of their 10· ·staff did that on every single loan. 11· · · ·Q.· ·Now, what does -- what does it mean to fulfill a 12· ·loan? 13· · · ·A.· ·I don't know.· I don't know what this document 14· ·was specifically trying to articulate. 15· · · ·Q.· ·But you just said that they fulfilled every loan. 16· ·What does that mean? 17· · · ·A.· ·As I would -- as I just used it? 18· · · ·Q.· ·Uh-huh. 19· · · ·A.· ·Fulfillment would be any of the operational 20· ·components that has to do with a loan. 21· · · ·Q.· ·Such as funding it -- 22· · · ·A.· ·Sure. 23· · · ·Q.· ·-- or handling -- 24· · · ·A.· ·Processing, underwriting, closing, funding, 25· ·post-closing.· It's used loosely, though, you know. Page 141 ·1· · · ·Q.· ·And what would quality control services be? ·2· · · ·A.· ·I can't speak to that exactly, but some component ·3· ·of loan-level quality control and/or, you know, higher ·4· ·level branch -- branch quality control as well.· Checking ·5· ·documents, making sure all the documents were there. ·6· ·Making sure they were all properly executed, you know. ·7· ·Controlling the quality of the file, in all aspects of the ·8· ·file.· The origination components, the processing, the ·9· ·underwriting, the fulfillment of the file. 10· · · ·Q.· ·If we go to the next column, it refers to $137 11· ·(sic) per closed loan. 12· · · · · · Do you know if Proficio received that payment in 13· ·exchange for its services in loan fulfillment and quality 14· ·control? 15· · · ·A.· ·Again, it wasn't a payment made by North American 16· ·to Proficio.· It was an expense -- or it was a -- it was 17· ·net of that amount that North American received.· It was 18· ·$135, and I do believe they received it on every loan, 19· ·yes. 20· · · ·Q.· ·And then the last line in this chart refers to 21· ·PMV Management. 22· · · · · · What does that item refer to? 23· · · ·A.· ·I can't be certain. 24· · · ·Q.· ·You don't know what management role PMV played in 25· ·the affiliation relationship between PMV and North Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 37 of 102 Page 142 ·1· ·American Marketing? ·2· · · ·A.· ·Sure.· We've talked about it, I mean, a hundred ·3· ·times.· You know, all the general management and oversight ·4· ·and all this stuff that they did, exactly the same board ·5· ·members, et cetera, et cetera.· What was contemplated ·6· ·exactly in this agreement, I don't know or recall. ·7· · · ·Q.· ·Okay.· So other than the management aspects that ·8· ·we've discussed previously, you can't think of anything ·9· ·that Proficio Mortgage Ventures did in connection with 10· ·this specific item? 11· · · ·A.· ·I cannot, no. 12· · · ·Q.· ·And then the fee on the right-hand column is 70 13· ·bps on closed loan production. 14· · · · · · Do you see that item? 15· · · ·A.· ·Yes. 16· · · ·Q.· ·How was that 70 bps on closed loan -- how was the 17· ·amount -- strike that. 18· · · · · · How was the amount of the fee for that item 19· ·calculated? 20· · · ·A.· ·How is the amount of the fee for that item 21· ·calculated?· The amount of the fee?· I don't understand 22· ·the question.· I'm sorry. 23· · · ·Q.· ·Well, it says it's 70 bps on closed loan 24· ·production.· What does that item refer to? 25· · · ·A.· ·So if there was a million dollars in loan Page 143 ·1· ·production closed that month, that fee would be $7,000. ·2· ·Bps would stand for basis point or a percent of a percent. ·3· · · ·Q.· ·And what is a basis point, just so I have it for ·4· ·the record? ·5· · · ·A.· ·I believe it to be a percent of a percent. ·6· · · ·Q.· ·Is 100 basis points equal to 1 percent? ·7· · · ·A.· ·Yes, I believe so. ·8· · · ·Q.· ·Other than the fees set forth in this chart, was ·9· ·Proficio Mortgage Ventures entitled to keep any revenue 10· ·associated with the reverse mortgage loans originated by 11· ·your department? 12· · · · · · MR. CARGILL:· Objection to the extent it calls 13· ·for a legal interpretation. 14· · · · · · THE WITNESS:· I think that's pointed out in this 15· ·agreement.· I think there were some things -- if there was 16· ·a loan loss, things along those lines, that they would 17· ·potentially be entitled to keep additional revenue.· If 18· ·there was insufficiency of a reserve, if there was a 19· ·branch shortage, you see some of these things described on 20· ·page 4 of the agreement.· But nothing that's not contained 21· ·in this agreement were they entitled to, from my 22· ·understanding. 23· ·BY MR. LEECH: 24· · · ·Q.· ·And some of those things you referenced, like 25· ·loan losses, those would just be reimbursements for Page 144 ·1· ·out-of-pocket losses.· Those wouldn't be a gain for ·2· ·Proficio, would they? ·3· · · ·A.· ·No, they would not be a gain for Proficio. ·4· · · ·Q.· ·So basically the only financial benefits that ·5· ·Proficio receives is $100 fee per employee boarded, ·6· ·reimbursement of its payroll processing expenses, $135 for ·7· ·each closed loan, and then 70 basis points on the closed ·8· ·loan production; is that correct? ·9· · · · · · MR. CARGILL:· Object to the form. 10· · · · · · THE WITNESS:· Yes. 11· ·BY MR. LEECH: 12· · · ·Q.· ·And when we say "closed loan production," we're 13· ·referring to the unpaid principal balance of the reverse 14· ·mortgage loan? 15· · · ·A.· ·Yes.· And again, all those fees would be net of 16· ·any other expenses that Proficio Mortgage Ventures had. 17· ·So that would plan to be a -- the goal of that would be 18· ·that would be a true net income number for the bank. 19· ·Their labor, any overhead they had, et cetera, et cetera, 20· ·legal costs, would all get debited to the branch. 21· · · ·Q.· ·And those were the items set forth on page 2 of 22· ·the agreement? 23· · · ·A.· ·What was? 24· · · ·Q.· ·The items that you just -- the expense items that 25· ·you just referred to. Page 145 ·1· · · ·A.· ·Yes.· Page 2, paragraph (b) subsection (ii), yep, ·2· ·a through j.· There might have been some others but at ·3· ·least those. ·4· · · ·Q.· ·Turning to page 5 of the agreement, paragraph 18. ·5· ·Can you review that provision and let me know when you ·6· ·have reviewed it? ·7· · · ·A.· ·I've read it. ·8· · · ·Q.· ·Did PMV operate any other reverse mortgage ·9· ·branches that were not assigned to the group as used in 10· ·this agreement? 11· · · ·A.· ·I believe it did, yes. 12· · · ·Q.· ·And did Proficio engage any other affiliate 13· ·managers similar to North American Marketing? 14· · · ·A.· ·I mean, I'd have to speculate as to whether or 15· ·not they did exactly, but I believe they did.· I've heard 16· ·rumors that they did.· We had an affiliate manager summit 17· ·at one point we went to.· But whether or not they had the 18· ·same contract I had, I have no way of knowing. 19· · · ·Q.· ·During the time that North American Marketing was 20· ·affiliated with Proficio Mortgage Ventures, did it provide 21· ·affiliate manager services to any other entity? 22· · · ·A.· ·I don't believe so. 23· · · ·Q.· ·And other than the PMV management fees we 24· ·discussed earlier, the remainder of the profit generated 25· ·by the team of loan officers selected and supervised by Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 38 of 102 Page 146 ·1· ·North American Marketing, all of the profits associated ·2· ·with those loans went to North American Marketing; is that ·3· ·correct? ·4· · · ·A.· ·Yeah, other than the direct related expenses that ·5· ·are contained on line 2, or excuse me, on page 2, the ·6· ·Employee Boarding, the Loan Fulfillment/Quality Control, ·7· ·the PMV Management fee and then any reserves that are ·8· ·explained here on page 3.· Whatever was left over above ·9· ·and beyond those, the net of that went to North American 10· ·Marketing, correct. 11· · · ·Q.· ·Was that sort of compensation arrangement 12· ·permissible under federal regulations? 13· · · · · · MR. CARGILL:· Object to the form and object to 14· ·the extent it calls for a legal interpretation or 15· ·conclusion. 16· ·BY MR. LEECH: 17· · · ·Q.· ·You can answer. 18· · · ·A.· ·My understanding was yes.· We had it reviewed by 19· ·a high-priced Washington DC attorney and he was okay with 20· ·it, so we felt that it was okay.· We were told FDIC was 21· ·aware of it -- 22· · · · · · MR. CARGILL:· Hold on.· Don't discuss any 23· ·conversations you had with an attorney. 24· · · · · · THE WITNESS:· Okay. 25· ·/// Page 147 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·Do you have anything further other than what you ·3· ·discussed with the attorney? ·4· · · ·A.· ·No.· Did you say other than what I discussed with ·5· ·the attorney or like what I discussed with an attorney? ·6· · · ·Q.· ·Other than what you discussed with the attorney. ·7· · · ·A.· ·Yeah.· No, I don't. ·8· · · ·Q.· ·Showing you what we'll mark as Exhibit 2. ·9· · · · · · (Exhibit 2 marked) 10· · · · · · THE WITNESS:· Thank you. 11· · · · · · MR. CARGILL:· I'll just note for the record that 12· ·Exhibit 2 is marked highly confidential, attorneys' eyes 13· ·only. 14· ·BY MR. LEECH: 15· · · ·Q.· ·Can you review this document and let me know when 16· ·you're finished? 17· · · ·A.· ·I've reviewed it. 18· · · ·Q.· ·Do you recognize this document? 19· · · ·A.· ·I do not. 20· · · ·Q.· ·Do you recognize any of the payments set forth on 21· ·this document? 22· · · ·A.· ·I can't tell with this document.· There's no 23· ·column headings or row headings or anything. 24· · · ·Q.· ·If you look at the top right corner, it says 25· ·North American Marketing, Inc.· Do you see that? Page 148 ·1· · · ·A.· ·I do. ·2· · · ·Q.· ·Then there appears to be a column of dates, a ·3· ·couple columns over to the right. ·4· · · ·A.· ·Yes. ·5· · · ·Q.· ·Then there are a couple of -- a couple of columns ·6· ·over to that there appear to be amounts. ·7· · · ·A.· ·Well, there's numbers.· Why do you say those are ·8· ·amounts? ·9· · · ·Q.· ·They're numbers.· Numbers or amounts.· Use your 10· ·words, numbers.· And then there's a -- last column appears 11· ·to be a description where it says, on the first line, for 12· ·example, Affiliate Manager Distribution. 13· · · ·A.· ·Sure. 14· · · ·Q.· ·Do you know if these amounts were paid to North 15· ·American Marketing pursuant to the Affiliate Manager 16· ·Agreement? 17· · · ·A.· ·Yeah.· So no, I don't know that to be a fact. 18· ·Again, I hate to speculate.· I assume that this is all 19· ·accurate, but no, I don't know for certain that this is 20· ·accurate, again, without column headings.· I don't know 21· ·why this doesn't have column headings on it. 22· · · · · · THE WITNESS:· Did we produce this?· Is this -- 23· · · · · · MR. CARGILL:· That's what I wanted to ask.· Do 24· ·you know if this is the form that we produced it in? 25· ·Because I know it's produced by us.· But, for example, if Page 149 ·1· ·we produced this in an Excel spreadsheet, this doesn't ·2· ·represent everything we would have produced.· There would ·3· ·have been column headings.· You know, one of the columns ·4· ·is cut off here.· So I'm just wondering if you know. ·5· · · · · · MR. LEECH:· I'd have to check.· It was your ·6· ·document.· I don't know if it was produced this way. ·7· · · · · · MR. CARGILL:· Well, that's noted for the record. ·8· · · · · · MR. LEECH:· Okay. ·9· ·BY MR. LEECH: 10· · · ·Q.· ·Turning to the second page of this agreement -- 11· ·or this document.· At the bottom there's a number 12· ·indicating -- near the bottom of the page there's a number 13· ·9,847,069.74. 14· · · · · · Do you see that number? 15· · · ·A.· ·Yes. 16· · · ·Q.· ·To me it appears to be a total of the numbers in 17· ·the columns above it. 18· · · · · · Do you know approximately how much North American 19· ·Marketing was paid pursuant to the Affiliate Manager 20· ·Agreement by Proficio? 21· · · ·A.· ·It was about 10 million. 22· · · ·Q.· ·And that number is about 10 million? 23· · · ·A.· ·Yes. 24· · · ·Q.· ·Do you know approximately how much volume in 25· ·terms of closed loan production that North American Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 39 of 102 Page 150 ·1· ·Marketing was able to generate for Proficio Mortgage? ·2· · · ·A.· ·I do not. ·3· · · ·Q.· ·Who would know that? ·4· · · ·A.· ·Dave Pittman would probably be the best person ·5· ·for that.· He's a controller, maybe CFO at Proficio by ·6· ·now.· I'm not sure what his exact role is.· Or really ·7· ·anybody at Proficio that has access to, you know, the ·8· ·reverse mortgage production from the times that we were ·9· ·there. 10· · · ·Q.· ·Show you what we'll mark as Exhibit 3. 11· · · · · · (Exhibit 3 marked) 12· · · · · · THE WITNESS:· Thank you. 13· ·BY MR. LEECH: 14· · · ·Q.· ·Let me know when you're finished reviewing this 15· ·document. 16· · · ·A.· ·I'm finished. 17· · · ·Q.· ·Do you recognize this document? 18· · · ·A.· ·I do not. 19· · · ·Q.· ·I'll represent to you that this is a chart of 20· ·loans that Proficio Mortgage Ventures asserts were closed 21· ·improperly by Federal Savings Bank as a result of 22· ·Naranjo's conduct as alleged in this case. 23· · · ·A.· ·Okay. 24· · · ·Q.· ·Can you review the names of the borrowers in 25· ·these charts? Page 151 ·1· · · ·A.· ·Is that a question? ·2· · · ·Q.· ·Yes.· Go ahead and take a look at the names of ·3· ·the borrowers in these charts, and can you tell me how ·4· ·these borrowers were selected for inclusion on this chart? ·5· · · · · · MR. CARGILL:· Objection to the extent it asks for ·6· ·attorney-client privileged information and work product. ·7· ·If you can answer that in any way without divulging ·8· ·discussions that we've had about how this information was ·9· ·prepared and how claims were made in this case and how 10· ·damages may have been calculated in this case, if you can 11· ·answer it outside of that at all, go ahead. 12· ·BY MR. LEECH: 13· · · ·Q.· ·I'm certainly -- I'm not looking to get into the 14· ·specifics of conversations you may have had with your 15· ·attorney, but I do think I'm entitled to know how Proficio 16· ·Mortgage came to the conclusion that, say, Harry Cousins 17· ·was improperly taken by Federal Savings Bank. 18· · · · · · My question is, Mr. Ohlhausen, do you have any 19· ·knowledge as to why Proficio Mortgage Ventures believes 20· ·Harry Cousins was a loan that was taken by The Federal 21· ·Savings Bank? 22· · · · · · MR. CARGILL:· And you can answer that.· I mean, 23· ·that's a -- yeah, that's a factual question.· So if you 24· ·have facts that would be responsive to that, go ahead. 25· ·But if it's -- just don't discuss anything that's based on Page 152 ·1· ·conversations with an attorney that we've had in this ·2· ·case. ·3· · · · · · THE WITNESS:· Okay.· Sure. ·4· · · · · · So specifically Harry Cousins, I don't recall why ·5· ·we have his specific name on there or any one of these ·6· ·individuals' names.· There was various lead list ·7· ·information, Proficio customer database information that ·8· ·we -- collectively, myself, Scott Guild, other Proficio ·9· ·employees -- identified that Eric Naranjo and other 10· ·individuals that resigned from their positions at Proficio 11· ·emailed to themselves and these borrowers' names were 12· ·contained on those lists, or I assume these borrowers' 13· ·names were contained on those lists.· I can't be certain 14· ·for each and every one of them.· And that would be one way 15· ·that we believe or we're alleging that The Federal Savings 16· ·Bank and Naranjo wound up with these customer names and 17· ·allegedly stole these customer names. 18· · · · · · The other reason is in many cases, secondhand 19· ·customers told our employees that they were being 20· ·contacted by Eric Naranjo or the current Federal Savings 21· ·Bank employee.· We provided a list of that, of each one of 22· ·those circumstances, again, to our attorneys.· And then 23· ·from there, it's probably more privileged with what they 24· ·did with that or how they got that list to you. 25· ·/// Page 153 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·So you didn't personally determine which one -- ·3· ·which borrowers Federal Savings Bank improperly closed? ·4· · · · · · MR. CARGILL:· Object to the form and misstates ·5· ·testimony. ·6· · · · · · THE WITNESS:· I didn't personally identify which ·7· ·customer The Federal Savings Bank closed, no.· We had ·8· ·somebody else work on that project.· We don't know what ·9· ·loans The Federal Savings Bank closed.· We speculated as 10· ·to which loans they closed by publicly available data. 11· ·BY MR. LEECH: 12· · · ·Q.· ·So this list was -- reflects your -- you and your 13· ·colleagues at Proficio, your speculation as to what loans 14· ·were closed? 15· · · ·A.· ·I don't know who provided this list.· I don't 16· ·know if this is a list that The Federal Savings Bank 17· ·provided or if this is a list we provided them.· And I was 18· ·not the person that presented or came up with the final 19· ·list. 20· · · ·Q.· ·Who at Proficio was in charge of determining 21· ·which individuals would be included on this list? 22· · · ·A.· ·Combination of myself, Scott Guild, Sarah Young, 23· ·I believe Shad Mickelberry had something to do with it, 24· ·Jesse Brewer, James Guiry.· Any other remaining Proficio 25· ·employees or loan officers that provided us with Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 40 of 102 Page 154 ·1· ·information that, you know, Hey, guys, I've got another ·2· ·one, would be a common statement that they would make, ·3· ·another Federal Savings Bank conflict issue.· Those would ·4· ·be loan officers.· There would also be operations people. ·5· ·So a combination of all those people. ·6· · · ·Q.· ·Do you know when Proficio first acquired ·7· ·information about the customers contained on this list? ·8· · · ·A.· ·Off the top of my head, no. ·9· · · ·Q.· ·Go ahead and review it. 10· · · ·A.· ·No. 11· · · ·Q.· ·How would you go about finding out that 12· ·information? 13· · · ·A.· ·I don't know that I could. 14· · · ·Q.· ·Who would be able to? 15· · · ·A.· ·I don't know if anybody could.· Scott Guild would 16· ·have a better chance of it than me.· Potentially some, you 17· ·know, system engineers for Proficio.· Shad Mickelberry was 18· ·an IT guy.· It's possible there's some lead records and 19· ·lead recreation dates, things like that that are contained 20· ·in Proficio systems. 21· · · ·Q.· ·Do you know what sources Proficio used to acquire 22· ·information about the customers contained on this list? 23· · · ·A.· ·I do not. 24· · · · · · MR. CARGILL:· And I'll just object as to a lack 25· ·of foundation.· The witness hasn't testified in any way Page 155 ·1· ·that he contributed to this list or created this list. ·2· ·BY MR. LEECH: ·3· · · ·Q.· ·Do you know if North American Marketing had any ·4· ·information about the customers identified on this list? ·5· · · ·A.· ·I do not. ·6· · · ·Q.· ·Do you know if Proficio had any information about ·7· ·these customers prior to its affiliation with North ·8· ·American Marketing? ·9· · · ·A.· ·I do not. 10· · · ·Q.· ·If you look at column three and four on this 11· ·chart, there's a loan amount per Federal Savings Bank and 12· ·a close date per Federal Savings Bank. 13· · · · · · Do you see that? 14· · · ·A.· ·I do. 15· · · ·Q.· ·I'll represent to you that the loan amount refers 16· ·to the unpaid principal balance of the reverse mortgage 17· ·loan, and the close date refers to the date that loan 18· ·closed with The Federal Savings Bank. 19· · · · · · Can you tell me with that information how much 20· ·profit Proficio Mortgage Ventures would have made on any 21· ·of these loans? 22· · · ·A.· ·No, I don't think so. 23· · · ·Q.· ·Would the revenues associated with these loans 24· ·have been governed by the Affiliate Manager Agreement? 25· · · ·A.· ·Ask me that again. Page 156 ·1· · · · · · MR. CARGILL:· Object to the form. ·2· ·BY MR. LEECH: ·3· · · ·Q.· ·We've discussed earlier how profits were divided ·4· ·between Proficio Mortgage Ventures and North American ·5· ·Marketing pursuant to the Affiliate Manager Agreement. ·6· · · ·A.· ·Sure. ·7· · · ·Q.· ·Would these loans have been covered by that ·8· ·agreement? ·9· · · · · · MR. CARGILL:· Had they closed at Proficio instead 10· ·of The Federal Savings Bank? 11· ·BY MR. LEECH: 12· · · ·Q.· ·Had they closed at Proficio? 13· · · ·A.· ·Assuming that North American Marketing, its 14· ·affiliate agreement had something to do with them, yes. 15· ·And then all the expenses associated related to closing 16· ·these loans would have been reimbursed to either, you 17· ·know, North American or to -- not to North American, but 18· ·by way of the agreement.· So net profit would not be 19· ·indicative of, you know, potential revenue that would have 20· ·been earned or losses that Proficio may have had. 21· · · ·Q.· ·But the expenses Proficio -- strike that. 22· · · · · · But any expenses associated with these loans 23· ·cover -- closing at Proficio would have been reimbursed 24· ·out of the -- out of the revenues associated with those 25· ·loans; is that correct? Page 157 ·1· · · ·A.· ·Only if there was revenue earned.· If the loan ·2· ·didn't close, there would have been no revenue earned. ·3· ·And then there was other allocated expenses that are fixed ·4· ·costs no matter what, overhead, rent, you know, salaries ·5· ·for managers, all that type of stuff. ·6· · · ·Q.· ·So let's look at the first line on this chart, ·7· ·Harry Cousins.· It shows a loan amount here of $331,760. ·8· · · · · · Do you see that? ·9· · · ·A.· ·I do. 10· · · ·Q.· ·When you were at Proficio approximately -- strike 11· ·that. 12· · · · · · Do you know how much revenue Proficio Mortgage 13· ·Ventures would have earned on closing a $331,000 reverse 14· ·mortgage? 15· · · ·A.· ·No. 16· · · · · · MR. CARGILL:· Objection to the extent it calls 17· ·for speculation. 18· · · · · · THE WITNESS:· I would need more information. 19· ·BY MR. LEECH: 20· · · ·Q.· ·What information would you need? 21· · · ·A.· ·The product type, the time, date.· Not the time, 22· ·but the date that it closed.· What lender it was sold to. 23· ·That's all I can think of off the top of my head.· Any 24· ·other fees that were charged to the consumer that would 25· ·have been income to the bank. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 41 of 102 Page 158 ·1· · · ·Q.· ·Do you recall what the average premium on a ·2· ·reverse mortgage loan approximately during the latter half ·3· ·of 2014 Proficio was receiving for reverse mortgage loans? ·4· · · ·A.· ·Approximately during the latter half of 2014, ·5· ·average premium, gross premium, is that the question? ·6· · · ·Q.· ·Yeah. ·7· · · ·A.· ·Approximately 1,000 basis points. ·8· · · ·Q.· ·So that would be approximately 10 percent? ·9· · · ·A.· ·Yes. 10· · · ·Q.· ·So on a reverse mortgage loan of $331,760, 11· ·Proficio would have received in revenue, gross revenue, 12· ·approximately $33,000? 13· · · · · · MR. CARGILL:· Objection to the extent it calls 14· ·for speculation. 15· ·BY MR. LEECH: 16· · · ·Q.· ·Had the loan closed in the latter half of 2014. 17· · · ·A.· ·Assuming my approximation of 1,000 basis points 18· ·was accurate, 1,000 basis points of $331,760 I agree is 19· ·$33,176 plus any origination fees, plus any other 20· ·loan-level related expenses that were able to be charged 21· ·to the consumer on the settlement statement.· Things like 22· ·an appraisal, et cetera, et cetera. 23· · · · · · So gross -- so that would not -- your question 24· ·about is that -- would that be gross revenue, no, that 25· ·would not be the complete gross revenue.· The gross Page 159 ·1· ·revenue would be the yield spread premium that you just ·2· ·identified, which is 10 points or 10 percent of $331,760, ·3· ·plus any origination fees that were charged or could have ·4· ·been charged, plus any loan-level expense reimbursements ·5· ·that were identified on the settlement statement. ·6· · · ·Q.· ·Now, are there any other items that would ·7· ·constitute gross revenue associated with a reverse ·8· ·mortgage loan? ·9· · · ·A.· ·I can't think of any, no. 10· · · ·Q.· ·And so when all of those items come in to 11· ·Proficio Mortgage Ventures, it -- Proficio Mortgage 12· ·Ventures is allowed to reimburse itself for any expenses 13· ·that it incurred in closing the loan pursuant to the 14· ·Affiliate Manager Agreement; is that correct? 15· · · ·A.· ·I don't know if I agree with the choice of words 16· ·"reimburse," but, you know, that would net out those 17· ·expenses, sure. 18· · · ·Q.· ·What words would you use? 19· · · ·A.· ·Net out. 20· · · ·Q.· ·And what does "net out" mean to you?· It's not a 21· ·term I'm familiar with. 22· · · ·A.· ·Not that dissimilar from -- so if $1,000 comes in 23· ·and $1,000 got spent, the net would be zero. 24· · · ·Q.· ·Uh-huh.· So basically they would be able to make 25· ·themselves whole from -- in connection with the expenses Page 160 ·1· ·they incurred in closing a given loan? ·2· · · ·A.· ·Yes. ·3· · · ·Q.· ·So in addition to making themselves whole, they ·4· ·would also receive a file fee of $135 pursuant to the -- ·5· ·go ahead, refer to it. ·6· · · ·A.· ·We discussed that already.· So whatever I said ·7· ·earlier, sure.· I think -- it sounds like -- I think it ·8· ·was $135 plus -- ·9· · · ·Q.· ·Go ahead and check. 10· · · ·A.· ·-- plus if there was any -- well, that's an 11· ·actual cost, plus 70 basis points of the closed loan 12· ·production. 13· · · ·Q.· ·So hypothetically, Harry Cousins, had he closed 14· ·with Proficio in October of 2014, Proficio would have been 15· ·able to make itself whole from any expenses it incurred in 16· ·closing that loan, and Proficio would have received a $135 17· ·fee, plus 70 basis points of the revenue; is that correct? 18· · · ·A.· ·Plus -- plus any other -- 19· · · · · · THE WITNESS:· Sorry.· Did you want to -- 20· · · · · · MR. CARGILL:· Objection.· Speculation.· Go ahead. 21· · · · · · THE WITNESS:· Plus any other fixed or variable 22· ·expenses related to the entire overall operation. 23· ·BY MR. LEECH: 24· · · ·Q.· ·But wouldn't that fall under the -- strike that. 25· ·Strike that. Page 161 ·1· · · ·A.· ·Okay. ·2· · · ·Q.· ·But it would be making itself whole in terms of ·3· ·those fixed or variable expenses associated with the ·4· ·operation? ·5· · · · · · MR. CARGILL:· Object to the form. ·6· · · · · · THE WITNESS:· I think so.· It would be being -- ·7· ·netting or the term you used earlier, reimbursed for, you ·8· ·know, expenses that it had.· Things like rents and ·9· ·salaries and other corporate allocations or all of this 10· ·stuff that was contained on page 2 of this Affiliate 11· ·Manager Agreement, sure.· Advertising, marketing, you 12· ·know, all that type of stuff.· There was tens of thousands 13· ·of -- you know, hundreds of thousands of dollars of those 14· ·types of expenses on a monthly basis. 15· · · · · · MR. CARGILL:· I'll also state for the record that 16· ·Proficio has named other 30(b)(6) witnesses specifically 17· ·to testify to loss of revenue and damages. 18· · · · · · MR. LEECH:· I understand.· I'm just entitled to 19· ·ask him. 20· · · · · · MR. CARGILL:· Yeah. 21· ·BY MR. LEECH: 22· · · ·Q.· ·So 70 basis points of 331,760 would be 0.07 23· ·percent.· Would that be 0.07 per- -- strike that whole 24· ·question. 25· · · · · · Can you tell me what 70 basis points of $331,760 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 42 of 102 Page 162 ·1· ·is? ·2· · · ·A.· ·Not without a calculator, no. ·3· · · ·Q.· ·You have a calculator on your phone? ·4· · · ·A.· ·Sure. ·5· · · ·Q.· ·Can you go ahead and run that calculation for me? ·6· · · ·A.· ·Sure.· I believe it would be $2,322.32. ·7· · · ·Q.· ·And if we add the $135 per file fee associated ·8· ·with that, I come up with $2,457.32; is that correct? ·9· · · ·A.· ·The number I just gave you plus 135 is 2,457.32, 10· ·yeah.· That's what my calculator shows. 11· · · ·Q.· ·And pursuant to the Affiliate Manager Agreement, 12· ·this would be -- strike that. 13· · · · · · So other than the netting out of its expenses 14· ·incurred in connection with the loan and with the group in 15· ·general, this would be the only income Proficio Mortgage 16· ·Ventures would receive from, say, $331,760 reverse 17· ·mortgage loan? 18· · · ·A.· ·No. 19· · · · · · MR. CARGILL:· Object to the form. 20· · · · · · THE WITNESS:· No. 21· ·BY MR. LEECH: 22· · · ·Q.· ·What other revenues would it receive? 23· · · ·A.· ·There would be net interest income. 24· · · ·Q.· ·Okay.· And what is net interest income? 25· · · ·A.· ·The amount of money that's earned while the Page 163 ·1· ·loan -- between the time the loan is funded and the time ·2· ·the loan was sold, the amount of interest it's earned, ·3· ·less the cost of funds required to fund that loan. ·4· · · · · · So on a 5 percent interest rate loan, annual ·5· ·interest rate loan, and if we show a 50 basis point, half ·6· ·a percent cost of funds, there would be 4 1/2 percent net ·7· ·interest income for as many days as that loan was on the ·8· ·line. ·9· · · ·Q.· ·So you said -- you mentioned a 5 percent annual 10· ·interest rate.· Would that have to be prorated over 365 11· ·days? 12· · · ·A.· ·Yes, that's right. 13· · · ·Q.· ·How large approxi- -- strike that. 14· · · · · · Approximately how large would the net interest 15· ·income be on a $331,760 loan? 16· · · · · · MR. CARGILL:· Objection.· Calls for speculation. 17· · · · · · THE WITNESS:· Can't answer that question if you 18· ·don't tell me how long we hold the loan for.· Are we 19· ·holding it a year or a day or a month?· You know. 20· ·BY MR. LEECH: 21· · · ·Q.· ·How long did Proficio Mortgage Ventures typically 22· ·hold a reverse mortgage loan in the latter half of 2014? 23· · · ·A.· ·To my memory, 15 to 20 days. 24· · · ·Q.· ·So how much net interest income would be 25· ·generated by holding a $331,760 -- strike that. Page 164 ·1· · · · · · So how much net interest income would be ·2· ·generated by holding a $331,760 reverse mortgage for 15 to ·3· ·20 days -- ·4· · · ·A.· ·I don't know. ·5· · · ·Q.· ·-- in the latter half of 2014? ·6· · · ·A.· ·Sorry.· I don't know.· Depended on what the ·7· ·interest rate is, depended on if we held it for 15 or 20 ·8· ·days, depends on what the cost of funds was for the bank. ·9· ·You know, there's too many variables for me to know. 10· · · ·Q.· ·But based on your experience at Proficio Mortgage 11· ·Ventures, you must have some notion of what that amount 12· ·would be. 13· · · · · · MR. CARGILL:· Objection.· Asked and answered. 14· ·BY MR. LEECH: 15· · · ·Q.· ·You can answer. 16· · · · · · MR. CARGILL:· I don't think there's a question. 17· ·BY MR. LEECH: 18· · · ·Q.· ·Do you have any notion based on your experience 19· ·at Proficio Mortgage Ventures of what the -- of what 20· ·Proficio Mortgage Ventures earned on reverse mortgage 21· ·loans in the latter half of 2014 in terms of net interest 22· ·income? 23· · · ·A.· ·Yeah.· I apologize.· I'm not trying to be 24· ·difficult, but there's too many variables that are left -- 25· ·that are ambiguous that I couldn't answer that question Page 165 ·1· ·for you.· So no, I cannot tell you with the information ·2· ·you've given me what the net interest income was earned on ·3· ·this loan. ·4· · · ·Q.· ·Other than net interest income, were there any ·5· ·other amounts of -- any other types of revenues that ·6· ·Proficio Mortgage Ventures earned in connection with ·7· ·closing a loan, a reverse mortgage loan in the latter half ·8· ·of 2014? ·9· · · ·A.· ·Yeah.· All kind of revenue for, you know, the 10· ·revenue we talked about to be reimbursed or to cover these 11· ·types of expenses and everything else, the rents, the 12· ·allocations.· You know, there's a half million dollars a 13· ·month plus of various corporate allocations and everything 14· ·else that, you know, each one of these individual loans 15· ·would have helped to reimburse Proficio for.· So sure, the 16· ·answer would be yes. 17· · · ·Q.· ·So other than the items, though, that we've 18· ·discussed in terms of netting out expenses, the 70 basis 19· ·points per loan and the $135 file fee and the net interest 20· ·income, are there any other forms of income that Proficio 21· ·Mortgage Ventures received in connection with closing a 22· ·reverse mortgage loan in, let's say, the latter half of 23· ·2014? 24· · · ·A.· ·Not that I can think of. 25· · · ·Q.· ·What steps did Proficio Mortgage Ventures take to Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 43 of 102 Page 166 ·1· ·maintain the confidentiality of lead lists that were ·2· ·provided to it by North American Marketing? ·3· · · ·A.· ·I don't know what Proficio did, you know.· I know ·4· ·that it -- it required each employee to sign ·5· ·confidentiality agreements.· It required each -- well, it ·6· ·required me, as an affiliate manager, to sign various ·7· ·Affiliate Manager Agreements.· So it required, to the best ·8· ·of my knowledge, or, you know, certainly -- I'm certain of ·9· ·the following.· I don't know what it did in addition to 10· ·this. 11· · · · · · It required each employee to sign the employment 12· ·agreements that covered -- that had various restrictive 13· ·covenants in it and confidentiality reminders.· It 14· ·required each employee to attend -- I believe it was 15· ·monthly trainings on these types of subjects. 16· ·Confidentiality reminders on email headers and footers. 17· ·Those would be the main things that I can think of. 18· · · · · · There was some security related to computer 19· ·stuff.· But again, the technology side of stuff I wasn't 20· ·real familiar with.· I didn't handle that stuff.· There 21· ·was various policies that were established about nonpublic 22· ·personal information and protecting, you know, customer 23· ·information. 24· · · ·Q.· ·Anything further? 25· · · ·A.· ·Not that I can think of, not in the hot seat Page 167 ·1· ·right now.· I'm sure there were additional things, though. ·2· · · ·Q.· ·Do you know what data management or customer ·3· ·relation manager programs were used by Proficio? ·4· · · ·A.· ·The reverse mortgage group at Proficio? ·5· · · ·Q.· ·Yes. ·6· · · ·A.· ·I think so, yeah. ·7· · · ·Q.· ·What programs were they? ·8· · · ·A.· ·I believe there was an instance of -- SugarCRM ·9· ·was the main one.· And then from a data management 10· ·standpoint, you know, I would consider it a loan 11· ·origination software system, but I would -- you know, if 12· ·that's what you're asking about, that software system was 13· ·a third party called ReverseVision.· And that's all I can 14· ·remember.· There may have been another software that was 15· ·used, but those are the two that I can remember. 16· · · ·Q.· ·You know who at Proficio had access to the lead 17· ·list information provided to Proficio by North American 18· ·Marketing? 19· · · ·A.· ·I don't, no. 20· · · ·Q.· ·Who would know the answer to that? 21· · · ·A.· ·Scott would have the best idea.· Scott Guild. 22· · · ·Q.· ·Was lead list information stored in 23· ·ReverseVision? 24· · · ·A.· ·I don't know. 25· · · ·Q.· ·Do you know if lead list information was stored Page 168 ·1· ·in SugarCRM? ·2· · · ·A.· ·I don't know what -- so there was certainly leads ·3· ·that were stored in SugarCRM.· Was it North American ·4· ·Marketing lead lists?· I don't know.· The way I would ·5· ·define a lead list is it was North American Marketing's ·6· ·until it was implemented or instituted or inputted into a ·7· ·Proficio system.· Once it was inputted into a Proficio ·8· ·system, then it became a Proficio lead or a product of ·9· ·Proficio.· And so yes, there was certainly North American 10· ·Marketing leads being input into Proficio systems on a 11· ·very frequent basis throughout the course of the 12· ·relationship, and that was all handled by Scott Guild. 13· · · ·Q.· ·And it was when they were -- when they were 14· ·provided to Proficio that those leads became Proficio 15· ·leads? 16· · · ·A.· ·Yes. 17· · · ·Q.· ·Was North American Marketing able to sell those 18· ·leads to other customers? 19· · · ·A.· ·Are you asking me if it was legally allowed to or 20· ·did it? 21· · · ·Q.· ·I'm asking you if it was allowed to. 22· · · · · · MR. CARGILL:· Objection to the extend it calls 23· ·for a legal conclusion. 24· · · · · · THE WITNESS:· Yeah.· I think you'd have to be a 25· ·lawyer to interpret this agreement.· If you're asking for Page 169 ·1· ·my interpretation of it, this Exclusivity provision, you ·2· ·know, page 6, section 18, clearly states that, This ·3· ·Agreement provides no exclusivity of any type to the ·4· ·Affiliate Manager or any branches assigned to the Group. ·5· ·I would assume that would be mutual.· So that's my ·6· ·understanding of the agreement. ·7· ·BY MR. LEECH: ·8· · · ·Q.· ·So it was your understanding of the agreement ·9· ·that you could, say, go sell lead -- the same lead 10· ·information to, say, Citibank, if Citibank was interested, 11· ·or The Federal Savings Bank, if Federal Savings Bank was 12· ·interested? 13· · · · · · MR. CARGILL:· Same objection.· It's clearly 14· ·requiring an interpretation of a legal document. 15· · · · · · MR. LEECH:· I'm asking for his understanding. 16· · · · · · THE WITNESS:· My understanding is that North 17· ·American Marketing could have provided various services, 18· ·et cetera, et cetera, to various banks at any time due to 19· ·the Exclusivity provision in this contract.· It's not my 20· ·understanding necessarily -- it was never contemplated, 21· ·never been considered as to whether or not North American 22· ·Marketing could assign a lead to a Proficio database and 23· ·then assign that same lead to a different bank's database. 24· ·So I've never contemplated that.· I'm not an attorney to 25· ·interpret what the contract would allow for or not allow Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 44 of 102 Page 170 ·1· ·for. ·2· ·BY MR. LEECH: ·3· · · ·Q.· ·Do you know what security features SugarCRM had? ·4· · · ·A.· ·I do not. ·5· · · ·Q.· ·Do you need a password to log in to it? ·6· · · ·A.· ·I think so, yes. ·7· · · ·Q.· ·Do you know who at Proficio had passwords for ·8· ·SugarCRM? ·9· · · ·A.· ·I do not. 10· · · ·Q.· ·Do you know what security features were contained 11· ·in ReverseVision? 12· · · ·A.· ·Same thing in terms of a password.· It certainly 13· ·needed a password.· I don't know what the other security 14· ·features were. 15· · · ·Q.· ·Do you know who at Proficio Mortgage Ventures had 16· ·access to those passwords? 17· · · ·A.· ·Are you asking individual passwords, like Eric's 18· ·password for Eric, or are you asking about like did an 19· ·individual have access to everybody's password? 20· · · ·Q.· ·Who at Proficio Mortgage Ventures had passwords 21· ·to ReverseVision? 22· · · ·A.· ·I assume every user.· That's an assumption. 23· · · ·Q.· ·Who would be the users? 24· · · ·A.· ·The employees in the reverse mortgage division. 25· · · ·Q.· ·The loan originators? Page 171 ·1· · · ·A.· ·Yes. ·2· · · ·Q.· ·Would the loan processors have ReverseVision ·3· ·passwords? ·4· · · ·A.· ·Yes. ·5· · · ·Q.· ·Do you know if -- strike that. ·6· · · · · · How did North American Marketing provide lead ·7· ·information to Proficio? ·8· · · · · · MR. CARGILL:· Object to the form and to the ·9· ·extent it's been asked and answered. 10· · · · · · THE WITNESS:· I don't understand the question. 11· ·BY MR. LEECH: 12· · · ·Q.· ·How did North American Marketing transmit lead 13· ·information to Proficio Mortgage Ventures? 14· · · ·A.· ·I don't know.· Ask Scott about that.· He handled 15· ·that a lot more than me. 16· · · ·Q.· ·You don't know if it was emailed or if it was -- 17· · · ·A.· ·I don't know, no. 18· · · ·Q.· ·Okay.· Other than what you've described, are you 19· ·aware of any other steps that Proficio took to ensure the 20· ·confidentiality of its lead information? 21· · · ·A.· ·No. 22· · · ·Q.· ·Turning to North American Marketing, what steps 23· ·did North American Marketing take to ensure the 24· ·confidentiality of its lead information? 25· · · ·A.· ·We've talked about this.· I mean, the only -- we Page 172 ·1· ·talked earlier -- first thing this morning about, you ·2· ·know, at times early on when I had more to do with the ·3· ·marketing stuff, so this does not contemplate when we were ·4· ·at Proficio, but early on in the Evofi days I told you ·5· ·that I had multiple, you know, like desktop files.· One ·6· ·was for, you know, one company, one was for the other. ·7· ·Those were all contained on a secured, you know, laptop or ·8· ·desktop that had passwords, everything else.· It was on my ·9· ·own local hard drive, not on a shared folder.· That's all 10· ·I can recall.· I think I had a couple other ideas for you 11· ·earlier, but I don't recall what they were. 12· · · ·Q.· ·So you mentioned it was not on a shared folder. 13· ·It was password-protected on your local computer. 14· · · · · · Who at North American Marketing had access to 15· ·that information? 16· · · ·A.· ·This was, again, two thousand -- I think '6 17· ·through 2009 time frame that we're talking about. 18· · · ·Q.· ·Uh-huh. 19· · · ·A.· ·I don't believe anybody else.· I believe it would 20· ·have just been myself. 21· · · ·Q.· ·And then going forward to the First National Bank 22· ·of Layton days, what steps did North American Marketing 23· ·take to preserve the confidentiality of its lead 24· ·information? 25· · · ·A.· ·I don't know.· That would be a good question for Page 173 ·1· ·Scott, who handled most of the technology in North ·2· ·American Marketing. ·3· · · ·Q.· ·How about when North American Marketing was ·4· ·affiliated with Proficio? ·5· · · ·A.· ·Same question.· Same thing. ·6· · · ·Q.· ·Scott would know.· You don't? ·7· · · ·A.· ·Scott would know.· I don't, yes.· I assume Scott ·8· ·would know.· Scott would have a better chance of knowing ·9· ·than I would. 10· · · ·Q.· ·Did North American Marketing use any data 11· ·management through CRM programs? 12· · · ·A.· ·I don't know.· Not that I recall. 13· · · ·Q.· ·North American Marketing didn't have its own 14· ·instance of Sugar? 15· · · ·A.· ·Not that I can recall.· Scott would know that 16· ·also.· He did a lot of the software engineering technology 17· ·for Sugar. 18· · · ·Q.· ·Do you know if North American Marketing used 19· ·ReverseVision at all? 20· · · ·A.· ·I don't believe it did, no. 21· · · ·Q.· ·Because North American Marketing didn't originate 22· ·loans? 23· · · ·A.· ·You've asked me that and I've answered that.· My 24· ·recollection was that North American Marketing never 25· ·originated a loan, but I'm not a thousand percent certain Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 45 of 102 Page 174 ·1· ·of that. ·2· · · ·Q.· ·Did North -- ·3· · · ·A.· ·It certainly did not originate a loan during its ·4· ·time at Proficio Mortgage. ·5· · · ·Q.· ·Did North American Marketing use passwords to ·6· ·protect its -- the computer files containing lead ·7· ·information? ·8· · · ·A.· ·I don't know.· I didn't handle the computer files ·9· ·that contained that information.· Scott did. 10· · · ·Q.· ·Did North American Marketing have any policies 11· ·regarding the confidentiality of lead information? 12· · · ·A.· ·I don't recall. 13· · · ·Q.· ·Did North American Marketing have any policies 14· ·about maintaining computer security or the security of 15· ·lead information? 16· · · ·A.· ·I don't recall. 17· · · ·Q.· ·What did North American Marketing do -- strike 18· ·that. 19· · · · · · Is there anything that would refresh your 20· ·recollection as to whether North American Marketing had 21· ·any policies regarding confidentiality or security? 22· · · ·A.· ·Yes. 23· · · ·Q.· ·What would? 24· · · ·A.· ·If you showed me policies about confidentiality 25· ·that was written by North American Marketing or for North Page 175 ·1· ·American Marketing. ·2· · · ·Q.· ·Anything else? ·3· · · ·A.· ·I'm sure there are things.· I can't -- I can't ·4· ·articulate them. ·5· · · ·Q.· ·Other than what we've just discussed, did North ·6· ·American Marketing take any other steps to protect the ·7· ·confidentiality of its lead information? ·8· · · ·A.· ·I don't remember.· Certainly me as a founder, as ·9· ·an individual at North American Marketing, you know, all 10· ·my stuff was as secure as possible.· I didn't share 11· ·passwords with people.· I didn't give anybody the 12· ·information.· So it was all kind of contained on a -- on a 13· ·local computer, any of the North American Marketing stuff 14· ·that I had.· Most of the actual data and lead lists lived 15· ·on, I believe, Scott Guild's personal computer, but I 16· ·can't be certain about that.· Another good thing for you 17· ·to ask him.· I think those would be some steps that, you 18· ·know, privacy was maintained or security was maintained 19· ·for those lists. 20· · · · · · MR. LEECH:· We've been going longer than an hour. 21· ·Want to take a quick break? 22· · · · · · MR. CARGILL:· Yeah. 23· · · · · · (Recess taken 2:41 p.m. to 2:55 p.m.) 24· ·BY MR. LEECH: 25· · · ·Q.· ·What was your role in assembling lead lists for Page 176 ·1· ·Proficio Mortgage Ventures? ·2· · · ·A.· ·I didn't have a role in assembling lead lists for ·3· ·Proficio Mortgage Ventures. ·4· · · ·Q.· ·Was that done entirely by Scott Guild? ·5· · · · · · MR. CARGILL:· Object to the form. ·6· ·BY MR. LEECH: ·7· · · ·Q.· ·Who -- ·8· · · ·A.· ·Almost exclusively, you know.· Depends on what ·9· ·you mean by "lead lists."· I helped with some marketing 10· ·and we discussed certain things.· But yes, Scott was 11· ·the -- he was the architect.· He was the one that did, you 12· ·know, almost all the technological aspects, a lot of the 13· ·data mining, a lot of the harvesting, a lot of the very 14· ·complicated, complex data components related to marketing, 15· ·the harvesting of the lead lists, et cetera, et cetera, 16· ·yes. 17· · · ·Q.· ·And do you pull down -- would you obtain lists of 18· ·HECM loans closed throughout the United States each month? 19· · · ·A.· ·Again, Scott is the one who did that, so I didn't 20· ·do any of that. 21· · · ·Q.· ·Before Scott became affiliated with North 22· ·American Marketing, did you pull down -- back when you 23· ·were assembling the lead list, did you obtain lists of the 24· ·HECM loans closed throughout the United States each month? 25· · · ·A.· ·No. Page 177 ·1· · · ·Q.· ·You did not? ·2· · · ·A.· ·I did not. ·3· · · ·Q.· ·Is that info publicly available? ·4· · · ·A.· ·What info? ·5· · · ·Q.· ·Details about reverse mortgage loans closed ·6· ·within the United States. ·7· · · ·A.· ·What details? ·8· · · ·Q.· ·Name of the borrower, amount of the loan, date it ·9· ·closed. 10· · · ·A.· ·You're asking me if a name of the borrower that 11· ·obtained a reverse mortgage is publicly available? 12· · · ·Q.· ·Yes. 13· · · ·A.· ·I don't think so, no.· I don't believe it is. 14· · · ·Q.· ·You can't acquire it through HUD? 15· · · ·A.· ·I don't know.· I've never acquired it from HUD 16· ·myself.· I believe you can get certain things from county 17· ·recorder's offices that may or may not indicate whether or 18· ·not it's a reverse mortgage, but I believe each county 19· ·recorder office is a little bit different.· So various 20· ·states, like in Texas and places like that, could be a lot 21· ·more difficult and you would actually have to go down to 22· ·the recorder's office to get that information, where a lot 23· ·of other stuff is automated.· Also, we're talking about, 24· ·you know, 2006 through 2016, so you're talking about a 25· ·10-year period.· Certainly technology and tools and Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 46 of 102 Page 178 ·1· ·everything else changed. ·2· · · · · · But no, I do not believe, per my recollection, ·3· ·that a name and a phone number of every single reverse ·4· ·mortgage -- not phone number, you didn't say phone number, ·5· ·but a name and loan type for every borrower in America is ·6· ·publicly available for anybody that wants it.· I do not ·7· ·believe that's true.· It might be, but I don't believe it ·8· ·is. ·9· · · ·Q.· ·Do you know approximately how many HECM loans 10· ·were closed last year in the US? 11· · · ·A.· ·Approximately less than 10,000. 12· · · ·Q.· ·Could you obtain that information from HUD? 13· · · ·A.· ·Yes, I believe so. 14· · · · · · To clarify that, no, I don't believe you could 15· ·ascertain how many loans were closed.· I believe you could 16· ·ascertain how many loans were endorsed by HUD.· I don't 17· ·believe that would be the same as a closed loan. 18· · · ·Q.· ·Are all HECM loans insured by HUD, insured by the 19· ·FHA? 20· · · ·A.· ·All HECM loans insured by FHA?· Yes, I think so. 21· ·The answer to that would be yes. 22· · · ·Q.· ·So for HECM loans, the number of loans endorsed 23· ·by HUD or insured by HUD would be the same as the number 24· ·of loans closed; is that correct? 25· · · ·A.· ·Yeah.· There could be variances as to when they Page 179 ·1· ·were recorded.· For instance, you could close a loan and ·2· ·not have it endorsed for a long period of time, 30, 60, ·3· ·90, 120 days.· If my assumption is correct that that ·4· ·information or that number that HUD says, Yes, there was a ·5· ·reverse mortgage endorsed is accurate, then you may not ·6· ·know if that loan was endorsed for up to, you know, X days ·7· ·after the loan actually closed.· So they may not coincide ·8· ·with each other.· So when you talk a time frame like a ·9· ·year or in a calendar year, a loan may have closed, but it 10· ·may not have been endorsed.· It could not be vice versa, 11· ·though.· It couldn't be endorsed without having closed. 12· · · · · · Does that make sense? 13· · · ·Q.· ·Understood.· Yeah. 14· · · · · · But eventually, that loan would be endorsed and 15· ·the details of that would be available? 16· · · ·A.· ·In most cases, yeah.· There could be some 17· ·anomalies, but yes.· Borrower could die in between the 18· ·time it was closed and the loan was endorsed.· There could 19· ·be a few things that could happen like that. 20· · · ·Q.· ·Showing you what we'll mark as Exhibit 4. 21· · · · · · (Exhibit 4 marked) 22· · · · · · THE WITNESS:· Thank you. 23· ·BY MR. LEECH: 24· · · ·Q.· ·Do you recognize this document? 25· · · ·A.· ·I do not. Page 180 ·1· · · ·Q.· ·Do you know who prepared this document? ·2· · · ·A.· ·I do not. ·3· · · ·Q.· ·Do you know how the document was prepared? ·4· · · ·A.· ·I do not. ·5· · · ·Q.· ·Do you know who owned this particular document? ·6· · · · · · MR. CARGILL:· Objection to the extent it calls ·7· ·for a legal conclusion. ·8· · · · · · THE WITNESS:· I don't.· I would have never seen ·9· ·something like this printed like this either.· So I don't 10· ·know what it is or who did it or what happened or any of 11· ·that.· I'm curious, though.· Can you tell me what it is? 12· · · · · · I don't get to ask questions? 13· · · · · · MR. CARGILL:· No. 14· ·BY MR. LEECH: 15· · · ·Q.· ·Was this the type of lead information that North 16· ·American Marketing provided to Proficio Mortgage Ventures? 17· · · ·A.· ·Again -- 18· · · · · · MR. CARGILL:· Objection.· Lack of foundation. 19· · · · · · THE WITNESS:· And I've answered that Scott 20· ·provided that information at North American Marketing -- 21· ·or excuse me, Scott at North American Marketing provided 22· ·that to Proficio and put that into the Proficio lead 23· ·systems, not myself.· But, you know, if you want to 24· ·abstract a certain column on here or something and ask me 25· ·that question, I could answer it. Page 181 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·Sure.· Go ahead and review this document, in ·3· ·particular the column headings, and identify for me what ·4· ·information you would consider to be confidential, ·5· ·proprietary or trade secret of either North American ·6· ·Marketing or Proficio Mortgage Ventures. ·7· · · · · · MR. CARGILL:· Just an objection to the extent it ·8· ·calls for a legal interpretation or conclusion. ·9· · · · · · THE WITNESS:· I didn't do the column headings, so 10· ·I wouldn't be comfortable speculating on some of that 11· ·stuff.· Anything that says estimated I believe would be 12· ·something that would take additional information.· But 13· ·again, Scott would be the right guy to talk to about this 14· ·stuff. 15· · · · · · And also, I would want some explanation as to 16· ·what the actual column headings mean, what they are. 17· ·Value increase estimates, all that type of stuff would not 18· ·be necessarily publicly available.· Phone numbers in many 19· ·cases would not be publicly available.· I don't know if 20· ·there's phone numbers on here.· There are some -- looks 21· ·like there are some phone numbers.· Maybe there's not. I 22· ·don't know. 23· · · · · · And again, by "publicly available," I don't know 24· ·what you mean by that.· Does that mean that anybody could 25· ·buy it, or does that mean anybody could just click on a Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 47 of 102 Page 182 ·1· ·website somewhere and obtain it? ·2· ·BY MR. LEECH: ·3· · · ·Q.· ·For purposes of our discussion, let's say that ·4· ·something that anyone could buy. ·5· · · ·A.· ·I think anybody could buy a lot of this ·6· ·information.· I don't -- I can't testify that they could ·7· ·buy all this information.· Because again, you asked me to ·8· ·look at almost, you know, hundreds of columns that have ·9· ·estimated or that have abbreviated column headings and 10· ·everything else that I'm not sure what they mean. 11· · · ·Q.· ·Looking at the column headings, based on your 12· ·experience in the mortgage industry and in marketing, what 13· ·type of information would someone in the public not be 14· ·able to buy? 15· · · · · · MR. CARGILL:· Object to the form. 16· · · · · · THE WITNESS:· So is the question on this 40 pages 17· ·of column headings, which information would not be 18· ·available to be publicly bought? 19· ·BY MR. LEECH: 20· · · ·Q.· ·Correct. 21· · · ·A.· ·And is that from a single source or from multiple 22· ·sources? 23· · · ·Q.· ·Just from sources available to the public for 24· ·purchase. 25· · · ·A.· ·So I would assume that almost everything could Page 183 ·1· ·be -- yeah, I can't speculate to that.· I don't know. I ·2· ·don't understand what all the column headings are, their ·3· ·abbreviations.· You know, YYMM, I can speculate as to what ·4· ·that means, but I don't know for sure.· Estimated Value ·5· ·(State), Desired Value (PL X2), without definitions of ·6· ·that stuff, I couldn't speculate as to whether that could ·7· ·be purchased by somebody. ·8· · · · · · With that said, I believe almost anything could ·9· ·be purchased by somebody, but it would come from multiple 10· ·stores so to speak.· I don't believe that you could buy 11· ·all this data, all this information -- not necessarily 12· ·this, but you certainly couldn't buy all the information 13· ·that North American Marketing provided to Proficio from 14· ·one stop, from one data provider. 15· · · ·Q.· ·How many data providers would you need? 16· · · ·A.· ·I don't know.· Multiple.· More than three. 17· · · ·Q.· ·What abbreviations on this document do you not 18· ·understand? 19· · · ·A.· ·Do you have a pen? 20· · · ·Q.· ·I think there's one over on the counter. 21· · · ·A.· ·Do you want me to mark it, or what do you want me 22· ·to do? 23· · · ·Q.· ·I'd like you to read it for the record. 24· · · ·A.· ·Okay.· MCA 20% increase target.· I'm on page 3. 25· · · ·Q.· ·Any others? Page 184 ·1· · · ·A.· ·Number of days since origination or since orig, I ·2· ·assume that means origination, also on page 3.· The blank ·3· ·column at the beginning of page 4.· The first number in ·4· ·the column is 2.19.· The next column over, MCA req'd to ·5· ·PAR Apr 1.· Qualify, I don't know what that means.· The ·6· ·two columns at the end of column -- column -- two columns ·7· ·at the end of page 4, Estimated Value (Zip), Estimated ·8· ·Value (County), I don't know how those estimated values ·9· ·were derived. 10· · · · · · The first column on page 5, same thing.· Desired 11· ·Value (PL X) -- (PL X2), I don't know what that means. 12· ·YYMM, fourth column on page 4, I don't know what that 13· ·means.· Sorry.· The fourth column on page 5. 14· ·ZipValue_Current -- ZipValue_Current, I don't know what 15· ·that means.· ZipValue_Original, I don't know what that 16· ·means.· ZipValue_Increase, I don't know what that means. 17· ·StateValue_Current, I don't know what that means. 18· ·StateValue_Original, I don't know what that means. 19· ·StateValue_Increase, I'm not sure what that means. 20· · · · · · MR. CARGILL:· Okay.· I'm going to object to the 21· ·relevance. 22· · · · · · THE WITNESS:· And this goes on for 21 pages. 23· · · · · · MR. CARGILL:· He testified that he doesn't know 24· ·what the document is, he didn't create it.· And you want 25· ·him to identify everything that he doesn't understand on a Page 185 ·1· ·document that he doesn't know what it is?· I just want to ·2· ·clarify if that's what you want him to do here. ·3· ·BY MR. LEECH: ·4· · · ·Q.· ·We've gone through enough, but I do have specific ·5· ·questions about some of these headers. ·6· · · ·A.· ·Fair enough. ·7· · · ·Q.· ·You identified MCA as being a term you don't ·8· ·understand.· Have you ever heard the term "MCA" in the ·9· ·HECM business? 10· · · ·A.· ·I don't think I identified that as a term I don't 11· ·understand.· I think the first one I said I didn't 12· ·understand was MCA 20% increased target.· I don't know 13· ·more or less what that means after MCA.· And I'm only 14· ·assuming that MCA means max claim amount. 15· · · ·Q.· ·What's a max claim amount? 16· · · ·A.· ·The total amount that a reverse mortgage -- the 17· ·total amount that a reverse -- an individual reverse 18· ·mortgage can be claimed against FHA at the time of loan 19· ·consummation.· Another way that we've always kind of 20· ·referred to it as would be the appraised value or the FHA 21· ·lending limit. 22· · · ·Q.· ·And that would be the maximum size of a HECM 23· ·mortgage that you could give to that particular borrower? 24· · · ·A.· ·No, I don't think so. 25· · · · · · What do you mean by "size"?· The maximum amount Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 48 of 102 Page 186 ·1· ·of money they could receive? ·2· · · ·Q.· ·Correct. ·3· · · ·A.· ·I don't think that's entirely true. ·4· · · ·Q.· ·How is it not true? ·5· · · ·A.· ·I think there's exceptions to that, and I can't ·6· ·recall exactly what they are. ·7· · · ·Q.· ·Going to the next page, I believe you identified ·8· ·MCA req'd to PAR Apr 1 as a column heading that you didn't ·9· ·understand. 10· · · ·A.· ·Yes. 11· · · ·Q.· ·Have you ever heard the term "par" or P-A-R in 12· ·the reverse mortgage industry? 13· · · ·A.· ·The only thing I think of when you say the term 14· ·"par" would be zero. 15· · · ·Q.· ·And so what do you mean by zero? 16· · · ·A.· ·For instance, a par -- a par price would be zero. 17· ·So when we talked about basis points before or average 18· ·basis points -- 19· · · ·Q.· ·Uh-huh. 20· · · ·A.· ·-- being 1,000 basis points, if there happens to 21· ·be negative 1,000 basis points, the par price would be 22· ·zero. 23· · · ·Q.· ·Uh-huh.· And you said you didn't know what the 24· ·term "qualified" meant? 25· · · ·A.· ·I could define the word qualify, you know, per Page 187 ·1· ·Webster's Dictionary.· But on this document, I have no ·2· ·idea what it means. ·3· · · ·Q.· ·Okay.· Fair enough.· Hand you what we'll mark ·4· ·as -- I think we're on five. ·5· · · ·A.· ·Yes.· This was four. ·6· · · · · · (Exhibit 5 marked) ·7· ·BY MR. LEECH: ·8· · · ·Q.· ·Do you recognize this document? ·9· · · ·A.· ·I do not. 10· · · ·Q.· ·Do you know who prepared this document? 11· · · ·A.· ·I do not. 12· · · ·Q.· ·Do you know how it was prepared? 13· · · ·A.· ·I do not. 14· · · ·Q.· ·Do you know who owned this document? 15· · · ·A.· ·I do not. 16· · · ·Q.· ·Do you know who owned the information contained 17· ·in this document? 18· · · ·A.· ·I do not.· I know nothing about this document. 19· · · ·Q.· ·If you could review this document and identify 20· ·any of the columns that you would consider to be a 21· ·confidential, proprietary or trade secret information of 22· ·either Proficio or North American Marketing. 23· · · ·A.· ·I mean, it's basically -- I feel like it's the 24· ·same question you just asked me about this last document, 25· ·it just looks like it's in a different form.· I don't know Page 188 ·1· ·if it's the same information or not, but...· It looks like ·2· ·there's column headings that are unique that, you know, I ·3· ·have no idea what they mean.· There's ID.· Very -- ·4· ·starting at the first top left column on the first page ·5· ·says ID.· I don't know what ID that's for.· Phone, I ·6· ·assume that's a phone number.· I would assume that that ·7· ·would be -- yes, that would be something that would be ·8· ·proprietary.· If it was Proficio's information, then it ·9· ·would be -- some of these phone numbers could potentially 10· ·be proprietary. 11· · · · · · 2.0 Flagged, I don't know what that means.· The 12· ·answer in each column says yes, I have no idea what that 13· ·means.· Join_Key_Long_Is_Unique, and then what's contained 14· ·in that column, I have no idea what that means.· It looks 15· ·like those are mortgage companies, but I don't know that. 16· ·Don't know if it would be proprietary or not because I 17· ·don't know what this is. 18· · · ·Q.· ·My question is very simple.· Do you know -- 19· ·looking at this information, what information here do you 20· ·know to be confidential, proprietary or a trade secret of 21· ·either North American Marketing or Proficio Mortgage 22· ·Ventures? 23· · · · · · MR. CARGILL:· That wasn't the question.· I think 24· ·the question was what would you deem confidential or 25· ·proprietary.· So I think -- Page 189 ·1· · · · · · MR. LEECH:· I think it's the same thing, but I'll ·2· ·reword it if that's helpful. ·3· · · · · · MR. CARGILL:· Whether you know something or ·4· ·whether you -- in your opinion something is confidential, ·5· ·I think is completely two different questions.· So I think ·6· ·we need to clarify what the question is. ·7· · · · · · MR. LEECH:· Can you read the question back? ·8· · · · · · (Record read) ·9· · · · · · MR. CARGILL:· Okay.· And objection to the extent 10· ·it calls for a legal interpretation or conclusion. 11· ·BY MR. LEECH: 12· · · ·Q.· ·Can you answer that question? 13· · · ·A.· ·I can't answer it.· I don't know what this 14· ·document is.· I don't -- are you telling me that this is 15· ·Proficio information here?· To me there's a bunch of 16· ·column headings.· It could be anything.· It could be from 17· ·your firm.· It could be from anything.· I have no idea 18· ·what this is. 19· · · ·Q.· ·So your answer is there's nothing here that you 20· ·couldn't testify -- strike that. 21· · · · · · So your answer is that there's nothing here that 22· ·you know to be confidential Proficio or North American 23· ·Marketing information? 24· · · · · · MR. CARGILL:· No.· His answer is what he said. 25· ·/// Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 49 of 102 Page 190 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·You can answer the question. ·3· · · ·A.· ·Yes. ·4· · · ·Q.· ·Show you what we'll mark as Exhibit 6. ·5· · · · · · (Exhibit 6 marked) ·6· · · · · · THE WITNESS:· Thank you. ·7· ·BY MR. LEECH: ·8· · · ·Q.· ·Do you recognize this document? ·9· · · ·A.· ·I do not. 10· · · ·Q.· ·Do you know who prepared this document? 11· · · ·A.· ·I do not. 12· · · ·Q.· ·Do you know how it was prepared? 13· · · ·A.· ·I do not. 14· · · ·Q.· ·Do you know who owned this specific document? 15· · · ·A.· ·No. 16· · · ·Q.· ·Do you know who owned the information contained 17· ·in this specific document? 18· · · ·A.· ·No. 19· · · ·Q.· ·Looking at the column headings, I'll ask you 20· ·similar to what I asked you before, is there anything in 21· ·this document that you know to be confidential, 22· ·proprietary or a trade secret of either Proficio Mortgage 23· ·Ventures or North American Marketing? 24· · · · · · MR. CARGILL:· Same objection to the extent it 25· ·calls for a legal interpretation or conclusion, and the Page 191 ·1· ·witness has clearly testified he has no idea what this ·2· ·document is. ·3· · · · · · THE WITNESS:· Without understanding what the ·4· ·document is, where it came from, whose information is ·5· ·contained in it, what the column heading abbreviations ·6· ·mean, the answer -- I would have to answer no. ·7· ·BY MR. LEECH: ·8· · · ·Q.· ·So you can't identify anything here that you're ·9· ·certain is a -- is confidential, proprietary or a trade 10· ·secret of either Proficio Mortgage Ventures or North 11· ·American Marketing? 12· · · ·A.· ·That's right. 13· · · ·Q.· ·Showing you what we marked as Exhibit 7. 14· · · · · · (Exhibit 7 marked) 15· · · · · · THE WITNESS:· I have a feeling we're going to 16· ·have the same answers here. 17· ·BY MR. LEECH: 18· · · ·Q.· ·That may well be the case, but I've got to hear 19· ·them. 20· · · ·A.· ·Fair enough. 21· · · ·Q.· ·Do you recognize this document? 22· · · ·A.· ·No. 23· · · ·Q.· ·Do you know who prepared this document? 24· · · ·A.· ·No. 25· · · ·Q.· ·Do you know how this document was prepared? Page 192 ·1· · · ·A.· ·No. ·2· · · ·Q.· ·Do you know who owned this document? ·3· · · ·A.· ·No. ·4· · · ·Q.· ·Do you know who owned the information contained ·5· ·in this document? ·6· · · ·A.· ·No. ·7· · · ·Q.· ·Reviewing the column headings for this document, ·8· ·is there any information in this document that you know to ·9· ·be a trade secret, confidential or proprietary to Proficio 10· ·Mortgage Ventures or North American Marketing? 11· · · ·A.· ·No.· I have no idea what this document is.· I do 12· ·not know without knowing what the document is or where it 13· ·came from, what -- what would be considered, you know, 14· ·proprietary to anybody, whoever owned -- whoever the owner 15· ·of this information is.· The same or similar 16· ·abbreviations, column headings I'm not familiar with. 17· ·Similar kind of answers to the last four or five exhibits 18· ·that we've looked at. 19· · · ·Q.· ·Would a borrower's age be something that's 20· ·confidential, proprietary or trade secret? 21· · · · · · MR. CARGILL:· Objection to the extent it calls 22· ·for a legal conclusion. 23· · · · · · THE WITNESS:· Would a borrower's age be something 24· ·that's proprietary or a trade secret?· I don't know what 25· ·"proprietary" or "trade secret" means.· If you're asking Page 193 ·1· ·if that's something that you could not easily obtain, it's ·2· ·been a long time since I've done that data mining, but ·3· ·yeah, I don't think you can easily get a borrower's age, a ·4· ·person's age.· So based on my knowledge, I would say yes, ·5· ·that's something that's less than publicly available. ·6· ·BY MR. LEECH: ·7· · · ·Q.· ·But are there ways to acquire information about a ·8· ·person's age? ·9· · · ·A.· ·I think there are, yeah. 10· · · ·Q.· ·To the best of your recollection, how would you 11· ·go about obtaining information about a person's age? 12· · · ·A.· ·I'd have to ponder that for a while.· It's been a 13· ·long time since I've, you know, thought about that. 14· · · ·Q.· ·How about their date of birth? 15· · · ·A.· ·I would consider that to be the same as the age. 16· · · ·Q.· ·How about the estimated value of a borrower's 17· ·property? 18· · · ·A.· ·The estimated value of a borrower's property? 19· ·Yes, there's multiple ways you could obtain that 20· ·information.· What are you asking me specifically? 21· · · ·Q.· ·Would you consider an estimated value of a 22· ·borrower's property to be something that's confidential, 23· ·proprietary to Proficio or North American Marketing? 24· · · · · · MR. CARGILL:· Same objections. 25· · · · · · THE WITNESS:· Yes. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 50 of 102 Page 194 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·Why? ·3· · · ·A.· ·Because it's not something that's -- that's -- ·4· ·it's something that took effort to get.· So confidential ·5· ·or proprietary?· Again, I don't have a legal opinion of ·6· ·what those two things mean.· But estimated value, it's not ·7· ·something that you can just, you know, happen upon.· It's ·8· ·not something that you can have that's publicly available. ·9· · · ·Q.· ·Could it be information that you could purchase? 10· · · ·A.· ·Sure, yes. 11· · · ·Q.· ·Who would you purchase it from? 12· · · ·A.· ·I think there's hundreds of companies that 13· ·provide valuation methodologies. 14· · · ·Q.· ·You're saying there's hundreds of companies that 15· ·I could purchase estimated value -- 16· · · ·A.· ·Yes. 17· · · ·Q.· ·-- properties from? 18· · · ·A.· ·Yes. 19· · · ·Q.· ·Why is that not publicly available, then, in your 20· ·mind? 21· · · ·A.· ·In my mind, I'm using the term "publicly 22· ·available" as something that you and I could walk into, 23· ·say, a library and just obtain for free without cost. 24· · · ·Q.· ·But even if anybody could obtain it for -- strike 25· ·that. Page 195 ·1· · · · · · So something would not be publicly available in ·2· ·your mind if there was some cost associated with it? ·3· · · ·A.· ·I think up to this point that's the way I've been ·4· ·defining "publicly available," yes. ·5· · · ·Q.· ·Show you what we've marked as eight. ·6· · · · · · (Exhibit 8 marked) ·7· · · · · · THE WITNESS:· Thank you again. ·8· ·BY MR. LEECH: ·9· · · ·Q.· ·Do you recognize this document? 10· · · ·A.· ·No. 11· · · ·Q.· ·Do you know who prepared this document? 12· · · ·A.· ·No. 13· · · ·Q.· ·Do you know how this document was prepared? 14· · · ·A.· ·No. 15· · · ·Q.· ·Do you know who owns this document? 16· · · ·A.· ·No. 17· · · ·Q.· ·Do you know -- do you know who owns the 18· ·information contained in this document? 19· · · ·A.· ·No. 20· · · · · · MR. CARGILL:· Same objections as the past five 21· ·exhibits. 22· ·BY MR. LEECH: 23· · · ·Q.· ·Reviewing this document is there anything in 24· ·this doc- -- strike that. 25· · · · · · Reviewing this document is there anything that Page 196 ·1· ·you -- strike that. ·2· · · · · · Reviewing this document is there any information ·3· ·contained in this document that you would consider to be ·4· ·confidential, proprietary or a trade secret of North ·5· ·American Marketing or Proficio Mortgage Ventures? ·6· · · · · · MR. CARGILL:· Same objections. ·7· · · · · · THE WITNESS:· Same answer I've given you the last ·8· ·five times too.· Without understanding what this document ·9· ·is, where it came from, who owns it, what the column 10· ·heading abbreviations mean, the answer is no. 11· ·BY MR. LEECH: 12· · · ·Q.· ·There's nothing you can identify that would be 13· ·proprietary, confidential or trade secret of Proficio 14· ·Mortgage Ventures? 15· · · · · · MR. CARGILL:· Asked and answered. 16· · · · · · THE WITNESS:· That's right. 17· ·BY MR. LEECH: 18· · · ·Q.· ·Show you what we're marking as nine. 19· · · · · · (Exhibit 9 marked) 20· ·BY MR. LEECH: 21· · · ·Q.· ·Do you recognize this document? 22· · · ·A.· ·It's more recognizable.· But no, I don't 23· ·specifically recognize it.· What I mean by that is this 24· ·title at the top, REFIBlackOPsNV, reminds me of a 25· ·similar-looking document or actually Excel spreadsheet Page 197 ·1· ·that came from an email that we saw Eric sent to, I ·2· ·believe, himself.· But I can't be sure that this is that ·3· ·same information. ·4· · · ·Q.· ·Do you know who prepared this list? ·5· · · ·A.· ·I don't, no. ·6· · · ·Q.· ·Do you know how this list was prepared? ·7· · · ·A.· ·I don't, no. ·8· · · ·Q.· ·Do you know who owned this list? ·9· · · ·A.· ·No. 10· · · · · · MR. CARGILL:· Same objections. 11· ·BY MR. LEECH: 12· · · ·Q.· ·Do you know who owned the information contained 13· ·in this list? 14· · · ·A.· ·No. 15· · · ·Q.· ·Looking at this list, is there any information 16· ·contained in this list that you would consider to be -- 17· ·strike that.· That you know to be confidential, 18· ·proprietary or a trade secret of Proficio Mortgage 19· ·Ventures or North American Marketing? 20· · · · · · MR. CARGILL:· Same objections. 21· · · · · · THE WITNESS:· Without understanding who this 22· ·document is from, who owns it, what the data, what it is, 23· ·the column heading abbreviations, the answer is no. 24· ·BY MR. LEECH: 25· · · ·Q.· ·You recall that Eric Naranjo emailed himself a Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 51 of 102 Page 198 ·1· ·similar document.· Was that what you said? ·2· · · ·A.· ·Yes. ·3· · · ·Q.· ·In what ways was the document similar? ·4· · · ·A.· ·I believe it had similar coloring, and I believe ·5· ·the -- the title of the -- of the email was labeled ·6· ·REFIBlackOPs, I believe.· And if it wasn't Eric, it was ·7· ·Russ.· One of the two. ·8· · · ·Q.· ·Do you know what the term REFIBlackOPs means? ·9· · · ·A.· ·I don't, no. 10· · · ·Q.· ·Was it ever a term that you used while you were 11· ·at North American Marketing or Proficio? 12· · · ·A.· ·I don't recall, no. 13· · · ·Q.· ·Talking about the spreadsheet you looked at that 14· ·Eric or Russ emailed to himself, is there any information 15· ·in that spreadsheet that you recall was confidential, 16· ·proprietary or a trade secret for Proficio Mortgage 17· ·Ventures or North American Marketing? 18· · · · · · MR. CARGILL:· Same objections. 19· · · · · · THE WITNESS:· Yes. 20· ·BY MR. LEECH: 21· · · ·Q.· ·What information was confidential, proprietary or 22· ·a trade secret that was contained in that spreadsheet? 23· · · · · · MR. CARGILL:· Objection to the extent it calls 24· ·for a legal conclusion. 25· · · · · · THE WITNESS:· I don't recall all of it and I Page 199 ·1· ·don't -- we're not -- we haven't defined the spreadsheet ·2· ·that we're talking about.· There's a couple emails ·3· ·floating around.· But at least one of them had FedEx ·4· ·numbers that were unique to Proficio.· They were Proficio ·5· ·borrowers' FedEx numbers that we actually sent FedExes to ·6· ·on a Proficio FedEx account. ·7· ·BY MR. LEECH: ·8· · · ·Q.· ·So FedEx numbers would be confidential, ·9· ·proprietary or trade secret? 10· · · ·A.· ·Absolutely, yes. 11· · · ·Q.· ·Anything else you recall from -- 12· · · ·A.· ·Not that I recall, no. 13· · · ·Q.· ·-- the spreadsheet that you referenced? 14· · · ·A.· ·Not that I recall.· I'm sure there was, but not 15· ·that I recall. 16· · · ·Q.· ·If you saw that spreadsheet, would you recognize 17· ·it? 18· · · ·A.· ·I may, especially if it was in that same form, 19· ·like electronically in the email and the Excel file.· If 20· ·this is it, you know, I'm not recognizing it because it's 21· ·in a much different form. 22· · · ·Q.· ·How was the form different? 23· · · ·A.· ·It's on paper.· It's expanded significantly. I 24· ·have to look at each page at a time as opposed to across. 25· ·It doesn't have the verbiage, the actual email content, Page 200 ·1· ·the content of the email.· This looks like it was -- if ·2· ·this is the same document, it was just an attachment. ·3· ·Those would be a few ways. ·4· · · ·Q.· ·So if this was the attachment that Eric Naranjo ·5· ·or Russ Riddle emailed to himself, can you review this ·6· ·document and show me or identify for me what information ·7· ·in this document you would consider to be confidential, ·8· ·proprietary or trade secret of Proficio Mortgage Ventures ·9· ·or North American Marketing? 10· · · · · · MR. CARGILL:· But only if it was the document 11· ·sent; right?· Objection.· Calls for speculation. 12· · · · · · THE WITNESS:· I'd have the same question.· So 13· ·you're asking me to speculate, or you're asking me to 14· ·assume -- you're stating that this is the document and 15· ·then assuming this is the document, you want me to start 16· ·talking about -- so in assuming that document was Proficio 17· ·information, this is a Proficio document, you want me to 18· ·speculate on here as to what is proprietary, confidential 19· ·information?· I can do that, sure. 20· ·BY MR. LEECH: 21· · · ·Q.· ·I want you to assume that this is -- you referred 22· ·to Eric Naranjo, Russ Riddle emailing himself a 23· ·spreadsheet -- 24· · · ·A.· ·Yep. 25· · · ·Q.· ·-- earlier. Page 201 ·1· · · ·A.· ·Yes. ·2· · · ·Q.· ·Assume this is that spreadsheet printed out on ·3· ·paper. ·4· · · ·A.· ·Okay. ·5· · · ·Q.· ·I'm asking you to go through it and identify what ·6· ·you would consider to be a Proficio or North American ·7· ·Marketing's confidential, proprietary or trade secret ·8· ·information. ·9· · · ·A.· ·And can you define "confidential, proprietary or 10· ·trade secret"? 11· · · ·Q.· ·What would you consider confidential, proprietary 12· ·to mean? 13· · · · · · MR. CARGILL:· Objection to the extent it requires 14· ·a legal conclusion, but go -- go ahead, to the extent you 15· ·can answer. 16· · · · · · THE WITNESS:· That you could not readily, easily 17· ·get without paying for it.· That's what I would define as, 18· ·you know, the three words that are the issues. 19· · · · · · Do you want to use that definition and me go 20· ·forward, or do you want to redefine it for me? 21· ·BY MR. LEECH: 22· · · ·Q.· ·I'll redefine it for you.· Something that you 23· ·could not easily obtain from a third party, either without 24· ·payment or by paying for it. 25· · · · · · MR. CARGILL:· No.· Object to the form.· To the Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 52 of 102 Page 202 ·1· ·extent it's -- lack of foundation.· To the extent it's ·2· ·based on an erroneous legal definition, I can go on.· Go ·3· ·ahead. ·4· ·BY MR. LEECH: ·5· · · ·Q.· ·No.· I'll rephrase it.· Let's use your ·6· ·definition. ·7· · · ·A.· ·Okay. ·8· · · ·Q.· ·And why don't you identify for me what you ·9· ·consider to be confidential, proprietary or trade secret 10· ·of North American Marketing or Proficio. 11· · · ·A.· ·Sure.· So in at least some of these cases, a 12· ·phone number.· All of the notes. 13· · · ·Q.· ·And where are the notes?· I'm sorry. 14· · · ·A.· ·I believe -- I believe they're in the Status 15· ·column is what it looks like here. 16· · · ·Q.· ·Okay.· So you've identified Phone in some cases 17· ·and Status in all cases? 18· · · ·A.· ·That's right. 19· · · ·Q.· ·Okay.· Keep going. 20· · · ·A.· ·Absolutely.· The Lender in some cases.· In some 21· ·cases, it looks like -- it looks like -- I'm assuming 22· ·STD/Saver is either standard or saver, so loan type. 23· ·Maybe -- maybe not existing MCA.· It's been a while since 24· ·I had to obtain that information myself.· That may be 25· ·publicly -- easily, readily available, it may not. Page 203 ·1· · · · · · I don't believe existing rate is readily ·2· ·available.· I don't believe current rate is readily ·3· ·available.· I don't believe existing rate type is readily ·4· ·available, but I could be wrong about that.· I don't know ·5· ·what MCA 20% increase target means, but I'd assume that ·6· ·would not be readily available.· If this is something that ·7· ·we did, that Scott did, then that would be something that ·8· ·would not be readily available.· Again, Interest Rate, ·9· ·probable accumulation rate.· Number of days since 10· ·origination or since orig, I assume that's a calculation 11· ·that Scott did, if this is North -- assuming this is that 12· ·document that we're talking about.· That would not be 13· ·readily, easily available. 14· · · · · · MCA Growth needed, that would be based on a 15· ·formula that Scott would have created.· The next column 16· ·heading is blank.· I don't know what that is.· MCA req'd 17· ·to PAR Apr 1, I don't know what that means, so I would 18· ·assume that would be not readily available.· Original 19· ·principal limit, I don't believe that would be contained 20· ·on any like loan documents or deed of trust or on a 21· ·recorded note.· That would be the only documents that 22· ·I consider readily, easily, free obtainable.· So that 23· ·would be one.· Maybe Initial Principal Limit. 24· · · · · · Basically, almost everything on here it looks 25· ·like.· I mean, do you want me to keep going? Page 204 ·1· · · ·Q.· ·Yeah. ·2· · · ·A.· ·Okay.· Estimated current PL, I assume that's ·3· ·estimated current principal limit.· Qualified, yes or no, ·4· ·I assume that's a value judgment that Scott made. ·5· ·Estimated Value (Zip), estimated Value (County), estimated ·6· ·Value (State), I assume that's Scott's intelligence that ·7· ·came up with those numbers.· Desired Value, ·8· ·ZipValue_Current, ZipValue_Original, ZipValue_Increase, ·9· ·StateValue_Current, StateValue_Original, 10· ·StateValue_Increase, CountyValue_Current, 11· ·CountyValue_Original, CountyValue_Increase. 12· · · · · · The rest of the columns, I'm not familiar with 13· ·the abbreviations.· I'm on the last three or four pages. 14· ·Let me look at all of them, but I'm getting lost in the 15· ·abbreviations on these.· Possibly on the fifth-to-last 16· ·page, the two middle columns that say Equity, don't know 17· ·what those mean.· Possibly Length_of_Residence, the very 18· ·last column on the second-to-last page.· That's all. 19· · · ·Q.· ·Okay.· Can phone numbers be purchased from 20· ·third-party companies? 21· · · ·A.· ·Yes. 22· · · ·Q.· ·Approximately how much do -- does it cost to 23· ·obtain an individual's phone number from a third-party 24· ·company? 25· · · ·A.· ·I don't know. Page 205 ·1· · · ·Q.· ·Would the lender be identified on the recorded ·2· ·mortgage note? ·3· · · ·A.· ·It may or may not.· It's been a long time since ·4· ·I've done that.· I think it may. ·5· · · ·Q.· ·Is the recorded mortgage note something you ·6· ·consider to be publicly available? ·7· · · ·A.· ·Yes. ·8· · · ·Q.· ·So if the lender's name was on that recorded ·9· ·mortgage note, the lender's name would be publicly 10· ·available? 11· · · ·A.· ·Yes.· I would agree with that. 12· · · ·Q.· ·Would the loan type be available -- strike that. 13· · · · · · Would the loan type, whether it's a standard or a 14· ·saver loan, would that be something that's set forth in 15· ·the recorded loan documents? 16· · · ·A.· ·I don't know.· I don't think so. 17· · · ·Q.· ·Do you know if that's something that's accessible 18· ·through HUD? 19· · · ·A.· ·So the problems that I've had when I've tried to 20· ·do the data mining before is a lot of different sources 21· ·for information.· HUD, title companies, et cetera, et 22· ·cetera, all offer different pieces of information.· Notes, 23· ·deeds of trust have different pieces of information.· So 24· ·while rate type may be -- I think that's the column 25· ·heading that you asked me about with HUD. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 53 of 102 Page 206 ·1· · · ·Q.· ·Uh-huh. ·2· · · ·A.· ·That may not be available with the same title ·3· ·data.· And, for instance, the consumer's name may not be ·4· ·available at HUD, but it is available with the title data. ·5· ·So I don't know the answer.· But even if it was rate type, ·6· ·it may not match to a customer's name.· So it takes a data ·7· ·expert to, per my recollection, be able to match and ·8· ·append all of the different data sources to equal one ·9· ·record.· And that was one of the things that Scott was one 10· ·of the best in the country at. 11· · · ·Q.· ·How would you go about identifying the existing 12· ·MCA of a property? 13· · · ·A.· ·I don't know. 14· · · ·Q.· ·Would that be something you could acquire from a 15· ·third party? 16· · · ·A.· ·Don't know. 17· · · ·Q.· ·Would the existing interest rate be something 18· ·that's identified in a recorded mortgage document? 19· · · ·A.· ·I don't think so, no.· My recollection -- that 20· ·would be a great example of what I just tried to 21· ·explain -- is that the interest rate type is recorded on 22· ·the note, the mortgage note, and I don't believe the 23· ·mortgage note is a recorded document.· I believe there's 24· ·interest rate indicators that a lot of people have used, 25· ·title companies, data aggregators have used, but I don't Page 207 ·1· ·believe the actual note is a recorded document.· The deed ·2· ·of trust is and the note may be recorded in other places. ·3· ·I also believe that the interest rate may be recorded on ·4· ·various HUD sites, but the name isn't recorded.· So again, ·5· ·you'd have to have an expert match and append those ·6· ·records, if there's anything to even match to. ·7· · · ·Q.· ·But the rate itself would be available from ·8· ·public sources? ·9· · · ·A.· ·I think I just answered that, you know. 10· · · ·Q.· ·There's a column heading here Probable Accum, 11· ·which I assume means accumulated, Rate. 12· · · · · · Do you -- are you familiar with the term 13· ·"probable accumulated rate"? 14· · · ·A.· ·I can speculate with reasonable certainty that it 15· ·means probable accumulation rate. 16· · · ·Q.· ·Okay.· What's a probable accumulation rate? 17· · · ·A.· ·I don't know what "probable" means but 18· ·"accumulation rate," as I've always used in definitions, 19· ·would be the interest rate and the FHA insurance premium 20· ·together. 21· · · ·Q.· ·And would that be the rate at which the balance 22· ·of the HECM loan increases? 23· · · ·A.· ·Yes. 24· · · ·Q.· ·Okay.· Would that be something you could acquire 25· ·from a third-party company? Page 208 ·1· · · ·A.· ·I don't think so.· I mean, it's -- yeah. A ·2· ·third-party company, I think you'd probably pay for that. ·3· ·I don't know that you can get that publicly available data ·4· ·from a title -- from a, you know, recorder's office or ·5· ·whatever else. ·6· · · ·Q.· ·But you could -- you could acquire it by paying a ·7· ·third-party company? ·8· · · ·A.· ·I believe you could potentially pay a third party ·9· ·for it, yeah. 10· · · ·Q.· ·And if you couldn't buy it from a third-party 11· ·company, how would you go about determining it? 12· · · ·A.· ·Again, when I was doing this, what we would do is 13· ·we would add the interest rate to the FHA interest rate -- 14· ·or the FHA insurance premium at the time of origination. 15· ·So we had to do a lot of calculations and a lot of math to 16· ·come up with that and a lot of assumptions, which is often 17· ·probably why this was called probable accumulation rate. 18· ·So it was not something that was easily -- easy to get. 19· ·We had to look back to what the FHA insurance premium was 20· ·at various times.· We had to hopefully have the accurate 21· ·interest rate for the consumer.· Add those two together 22· ·and then come up with what we thought was a probable 23· ·accumulation rate. 24· · · ·Q.· ·Did you have to do anything else? 25· · · ·A.· ·That's all I can recall. Page 209 ·1· · · ·Q.· ·Number of days since origination, wouldn't -- ·2· ·strike that. ·3· · · · · · Looking at the heading number of days -- number ·4· ·days since origination, I assume that's what that means, ·5· ·the date a HECM mortgage loan is originated, that would be ·6· ·reflected in publicly recorded documents; correct? ·7· · · ·A.· ·Yes. ·8· · · ·Q.· ·So wouldn't the number of days that have passed ·9· ·since that loan was originated, wouldn't that be subject 10· ·to a pretty easy calculation? 11· · · · · · MR. CARGILL:· Object to the form. 12· · · · · · THE WITNESS:· Sure.· I mean, I -- just -- I think 13· ·that's reasonable to say, yeah. 14· ·BY MR. LEECH: 15· · · ·Q.· ·Yeah.· I mean, just from my experience with 16· ·Excel, there's a function that you can pull today's date, 17· ·you input minus, you know, another date, and it just 18· ·generates that number for you. 19· · · ·A.· ·I think that's fair, yeah.· I think it would be a 20· ·pretty simple formula to do pretty basic math on that, 21· ·sure. 22· · · ·Q.· ·So it would be very easily -- very easy to 23· ·determine the number of days since a HECM loan was 24· ·originated? 25· · · ·A.· ·Not so much because -- Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 54 of 102 Page 210 ·1· · · · · · MR. CARGILL:· Object to the form. ·2· · · · · · THE WITNESS:· And again, you have to match this ·3· ·data from various sources; right?· So you have to match a ·4· ·name with a closing date, you know, to obtain that -- to ·5· ·come up with the variables that equal that equation.· So ·6· ·while the math is simple, I agree, obtaining that ·7· ·information and matching that information from various ·8· ·potentially public sources or private sources that you ·9· ·obtain or purchase that data from is where it gets very 10· ·complex.· So I can't agree with a simple yes in that 11· ·setting. 12· ·BY MR. LEECH: 13· · · ·Q.· ·You identified the column header MCA Growth 14· ·needed.· Do you know what formula was used to determine 15· ·that? 16· · · ·A.· ·No. 17· · · ·Q.· ·So you don't know whether or not that formula 18· ·would be something that's publicly available or not? 19· · · ·A.· ·No, I don't. 20· · · ·Q.· ·I believe you said the original principal limit 21· ·was something that would not be publicly available; is 22· ·that correct? 23· · · ·A.· ·I either did or didn't.· I don't recall. 24· · · ·Q.· ·I don't recall either. 25· · · · · · Would the original principal limit for a HECM Page 211 ·1· ·mortgage be something that's publicly available? ·2· · · ·A.· ·I don't think so. ·3· · · ·Q.· ·How would you go about obtaining that ·4· ·information? ·5· · · ·A.· ·I don't know. ·6· · · ·Q.· ·How do you determine what the principal limit is ·7· ·for a HECM loan in general? ·8· · · ·A.· ·I believe it's a percentage of the max claim ·9· ·amount based upon the interest rate, the product type and 10· ·the borrower's -- the youngest borrower's age, but it's a 11· ·long time since I've had to do that math.· That's my 12· ·recollection. 13· · · ·Q.· ·So if you knew the product type, the youngest 14· ·borrower's age and the interest rate, you could determine 15· ·what the principal limit is for a HECM mortgage? 16· · · ·A.· ·And I think you need to know the date that it was 17· ·originated because the -- the factors, the principal limit 18· ·factors have changed over time. 19· · · ·Q.· ·Certainly.· But I'm talking like right now.· Just 20· ·generally speaking, if you had a potential prospective 21· ·borrower for a HECM mortgage, if you knew the age of the 22· ·youngest borrower, the product type and the rate, could 23· ·you determine what the principal limit is? 24· · · ·A.· ·No. 25· · · ·Q.· ·Would you need the value of the home as well? Page 212 ·1· · · ·A.· ·No, not expressed as a percentage. ·2· · · ·Q.· ·What would you need? ·3· · · ·A.· ·The principal limit factor. ·4· · · ·Q.· ·What's the principal limit factor? ·5· · · ·A.· ·It's a number that I believe FHA produces.· It is ·6· ·updated, you know, periodically over time. ·7· · · ·Q.· ·So would the principal limit factor be something ·8· ·that's publicly available? ·9· · · ·A.· ·That is, yes. 10· · · ·Q.· ·Okay.· You identified the column qualify as 11· ·something you didn't think was publicly available.· Would 12· ·that be whether a person qualifies for a reverse mortgage 13· ·or not? 14· · · ·A.· ·I stated that I didn't know what that meant.· But 15· ·I assume that if this was a document Scott put together, 16· ·he had to apply some sort of logic.· And if it's Scott's 17· ·logic, then it's not publicly available. 18· · · ·Q.· ·Okay.· How would you go about obtaining estimated 19· ·value of a property? 20· · · ·A.· ·We talked about that.· There's lots of different 21· ·sources.· There's literally, if not hundreds, tens of, you 22· ·know, sources, companies that you could obtain that data 23· ·from, buy it from. 24· · · ·Q.· ·So it would be easily available but for purchase? 25· · · ·A.· ·I think you could get -- Page 213 ·1· · · · · · MR. CARGILL:· Object to the form. ·2· · · · · · THE WITNESS:· You could get it for free ·3· ·sometimes. ·4· ·BY MR. LEECH: ·5· · · ·Q.· ·Okay.· I'm just noting, I believe you identified ·6· ·this estimated Value (Zip), (County) and (State) as being ·7· ·something you felt was confidential, proprietary. ·8· · · ·A.· ·Yeah. ·9· · · ·Q.· ·If it's available from hundreds or thousands of 10· ·sources, why would it -- you consider it to be 11· ·confidential or proprietary? 12· · · ·A.· ·Because we had to pay for it.· Took a lot of 13· ·effort to get it.· Wasn't just something that miraculously 14· ·appeared that we had.· You know, it's been -- as I defined 15· ·it earlier, I forget what my exact definition was, but the 16· ·proprietary trade secret definition that I gave you was 17· ·something -- that I've been going off of was something 18· ·along the lines of, you know, easily available for free. 19· ·And I don't believe that a large data set, maybe a single 20· ·house, but a large data set of estimated values is 21· ·publicly available for free or easily available for free. 22· · · ·Q.· ·How much would it cost to get a large data set of 23· ·values? 24· · · ·A.· ·I don't know.· Depends what source you went to. 25· · · ·Q.· ·Let's say Zillow. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 55 of 102 Page 214 ·1· · · ·A.· ·I don't know.· I believe Zillow charges something ·2· ·for those, but I'm not sure for a large data set.· If I ·3· ·wanted to -- if you or I wanted to go do our house right ·4· ·now and figure out what Zillow's value was, we could do ·5· ·that for free.· It would take us, I don't know -- we could ·6· ·probably pull the website up and type it in inside of, you ·7· ·know, four or five minutes.· Maybe less. ·8· · · ·Q.· ·How much would it cost to obtain, to the best of ·9· ·your recollection, per address -- strike that. 10· · · · · · Approximately how much would it cost per item in 11· ·the data set to obtain a large data set of home values 12· ·from, say, Zillow or similar type of company? 13· · · · · · MR. CARGILL:· Objection.· Speculation. 14· · · · · · THE WITNESS:· I lost your question too.· I'm 15· ·sorry.· Can you reread it? 16· · · · · · MR. LEECH:· Can you read that back? 17· · · · · · (Record read) 18· · · · · · THE WITNESS:· Can you rephrase the question? 19· ·BY MR. LEECH: 20· · · ·Q.· ·I'll do my best. 21· · · ·A.· ·I'm sorry. 22· · · ·Q.· ·I think what I'm -- to try to illustrate what I'm 23· ·getting at, it's kind of a math type of question. 24· · · ·A.· ·Okay. 25· · · ·Q.· ·If I can buy 100 item data set for $1,000, I'm Page 215 ·1· ·paying $10 per item in the data set.· Do you follow me? ·2· · · ·A.· ·Yes. ·3· · · ·Q.· ·So I have a similar question with respect to the ·4· ·large data set that you referred to from Zillow. ·5· · · ·A.· ·Okay. ·6· · · ·Q.· ·How much per item, like per home -- ·7· · · ·A.· ·Yes. ·8· · · ·Q.· ·-- would it cost to obtain valuation information ·9· ·from Zillow? 10· · · ·A.· ·I don't know. 11· · · ·Q.· ·Can you give me an approximate -- 12· · · ·A.· ·I can't. 13· · · ·Q.· ·-- amount? 14· · · · · · MR. CARGILL:· Objection.· Calls for speculation. 15· · · · · · THE WITNESS:· I can't, no. 16· ·BY MR. LEECH: 17· · · ·Q.· ·Do you know if it cost more than $10 per home? 18· · · ·A.· ·Again, I don't know. 19· · · ·Q.· ·More than $100? 20· · · ·A.· ·I don't know.· I know there's various, you know, 21· ·automatic valuation methods out there that you could spend 22· ·that would cost more than $100 apiece, sure.· It wouldn't 23· ·be Zillow, though.· So specifically Zillow, I don't know. 24· ·My guess is that Zillow would be less than $100, 25· ·absolutely -- Page 216 ·1· · · ·Q.· ·Okay. ·2· · · ·A.· ·-- per record. ·3· · · ·Q.· ·I think you identified Equity as something you ·4· ·consider to be proprietary or a trade secret of Proficio ·5· ·and North American Marketing? ·6· · · ·A.· ·I think it's something that I identified could ·7· ·require a calculation.· If that calculation was performed ·8· ·by, you know, Scott Guild, then that, yes, would be ·9· ·proprietary to Proficio.· I don't know what he meant by 10· ·this, though. 11· · · ·Q.· ·Okay.· So you don't know for certain with this 12· ·column? 13· · · ·A.· ·I do not know. 14· · · ·Q.· ·Strike that.· You don't know for certain if this 15· ·column contains information that is confidential, 16· ·proprietary or trade secret to Proficio Mortgage Ventures 17· ·or North American Marketing? 18· · · ·A.· ·That's right. 19· · · ·Q.· ·Show you what I'm marking 10. 20· · · ·A.· ·Yeah, 10. 21· · · · · · (Exhibit 10 marked) 22· ·BY MR. LEECH: 23· · · ·Q.· ·Do you recognize this document? 24· · · ·A.· ·No. 25· · · ·Q.· ·Do you know who prepared this document? Page 217 ·1· · · ·A.· ·No. ·2· · · ·Q.· ·Do you know how this document was prepared? ·3· · · ·A.· ·No. ·4· · · ·Q.· ·Do you know who owned this document? ·5· · · ·A.· ·No. ·6· · · ·Q.· ·Do you know who owned the information contained ·7· ·in this document? ·8· · · ·A.· ·No. ·9· · · · · · MR. CARGILL:· Do you want him to just say he 10· ·knows nothing about this document? 11· · · · · · MR. LEECH:· I've got to make the record, Counsel. 12· · · · · · MR. CARGILL:· I think that would answer all the 13· ·questions. 14· · · · · · THE WITNESS:· This looks like one of those 15· ·documents that had the FedEx tracking number on it, which 16· ·I referred to earlier.· I don't know if it is or not, 17· ·though.· Again, it's different form, different -- you 18· ·know, the subject in the email isn't there, so I don't 19· ·want to speculate as to that, although I just did. 20· ·BY MR. LEECH: 21· · · ·Q.· ·Looking at the subject headers contained in this 22· ·document, is there anything that you know to be a 23· ·Proficio/North American -- strike that. 24· · · · · · Looking at the subject headers in this document, 25· ·do you know if any of this information is confidential, Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 56 of 102 Page 218 ·1· ·proprietary or a trade secret to Proficio Mortgage ·2· ·Ventures or North American Marketing? ·3· · · · · · MR. CARGILL:· Same objections as the previous ·4· ·exhibits. ·5· · · · · · THE WITNESS:· Are we to assume, like we did on ·6· ·the last one, that this is some of the documents that I ·7· ·referred to as an email that Eric or Russ emailed to ·8· ·himself or no? ·9· ·BY MR. LEECH: 10· · · ·Q.· ·I'm just asking if you, looking at this, do you 11· ·recognize? 12· · · ·A.· ·I don't, no. 13· · · ·Q.· ·Anything you can say? 14· · · ·A.· ·No. 15· · · ·Q.· ·Would a FedEx -- strike that. 16· · · · · · Would a Proficio FedEx tracking number have any 17· ·value to a competitor of Proficio? 18· · · · · · MR. CARGILL:· Objection.· Calls for speculation. 19· · · · · · THE WITNESS:· Probably not. 20· ·BY MR. LEECH: 21· · · ·Q.· ·Would a Proficio FedEx URL have any value to a 22· ·competitor of Proficio? 23· · · · · · MR. CARGILL:· Same objection. 24· · · · · · THE WITNESS:· I don't -- I don't know.· It could. 25· ·Could have some customer information there, sensitive Page 219 ·1· ·data, but I don't think so on its own. ·2· ·BY MR. LEECH: ·3· · · ·Q.· ·You currently work in the reverse mortgage ·4· ·industry; correct? ·5· · · ·A.· ·I do. ·6· · · ·Q.· ·And you worked in there since, I believe you ·7· ·said, at least 2006, 2007, about ten years? ·8· · · ·A.· ·Sounds about right, yeah. ·9· · · ·Q.· ·If you were to obtain a FedEx URL from, say, The 10· ·Federal Savings Bank for one of their customers, would 11· ·that be of value to you in your current role? 12· · · ·A.· ·No.· The only value that it would provide to me 13· ·would be letting me know that it wasn't mine.· It wasn't 14· ·my data, it was somebody else's, and I need to return it 15· ·to them. 16· · · ·Q.· ·Showing you what we'll mark as 11. 17· · · · · · (Exhibit 11 marked.) 18· · · · · · THE WITNESS:· Thank you. 19· ·BY MR. LEECH: 20· · · ·Q.· ·Do you recognize this document? 21· · · ·A.· ·No. 22· · · ·Q.· ·Have you ever seen this document before? 23· · · ·A.· ·I'm only halfway through it right now. 24· · · ·Q.· ·Okay.· Take your time. 25· · · ·A.· ·So far I don't recognize anything. Page 220 ·1· · · ·Q.· ·Take your time and please let me know when you're ·2· ·finished looking through it. ·3· · · ·A.· ·Sure. ·4· · · · · · Mind if I use the restroom real quick? ·5· · · ·Q.· ·Yeah.· Let's take a five-minute break. ·6· · · ·A.· ·Let me finish reviewing this, but then... ·7· · · · · · Yes.· I don't know what this -- I don't -- I've ·8· ·never seen this before. ·9· · · · · · MR. LEECH:· Okay.· Let's go for a five-minute 10· ·break. 11· · · · · · (Recess taken 4:00 p.m. to 4:08 p.m.) 12· ·BY MR. LEECH: 13· · · ·Q.· ·So looking at this document, it appears to be an 14· ·email and an attachment; is that correct? 15· · · ·A.· ·Yeah.· I think that's fair. 16· · · ·Q.· ·And you don't -- do you know who prepared the 17· ·attachment? 18· · · ·A.· ·No. 19· · · ·Q.· ·Do you know how it was prepared? 20· · · ·A.· ·No. 21· · · ·Q.· ·Do you know who owned -- do you know who owned 22· ·the attachment? 23· · · · · · MR. CARGILL:· Same objections. 24· · · · · · THE WITNESS:· No. 25· ·/// Page 221 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·Do you know who owned the information contained ·3· ·in the -- in the attachment? ·4· · · ·A.· ·It looks like information -- yeah, no.· I don't ·5· ·know for sure. ·6· · · ·Q.· ·Is there any information contained in this ·7· ·attachment that you would consider to be confidential or ·8· ·proprietary to North American Marketing or Proficio? ·9· · · ·A.· ·I'd have to refer to the employment contract that 10· ·Eric had with Proficio to answer that.· Not -- not from 11· ·a -- not that I can see here at first glance from a North 12· ·American Marketing standpoint, though.· My assumption and 13· ·recollection of the Employment Agreement, assuming this 14· ·information was put together by Eric, is that most of this 15· ·information would be confidential per his Employment 16· ·Agreement with Proficio.· I'm sure we can refer to that. 17· ·I don't know it off the top of my head. 18· · · ·Q.· ·Would the MCA of a property be something that was 19· ·confidential or proprietary to Proficio? 20· · · · · · MR. CARGILL:· Objection to the extent it calls 21· ·for a legal conclusion. 22· · · · · · THE WITNESS:· I don't know.· We'd have to refer 23· ·to the contract. 24· ·BY MR. LEECH: 25· · · ·Q.· ·Showing you what we marked as 11. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 57 of 102 Page 222 ·1· · · · · · THE REPORTER:· 12. ·2· · · · · · MR. LEECH:· 12. ·3· · · · · · (Exhibit 12 marked) ·4· · · · · · THE WITNESS:· Thank you. ·5· ·BY MR. LEECH: ·6· · · ·Q.· ·Do you recognize this document? ·7· · · ·A.· ·It looks like an Employment Agreement between ·8· ·Proficio Mortgage and Eric Naranjo. ·9· · · ·Q.· ·Turning to the last page of this document -- 10· · · ·A.· ·Uh-huh. 11· · · ·Q.· ·-- under the line that reads, By:· Proficio 12· ·Mortgage Ventures, LLC, there's a signature.· Do you see 13· ·that signature? 14· · · ·A.· ·There's two signatures, yes. 15· · · ·Q.· ·Do you see the first signature? 16· · · ·A.· ·Yes. 17· · · ·Q.· ·Do you recognize that signature? 18· · · ·A.· ·Yes. 19· · · ·Q.· ·Whose signature is that? 20· · · ·A.· ·That's my signature. 21· · · ·Q.· ·And then over to the right, Name and Title, says 22· ·Alek W. Ohlhausen.· Is that you? 23· · · ·A.· ·Yes. 24· · · ·Q.· ·And the date read 7/23/12.· Is that the date that 25· ·you signed this agreement? Page 223 ·1· · · ·A.· ·That's what I -- yeah, I would have no reason to ·2· ·believe it's not. ·3· · · ·Q.· ·There's no title indicated on this signature ·4· ·line.· Did you have a title at Proficio Mortgage Ventures? ·5· · · ·A.· ·No. ·6· · · ·Q.· ·Why were you signing a document on behalf of ·7· ·Proficio Mortgage Ventures? ·8· · · ·A.· ·I don't recall. ·9· · · ·Q.· ·Were you authorized to sign contracts on behalf 10· ·of Proficio Mortgage Ventures? 11· · · ·A.· ·I'm -- I'm not sure.· I don't recall. 12· · · ·Q.· ·This is an Employment Agreement.· Were you 13· ·authorized to enter into Employment Agreements with 14· ·employees on behalf of Proficio Mortgage Ventures? 15· · · ·A.· ·We've talked about that.· I could provide 16· ·recommendations and then they'd be hired by the actual 17· ·branch managers.· It looks like that's what happened on 18· ·here, is probably prior to -- let me look real quick. 19· · · · · · So the Affiliate Manager Agreement wasn't 20· ·executed until 12 of 13/12 and this agreement was signed 21· ·7/23/12.· So I imagine in that in-between period we were 22· ·evaluating whether or not we were going to be affiliate 23· ·managers or we were going to be actual employees of the 24· ·company.· At this specific moment in time, I may have 25· ·thought that we were going to become employees or that we Page 224 ·1· ·were employees.· But I don't recall the exact specifics. ·2· ·It was a little muddy in that time period.· During the ·3· ·transition, there was a lot going on. ·4· · · ·Q.· ·So were you employed in July 2012 by Proficio ·5· ·Mortgage Ventures? ·6· · · ·A.· ·I don't think so.· I don't think so, no.· But it ·7· ·was not -- it's not impossible that I was an employee for ·8· ·a few days or that I submitted all that paperwork and ·9· ·thought I was employed or whatever else, so I don't 10· ·recall. 11· · · ·Q.· ·Did anyone at Proficio Mortgage Ventures inform 12· ·you that you were authorized to execute Employment 13· ·Agreements on behalf of Proficio Mortgage Ventures? 14· · · ·A.· ·I don't recall. 15· · · ·Q.· ·So why did you assume that you had the authority 16· ·to sign this? 17· · · ·A.· ·I don't recall. 18· · · ·Q.· ·Do you recall when you presented this to Eric 19· ·Naranjo for his signature? 20· · · ·A.· ·I do not. 21· · · · · · MR. CARGILL:· Objection to the form. 22· ·BY MR. LEECH: 23· · · ·Q.· ·Do you recall the circumstances of how it was 24· ·presented to Eric Naranjo? 25· · · ·A.· ·I don't.· And I'm not saying that I presented Page 225 ·1· ·this to Eric. ·2· · · ·Q.· ·Okay.· That was my next question.· Were you the ·3· ·person who presented this to Eric? ·4· · · ·A.· ·I don't know. ·5· · · ·Q.· ·Do you know who did? ·6· · · ·A.· ·No. ·7· · · ·Q.· ·You indicated that you needed to refer to ·8· ·Mr. Naranjo's employment contract to answer my earlier ·9· ·question about what in Ohlhausen Exhibit No. 11 was 10· ·confidential or proprietary or trade secret of Proficio. 11· · · · · · Can you review the document and direct me to the 12· ·particular provision that you were referring to? 13· · · ·A.· ·I can try.· It could take a while. 14· · · ·Q.· ·Please do. 15· · · · · · MR. CARGILL:· Objection.· Counsel is clearly 16· ·asking the witness to interpret what may or may not be 17· ·confidential pursuant to a contract. 18· · · · · · MR. LEECH:· I'm asking him to explain his earlier 19· ·answer. 20· · · · · · THE WITNESS:· So one area would be the very first 21· ·paragraph.· Let me read it.· It says, Employment. 22· ·Employer hereby employs employee on an AT-WILL basis. 23· ·Employee understands that the nature of his or her 24· ·employment under this Agreement is that of an employee. 25· ·Employee is not an independent contractor who may offer Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 58 of 102 Page 226 ·1· ·his or her service to any other mortgage provider. ·2· ·Although Employee retains a certain amount of discretion ·3· ·concerning the manner in which Employee's duties to ·4· ·Employer are fulfilled, Employee retains -- Employer ·5· ·retains absolute control over the activities of Employee ·6· ·regarding all employment-related activities during the ·7· ·term of this Agreement.· Accordingly, while employed under ·8· ·this Agreement, Employee shall provide services ·9· ·exclusively for Employer, and may not, (a), Be employed 10· ·by, or provide services to, any other mortgage broker, 11· ·lender, or financial services company.· Receive any 12· ·compensation in connection with the origination, referral, 13· ·processing, or closing of mortgage loans from any entity 14· ·or person other than Employer.· Originate, negotiate, 15· ·submit, or arrange for any mortgage through, or on behalf 16· ·of, any other entity other than Employer. 17· · · · · · I think some of that would contain some of this 18· ·information.· I'll keep reading here.· I don't have 19· ·Proficio's ethical standards, code of ethical standards, 20· ·but paragraph 2, section (c), on page 1 reads as follows: 21· ·Employee shall perform his or her duties in a professional 22· ·and honest manner and shall uphold, comply with, and 23· ·reflect Employer's code of ethical standards in all 24· ·dealings with customers, business partners, and the 25· ·greater community. Page 227 ·1· · · · · · I would imagine if we refer to that ethical ·2· ·standards, there would be something in there about ·3· ·divulging what appears to be, you know, revenue ·4· ·projections and, you know, funded loan records of -- you ·5· ·know, of the employee or of the employer. ·6· · · · · · I think paragraph 3 on page 2 would have ·7· ·something to do with that.· It's a long one.· Do you want ·8· ·me to read it all? ·9· · · ·Q.· ·No.· You can just identify it by page number. I 10· ·think that would make everything go faster for both of us. 11· · · · · · Where specifically in paragraph 3 do you think it 12· ·applies? 13· · · ·A.· ·Again, it's a very long one.· So paragraph 3 -- 14· ·I'll have to read it all to give you that, so I might as 15· ·well read it for the record.· Diligence and Compliance. 16· · · ·Q.· ·No, you can refer to it.· I'm fine with you just 17· ·referring to it as a record.· If you think you -- if you 18· ·think the entire paragraph is responsive to my question, 19· ·we'll just -- the record can reflect that. 20· · · ·A.· ·Well, I don't know that.· What I said is I have 21· ·to reread the paragraph to identify which parts are 22· ·responsive to your request.· So if you want me to do that, 23· ·I can do that, or I can just read it out loud and then I 24· ·can identify it for you. 25· · · · · · MR. CARGILL:· Just read it to yourself and if Page 228 ·1· ·there's portions of it that you think apply -- ·2· · · · · · THE WITNESS:· Okay. ·3· · · · · · MR. CARGILL:· -- just go ahead and state those. ·4· ·BY MR. LEECH: ·5· · · ·Q.· ·Yeah.· I think that would be the easiest way to ·6· ·go. ·7· · · ·A.· ·Employee agrees to work diligently and use ·8· ·Employee's best efforts and good faith to perform the ·9· ·duties provided for herein to the best of Employee's 10· ·abilities.· Employee shall devote his/her full business 11· ·time and attention to the performance of such duties. 12· ·While employed by Employer, Employee will not, without the 13· ·prior written consent of Employer's Senior Officers, 14· ·engage in, or obtain a financial or ownership interest in, 15· ·any business that may interfere with the performance of 16· ·Employee's duties hereunder, present a conflict of 17· ·interest with Employer, breach Employee's duty of loyalty 18· ·or fiduciary duties to Employer, or otherwise conflict 19· ·with the provisions of this Agreement.· I think that would 20· ·relate. 21· · · · · · Paragraph 4, letter (e), Employee, by execution 22· ·of this Agreement acknowledges receipt of Employer's 23· ·policies and procedures, including, but not limited to, 24· ·Employer's Employee Handbook, and hereby agrees to 25· ·strictly adhere to and enforce these policies, as updated Page 229 ·1· ·and amended from time to time by Employer.· I'm certain -- ·2· ·I'm almost certain that there's various provisions of that ·3· ·employee handbook and Proficio's policies and procedures ·4· ·that would expressly prohibit sharing information with our ·5· ·competitors or with Proficio's competitors. ·6· · · · · · Number 6, Operational Procedures.· Not in ·7· ·limitation of anything contained in Law, Employee shall ·8· ·comply with the following procedures, policies, rules, ·9· ·regulations, and restrictions on Employee's authority, and 10· ·shall be responsible for compliance with such provisions 11· ·by any subordinates, if applicable. 12· · · · · · Number 10 is a good one, page 3.· Employer's 13· ·Information; Confidentiality.· Employee acknowledges that 14· ·Employee -- excuse me.· Employee acknowledges that 15· ·Employer may disclose confidential information to Employee 16· ·during the time of this Agreement.· Any such information 17· ·that is, or that should be -- that should reasonably be 18· ·understood to be, confidential or proprietary to Employer, 19· ·including mailing lists, current or prospective customer 20· ·or client lists, databases, memoranda, sales figures, 21· ·costs, unpublished financial information, product and 22· ·business plans, projections, marketing data, computer 23· ·data, computer programs and supporting documentation, and 24· ·Employer's policies and procedures manuals that contain 25· ·any information relating or pertaining to Employer or its Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 59 of 102 Page 230 ·1· ·affiliates, parent, or subsidiaries, (altogether, ·2· ·"Information") shall, at all times, remain the exclusive ·3· ·property of Employer.· Employee acknowledges and agrees ·4· ·that during the term of this agreement and immediately ·5· ·following termination of Employee's employment, Employee ·6· ·shall (i) maintain in strict confidence all Information, ·7· ·and shall not use any Information for any purpose other ·8· ·than performance of Employee's duties under this ·9· ·Agreement. 10· · · · · · MR. CARGILL:· Remember, she's taking down 11· ·everything you're saying, so... 12· · · · · · THE WITNESS:· I'm sorry.· It's his fault. 13· ·BY MR. LEECH: 14· · · ·Q.· ·Do you think this provision applies to the 15· ·information contained in the attachment to Ohlhausen 11? 16· · · ·A.· ·I do. 17· · · ·Q.· ·Okay.· We can move on. 18· · · ·A.· ·Do you want me to keep going? 19· · · ·Q.· ·No. 20· · · ·A.· ·I think No. 13 would be important, 21· ·Non-Solicitation of Employees.· There's certain names and 22· ·salaries and things on there that I mentioned. 23· · · ·Q.· ·Mark as Ohlhausen 13. 24· · · · · · (Exhibit 13 marked.) 25· ·/// Page 231 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·Do you recognize this document? ·3· · · ·A.· ·No. ·4· · · ·Q.· ·Do you know who prepared this document? ·5· · · ·A.· ·No. ·6· · · ·Q.· ·Do you know how it was prepared? ·7· · · ·A.· ·No. ·8· · · · · · MR. CARGILL:· Same -- same objections to all of ·9· ·the exhibits that we've previously discussed. 10· ·BY MR. LEECH: 11· · · ·Q.· ·Do you know who owns the information contained in 12· ·this document? 13· · · ·A.· ·I don't. 14· · · ·Q.· ·Do you know who owns this document itself? 15· · · ·A.· ·No. 16· · · ·Q.· ·Looking at the document, is there anything 17· ·contained therein that we haven't previously discussed 18· ·that you consider to be a Proficio or North American 19· ·Marketing trade secret? 20· · · · · · MR. CARGILL:· Same objections. 21· ·BY MR. LEECH: 22· · · ·Q.· ·Or confidential or proprietary to North American 23· ·Marketing? 24· · · ·A.· ·The ReverseVision ID number, I don't know if 25· ·we've ever mentioned that before, assuming this is a Page 232 ·1· ·Proficio -- this is Proficio data and Proficio ·2· ·documentation.· Disposition, I don't think we've ·3· ·mentioned.· Potentially Alternate Phone.· My assumption is ·4· ·that's not, you know, something that was easy to get. ·5· ·Again, Phone would be.· We've already talked about that. ·6· ·Disposition, the Notes, certainly.· The FedEx, URLs and ·7· ·tracking numbers, we may have already mentioned that.· All ·8· ·this FedEx stuff.· True Interest Rate from Statement, ·9· ·certainly that would be.· I don't think we've mentioned 10· ·that before.· The stuff on the second-to-last -- or the 11· ·third-to-last page is stuff we already talked about.· So 12· ·yeah, that's it. 13· · · ·Q.· ·Show you what is marked as 14. 14· · · · · · (Exhibit 14 marked.) 15· · · · · · THE WITNESS:· Thank you. 16· ·BY MR. LEECH: 17· · · ·Q.· ·Do you recognize this document? 18· · · ·A.· ·Yes. 19· · · ·Q.· ·What is this document? 20· · · ·A.· ·I believe it was an email, but it may have been 21· ·an attachment in an email that we received from Steve 22· ·Chapton and John Miller at Proficio Mortgage Ventures and 23· ·Bank notifying us that they were terminating our affiliate 24· ·agreement with them. 25· · · ·Q.· ·Who received this document? Page 233 ·1· · · ·A.· ·I can't be certain, but ultimately I received it. ·2· ·Whether it was sent directly to me or to Scott or somebody ·3· ·else, I'm not sure. ·4· · · ·Q.· ·Did you have any conversations with Steve Chapton ·5· ·or John Miller regarding why they were terminating the ·6· ·Affiliate Manager Agreement? ·7· · · ·A.· ·Yes. ·8· · · ·Q.· ·And what -- what were the nature of those ·9· ·discussions? 10· · · ·A.· ·I don't recall specifically. 11· · · · · · MR. CARGILL:· Object to the form. 12· · · · · · THE WITNESS:· Yeah.· I don't recall all the 13· ·various components.· There was a contract dispute in terms 14· ·of financials, and there was also some challenges from, I 15· ·believe, the regulator as to their preference or their 16· ·desire of the affiliate management structure.· I don't 17· ·believe they love that, but I didn't have those 18· ·conversations with the regulators. 19· ·BY MR. LEECH: 20· · · ·Q.· ·Other than what you just told me, were there any 21· ·other reasons that Proficio Mortgage Ventures provided to 22· ·you as to why they were terminating the Affiliate Manager 23· ·Agreement? 24· · · ·A.· ·Not that I can recall. 25· · · · · · (Exhibit 15 marked) Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 60 of 102 Page 234 ·1· · · · · · MR. CARGILL:· I just want to note for the record ·2· ·that Exhibit 14 that we just looked at is marked highly ·3· ·confidential, attorneys' eyes only.· Also, Exhibit 15 has ·4· ·the same label. ·5· ·BY MR. LEECH: ·6· · · ·Q.· ·Looking at Exhibit 15, do you recognize this ·7· ·document? ·8· · · ·A.· ·So I don't know what these last two pages are. ·9· · · ·Q.· ·Yeah. 10· · · ·A.· ·They're not meant to be on there, are they? 11· · · ·Q.· ·Yeah, they're not.· You can -- 12· · · ·A.· ·Do you want me to take them out or do you want to 13· ·keep it? 14· · · ·Q.· ·Let's take those last two pages, tear it off. 15· · · ·A.· ·Yes, I'm familiar with this document. 16· · · ·Q.· ·What is this document? 17· · · ·A.· ·Transition Expense Agreement. 18· · · ·Q.· ·Did you participate in the negotiation of this 19· ·document? 20· · · ·A.· ·Yeah. 21· · · ·Q.· ·Was that your signature on the second-to-last 22· ·page of this document? 23· · · ·A.· ·Yes. 24· · · ·Q.· ·And you mentioned there was a contract dispute 25· ·earlier between Proficio Mortgage Ventures and North Page 235 ·1· ·American Marketing.· What was the nature of that dispute? ·2· · · · · · MR. CARGILL:· And I'll object to the extent that ·3· ·that requires you to divulge any discussions, ·4· ·conversations you had with attorneys regarding that ·5· ·dispute or potential litigation involving -- involving ·6· ·that dispute.· Do not divulge any of that.· Otherwise, if ·7· ·you can answer, go ahead. ·8· · · · · · THE WITNESS:· Neither one of us -- excuse me.· We ·9· ·were not happy with the financial terms that they wanted 10· ·to present.· I don't remember exactly what they were. 11· ·BY MR. LEECH: 12· · · ·Q.· ·So Proficio wanted to change the financial terms 13· ·of the Affiliate Manager Agreement? 14· · · ·A.· ·Yes. 15· · · ·Q.· ·And you were not happy with that? 16· · · ·A.· ·Or they wanted to change the structure of the 17· ·agreement altogether, yes, correct. 18· · · ·Q.· ·And that -- and you were not happy with the 19· ·changes that they proposed? 20· · · ·A.· ·Financial changes, yes. 21· · · ·Q.· ·Do you recall what those financial changes were? 22· · · ·A.· ·No. 23· · · ·Q.· ·Do you recall how significant they were to the 24· ·bottom line for North American Marketing? 25· · · · · · MR. CARGILL:· Objection.· Relevance. Page 236 ·1· · · · · · THE WITNESS:· Yeah, and it was very -- it was -- ·2· ·it was -- no, because there was never any actual agreement ·3· ·made.· There was never any proposal given to us.· There ·4· ·was talk and the talk was, you know, all over the place. ·5· ·It ranged from very similar to where we were at to, you ·6· ·know, long-term earnouts to, you know, very, very ·7· ·different from where we were at.· But again, nothing was ·8· ·ever consummated or even contemplated in a form that we ·9· ·could, you know, say yes or no to. 10· ·BY MR. LEECH: 11· · · ·Q.· ·Okay.· Looking at this Transition Expense 12· ·Agreement, there's a reference to two separate profit and 13· ·loss statements. 14· · · ·A.· ·Uh-huh. 15· · · ·Q.· ·Are you familiar with those two separate profit 16· ·and loss statements? 17· · · ·A.· ·I understand the term "profit and loss," and I 18· ·understand, you know, these two things.· If you're asking 19· ·me for a direct expense on one of those P&Ls, I don't 20· ·think I would know that.· But in general, I'm familiar, 21· ·yes, with the concept and with that expressed in this 22· ·agreement. 23· · · ·Q.· ·Sure.· I just want to understand what type of 24· ·profits and losses were assigned to the Proficio P&L 25· ·statement, and what type of profit and losses were Page 237 ·1· ·assigned to the NAM P&L statement. ·2· · · · · · MR. CARGILL:· Objection.· Lack of foundation. ·3· · · · · · THE WITNESS:· Well, I think it's all described in ·4· ·this document.· Should we read this?· I mean, I haven't ·5· ·reviewed this in, you know, if not months, potentially ·6· ·years.· I think it's pretty clear, though.· Both parties ·7· ·agree that certain expenses can be tracked to a specific ·8· ·loan transaction that would be attributed to either the ·9· ·Proficio P&L or the NAM P&L.· The P&L that will receive 10· ·the income and pay the Loan Level Expenses is determined 11· ·by the application date of the loan transaction, as 12· ·detailed in a separate agreement.· All Loan Levels 13· ·Expenses will be charged to the appropriate P&L that will 14· ·receive the revenue from the specific loan.· These 15· ·expenses include, but are not limited to, appraisals, 16· ·credit reports, flood certifications, certain postage and 17· ·shipping, et cetera, et cetera. 18· ·BY MR. LEECH: 19· · · ·Q.· ·Yeah.· My question relates to revenues from 20· ·loans.· How is it -- this agreement, it seems to me, 21· ·specifies the transition period. 22· · · ·A.· ·Uh-huh. 23· · · ·Q.· ·What was your understanding of that transition 24· ·period? 25· · · · · · MR. CARGILL:· And by the way, take your time to Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 61 of 102 Page 238 ·1· ·review the whole agreement if you need it. ·2· · · · · · THE WITNESS:· Can you ask me the question again? ·3· · · · · · MR. LEECH:· Can you read that back? ·4· · · · · · (Record read) ·5· · · · · · THE WITNESS:· November through January of 2015. ·6· ·BY MR. LEECH: ·7· · · ·Q.· ·I'm looking at the first paragraph that refers to ·8· ·transition period beginning November 3rd, 2014 and ending ·9· ·May 2nd, 2015.· Does that refresh your recollection as to 10· ·what date the transition period was? 11· · · ·A.· ·Yes.· That's right.· Six months after the 12· ·notification. 13· · · ·Q.· ·And how were revenues generated from loans closed 14· ·during that six-month period assigned to Proficio and to 15· ·North American Marketing? 16· · · · · · MR. CARGILL:· Objection to the extent the 17· ·document speaks for itself and outlines that. 18· · · · · · THE WITNESS:· I think it's spelled out pretty 19· ·well in this document that's, you know, 10,000 words. 20· · · · · · Do you want me to find the section that applies 21· ·to that? 22· ·BY MR. LEECH: 23· · · ·Q.· ·In all honesty if you could, I would greatly 24· ·appreciate it, because everything in this agreement to me 25· ·seems to apply to expenses, which is why I'm asking the Page 239 ·1· ·question about revenues. ·2· · · ·A.· ·Okay. ·3· · · ·Q.· ·I agree that it does set out how the expenses are ·4· ·going to be divided.· I'm just trying to make sure I ·5· ·understand how the revenues are being divided and how the ·6· ·revenues are assigned to the specific P&Ls. ·7· · · ·A.· ·Okay.· So I think this answers it.· We can go ·8· ·back to the previous agreement, I believe.· This is on ·9· ·page 1, second paragraph, second line.· The P&L that will 10· ·receive the income and pay the Loan Level Expenses is 11· ·determined by the application date of the loan 12· ·transaction, as detailed in a separate agreement. I 13· ·believe that separate agreement would be the Affiliate 14· ·Management Agreement.· We can see what happens on 15· ·termination here. 16· · · · · · So page 4, letter (f) would have something to do 17· ·with this.· It's called the Reserve Retainer Period.· Upon 18· ·termination of this Agreement, PMV will release funds from 19· ·reserve, and credit such funds to the Group as revenue, 20· ·according to the following schedule (unless such funds are 21· ·required to offset any branch reserve shortages):· On the 22· ·61st day after termination, 50% of the reserve balance 23· ·will be credited to the Group.· On the 120th day after 24· ·termination, any remaining reserve balance will be 25· ·credited to the Group. Page 240 ·1· · · ·Q.· ·So to your recollection, under the Transition ·2· ·Expense Agreement during the transition period, what loans ·3· ·were to be assigned to the NAM P&L? ·4· · · ·A.· ·I think I'm looking for that. ·5· · · ·Q.· ·Okay. ·6· · · ·A.· ·So section 13 I think is the -- is the -- excuse ·7· ·me.· Paragraph 13 on page 5 of the Affiliate Manager ·8· ·Agreement. ·9· · · ·Q.· ·Uh-huh. 10· · · ·A.· ·Payment of Compensation Upon Termination.· Upon 11· ·termination of this Agreement, the Group shall continue to 12· ·earn revenue and be assessed customary expenses for a 13· ·period of six months after the termination date, in order 14· ·for trailing revenues and expenses to be properly 15· ·allocated to the Group.· During this period, the Affiliate 16· ·Manager shall continue to earn compensation in accordance 17· ·with this Agreement.· At the conclusion of this period, a 18· ·final reconciliation of the Group revenues and expenses 19· ·shall be performed by PMV and any remaining Group Profit 20· ·and/or reserve balance shall be paid to the Affiliate 21· ·Manager. 22· · · ·Q.· ·So for that six-month period, would it be all 23· ·loans gener- -- all loans closed by Proficio that would be 24· ·allocated to North American Marketing -- strike that. 25· · · · · · So for that transition period, would all loans Page 241 ·1· ·closed by Proficio be allocated to that North American ·2· ·Marketing P&L? ·3· · · ·A.· ·I don't know.· What do these agreements say? ·4· ·We'd have to go back to the agreements.· I don't recall ·5· ·exactly what our negotiations were.· It's all, you know, ·6· ·contemplated -- I believe it's all contemplated and put ·7· ·into these agreements.· It sounds to me like -- I think ·8· ·there was something to do with the application date as ·9· ·well, but now I'm speculating.· I mean, you know, I'd have 10· ·to go back and review all these documents to remember 11· ·everything. 12· · · ·Q.· ·Oh, okay.· So it says, The P&L that will receive 13· ·the income and pay the Loan Level Expenses is determined 14· ·by the application date of the loan transaction. 15· · · · · · Would that refer to loans that were to borrowers 16· ·who had applied prior to the termination of the Affiliate 17· ·Manager Agreement? 18· · · ·A.· ·Say that again. 19· · · ·Q.· ·When it says that, The P&L that will receive the 20· ·income and pay the Loan Level Expenses is determined by 21· ·the application date of the loan transaction, does that 22· ·mean that borrowers who applied for a loan prior to the 23· ·termination of the Affiliate Manager Agreement would be 24· ·assigned to the North American Marketing P&L and that 25· ·borrowers that applied for a loan after the termination of Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 62 of 102 Page 242 ·1· ·the Affiliate Manager Agreement would be assigned to the ·2· ·Proficio P&L? ·3· · · ·A.· ·That's a good question.· I don't -- I don't ·4· ·remember specifically. ·5· · · ·Q.· ·To the best of your recollection. ·6· · · · · · MR. CARGILL:· And objection to the extent it's ·7· ·requiring a legal interpretation here. ·8· · · · · · THE WITNESS:· Yeah, I mean, this was all agreed ·9· ·to.· I mean, we had a very friendly, you know, amicable 10· ·resolution where all parties sat around and tried to come 11· ·up with something.· There were so many moving pieces that 12· ·the specific questions you're asking me I don't remember, 13· ·and I didn't handle the financial aspect of it. 14· ·BY MR. LEECH: 15· · · ·Q.· ·Who handled the financial aspects of the 16· ·Proficio-North American Marketing termination? 17· · · ·A.· ·The same Proficio accounting people that we 18· ·talked about before.· Dave Pittman, Ben Sillitoe, Amber 19· ·Foard.· I believe Jessica Cabasug at that time.· Scott 20· ·Guild was involved.· John Miller was involved.· I was 21· ·involved. 22· · · ·Q.· ·They handled it for both Proficio and North 23· ·American Marketing? 24· · · ·A.· ·I certainly didn't handle for Proficio, but I 25· ·handled it for North American Marketing.· Some of the Page 243 ·1· ·other individuals helped -- like Amber helped for both, ·2· ·sure.· Ben helped for both. ·3· · · ·Q.· ·Did Scott Guild have any role in the financial ·4· ·aspects of that termination? ·5· · · ·A.· ·Yeah. ·6· · · · · · MR. CARGILL:· I'd like to -- while we're at a ·7· ·little break here, I'd like to have the court reporter ·8· ·calculate the time of the deposition so far. ·9· · · · · · MR. LEECH:· That's fine.· Let's take a 10· ·five-minute break.· I could use a moment and then she can 11· ·get us that information.· I'm close to being done, 12· ·Counsel. 13· · · · · · MR. CARGILL:· Okay.· Because I think we're 14· ·getting close. 15· · · · · · MR. LEECH:· I think we are getting close. I 16· ·don't think we're -- I think I've got some time left. 17· ·Maybe a little bit more.· I don't think I'm going to need 18· ·it, but that's why I'm -- I'm trying to do this as 19· ·efficiently as I can but, you know, there's a lot of 20· ·material to cover. 21· · · · · · MR. CARGILL:· I'm keeping it at seven hours, just 22· ·to let you know. 23· · · · · · MR. LEECH:· Cross that bridge when we get to it. 24· ·Let's take a break.· The court reporter can get us a 25· ·calculation. Page 244 ·1· · · · · · (Recess taken 4:45 to 4:56 p.m.) ·2· · · · · · (Record read) ·3· ·BY MR. LEECH: ·4· · · ·Q.· ·What did you do in terms -- strike that. ·5· · · · · · When Proficio Mortgage Ventures notified you that ·6· ·it was terminating the Affiliate Manager Agreement, did ·7· ·North American Marketing take any steps to find a new bank ·8· ·to work with? ·9· · · ·A.· ·Not really, no. 10· · · ·Q.· ·Did North American Marketing eventually move to a 11· ·new bank besides Proficio Mortgage Ventures? 12· · · ·A.· ·No. 13· · · ·Q.· ·Did you personally take any steps to find a new 14· ·employer after the Affiliate -- 15· · · ·A.· ·Yes. 16· · · ·Q.· ·-- Manager Agreement was terminated? 17· · · ·A.· ·Yes. 18· · · ·Q.· ·When did you start taking those steps? 19· · · ·A.· ·I was taking those steps same -- ever since First 20· ·National Bank of Layton kind of imploded on us. 21· · · ·Q.· ·So you were looking for a new employer throughout 22· ·your tenure at Proficio? 23· · · ·A.· ·I wasn't an employee at Proficio, so I was always 24· ·looking for new opportunities, yes. 25· · · ·Q.· ·Okay.· That's fair enough.· Would you say you Page 245 ·1· ·were looking for -- so during your -- strike that. ·2· · · · · · Throughout the entirety of your relationship with ·3· ·Proficio Mortgage Ventures, were you looking for a new ·4· ·affiliate manager-type relationship or employment role? ·5· · · ·A.· ·Yes.· That was a, kind of, check-the-box thing I ·6· ·did on a monthly basis. ·7· · · ·Q.· ·Uh-huh. ·8· · · ·A.· ·And when -- I wouldn't define it as new.· I would ·9· ·say looking for other options, looking for options. 10· · · ·Q.· ·When did you first start considering Bank of 11· ·Maumee? 12· · · · · · MR. CARGILL:· Object to the form. 13· ·BY MR. LEECH: 14· · · ·Q.· ·When did you first start considering affiliating 15· ·or becoming employed by Bank of Maumee? 16· · · · · · MR. CARGILL:· Objection.· Lack of foundation. I 17· ·don't know if you made the link between Resolute Bank and 18· ·Bank of Maumee yet. 19· · · · · · MR. LEECH:· I will, but... 20· · · · · · MR. CARGILL:· Okay. 21· · · · · · MR. LEECH:· We'll talk about Bank of Maumee first 22· ·and then we'll establish they're one and the same. 23· · · · · · MR. CARGILL:· Okay. 24· · · · · · THE WITNESS:· Sure.· Myself and Scott Guild 25· ·invested in a company that was soon to be a bank holding Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 63 of 102 Page 246 ·1· ·company that ultimately acquired Bank of Maumee, around ·2· ·like November '12, I think, maybe November '13. ·3· ·BY MR. LEECH: ·4· · · ·Q.· ·Of 2014? ·5· · · ·A.· ·Of 2012 or 2013.· At that point we were ·6· ·shareholders in a bank.· The fact we were shareholders in ·7· ·a bank, shareholders in a holding company that owned a ·8· ·bank and always contemplate -- always contemplated that ·9· ·being a potential -- potential home for us.· There was no 10· ·reason to leave Proficio at that time when we -- when we 11· ·acquired stock in that company and, you know, we didn't 12· ·contemplate leaving Proficio at that time, but it was 13· ·always an option. 14· · · ·Q.· ·How much stock did you have in that bank holding 15· ·company? 16· · · ·A.· ·By "how much" do you mean shares or dollar 17· ·amount? 18· · · ·Q.· ·A percentage of ownership. 19· · · ·A.· ·I don't know. 20· · · ·Q.· ·Was it a controlling share? 21· · · ·A.· ·No. 22· · · ·Q.· ·And what was the name of the holding company? 23· · · ·A.· ·Princeton Capital. 24· · · ·Q.· ·And that was the holding company that owned Bank 25· ·of -- Page 247 ·1· · · ·A.· ·Or PrinCap.· It's one or the other.· There's a ·2· ·holding company and then a material holding company that ·3· ·acquired the bank. ·4· · · ·Q.· ·And that was the holding company that owned Bank ·5· ·of Maumee? ·6· · · ·A.· ·That was a company that went on to purchase the ·7· ·controlling interest in Bank of Maumee.· It did not own ·8· ·Bank of Maumee when we -- when I contributed to it. ·9· · · ·Q.· ·Do you recall when it acquired control of Bank of 10· ·Maumee? 11· · · ·A.· ·I already answered that.· It was approximately 12· ·'12 or '13.· November of '12 or '13 is my best 13· ·recollection.· Could have been '14, though. 14· · · ·Q.· ·Okay.· I may have misheard you.· I thought that 15· ·was when you invested in that company. 16· · · · · · When did you invest in PrinCap? 17· · · ·A.· ·About the same time as we entered into the 18· ·affiliate agreement with Proficio.· Maybe just before or 19· ·just after, but same period of time.· I was ultra, kind 20· ·of, sensitive to just having one option. 21· · · ·Q.· ·Okay.· And did Bank of Maumee ever become -- 22· ·strike that. 23· · · · · · Did Bank of Maumee ever change its name? 24· · · ·A.· ·Yes. 25· · · ·Q.· ·What did it change its name to? Page 248 ·1· · · ·A.· ·Resolute Bank. ·2· · · ·Q.· ·And is that the Resolute Bank that you're ·3· ·currently an employee of? ·4· · · ·A.· ·Yes. ·5· · · ·Q.· ·Approximately when -- strike that. ·6· · · · · · When did you become an employee of Resolute Bank? ·7· · · ·A.· ·Approximately November of '14, I believe. ·8· · · ·Q.· ·So during the transition period between -- during ·9· ·the transition period associated with the termination of 10· ·the Affiliate Manager Agreement? 11· · · ·A.· ·Yes.· Almost immediately after the termination of 12· ·the Affiliate Management Agreement.· November of '14 would 13· ·be accurate.· I don't know what day. 14· · · ·Q.· ·Were you still performing services for Proficio 15· ·Mortgage Ventures while you were an employee of Resolute 16· ·Bank? 17· · · ·A.· ·I think I might have been, yeah.· I think there 18· ·were certain things that we were doing according to the 19· ·Transition Expense Agreement.· What specifically those 20· ·services were, I don't remember.· Most of it was done by 21· ·Proficio employees at that point.· So I had to do things 22· ·for North American Marketing like, you know, some of the 23· ·financial stuff we talked about before.· But I wasn't 24· ·doing any consulting or any work like that for -- for the 25· ·bank.· No policy procedure stuff, any of that. Page 249 ·1· · · ·Q.· ·Did any Proficio employees follow you from ·2· ·Proficio to Bank of Maumee? ·3· · · ·A.· ·Yes. ·4· · · ·Q.· ·Who? ·5· · · ·A.· ·I don't recall. ·6· · · ·Q.· ·Sarah Young? ·7· · · ·A.· ·Not at that time frame, no. ·8· · · ·Q.· ·Did she do so later? ·9· · · ·A.· ·Yes. 10· · · ·Q.· ·Who would know -- 11· · · ·A.· ·I can give you a couple other names that I can 12· ·remember. 13· · · ·Q.· ·Yeah. 14· · · ·A.· ·I don't remember everybody.· James Guiry. 15· · · ·Q.· ·Who else? 16· · · ·A.· ·Aaron Baca, Louis Simon.· So that was all kind of 17· ·initial time frame.· I think that was it.· Oh, you know 18· ·what, Alvin Johnson.· I think that was it initially. 19· · · ·Q.· ·What did you tell people at Proficio when you 20· ·were leaving to become an employee of Resolute Bank? 21· · · ·A.· ·I don't know. 22· · · · · · MR. CARGILL:· Object to the form. 23· ·BY MR. LEECH: 24· · · ·Q.· ·And by Resolute -- I'm going to use Resolute Bank 25· ·and Bank of Maumee interchangeably, and I assume you'll Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 64 of 102 Page 250 ·1· ·understand them to be one and the same.· Is that fair? ·2· · · ·A.· ·Yes. ·3· · · · · · MR. CARGILL:· Well, objection to the extent it ·4· ·could possibly refer to different time periods. ·5· ·BY MR. LEECH: ·6· · · ·Q.· ·Did you ever have Proficio Mortgage Ventures ·7· ·employees complete Bank of Maumee applications while they ·8· ·were working on Proficio time? ·9· · · ·A.· ·I don't remember. 10· · · ·Q.· ·Would that be something that you were authorized 11· ·to do by Proficio? 12· · · ·A.· ·Would what be something that I was authorized to 13· ·do by Proficio? 14· · · ·Q.· ·Have Proficio Mortgage Ventures employees 15· ·complete applications for the Bank of Maumee while they 16· ·were working for Proficio? 17· · · · · · MR. CARGILL:· Objection to the extent it calls 18· ·for a legal conclusion. 19· · · · · · THE WITNESS:· Yeah.· I don't think that they 20· ·would explicitly like, you know, appreciate me doing that. 21· ·It was understood -- I believe it to be understood that 22· ·only a certain limited number of Proficio employees would 23· ·be exempt from my solicitation at that point. 24· ·BY MR. LEECH: 25· · · ·Q.· ·Was there a written agreement to that effect? Page 251 ·1· · · ·A.· ·Yes. ·2· · · ·Q.· ·Was that one of the -- have we looked at that ·3· ·agreement today? ·4· · · ·A.· ·We have not, no. ·5· · · ·Q.· ·Was that an agreement between you personally and ·6· ·Proficio Mortgage Ventures? ·7· · · ·A.· ·No. ·8· · · ·Q.· ·Who is that agreement with? ·9· · · ·A.· ·North American Marketing and Proficio Mortgage 10· ·Ventures. 11· · · ·Q.· ·Did you ever have individuals who were employed 12· ·by Proficio Mortgage Ventures perform services for Bank of 13· ·Maumee on Proficio time? 14· · · ·A.· ·I don't think so. 15· · · ·Q.· ·Do you recall for certain whether you did or 16· ·didn't? 17· · · ·A.· ·I do not. 18· · · ·Q.· ·Do you know who created the website for Bank of 19· ·Maumee? 20· · · ·A.· ·The current website? 21· · · ·Q.· ·The website -- 22· · · ·A.· ·John Metcalf created the current website. 23· · · ·Q.· ·How about the website in 2014? 24· · · ·A.· ·I don't know what website that was. 25· · · ·Q.· ·Did you ever create a website for Bank of Maumee? Page 252 ·1· · · ·A.· ·I did not personally, no. ·2· · · ·Q.· ·Do you know if Proficio Mortgage Ventures' web ·3· ·templates were ever used to create a website for Bank of ·4· ·Maumee? ·5· · · ·A.· ·I do not.· I recall there being a website that, I ·6· ·believe, North American Marketing did for Proficio that ·7· ·ultimately got used -- bits and pieces of it got used for ·8· ·Resolute Bank that was a period of an issue for Proficio. ·9· ·But that got worked out.· And that was simply oversight. 10· ·It was unintentional. 11· · · ·Q.· ·And how was it resolved? 12· · · ·A.· ·It was taken down and redone. 13· · · ·Q.· ·So it was not acceptable that Proficio -- strike 14· ·that. 15· · · · · · It was not acceptable that North American 16· ·Marketing took the Proficio web templates and used them to 17· ·develop a website for Bank of Maumee? 18· · · ·A.· ·I don't -- 19· · · · · · MR. CARGILL:· I'm going to object to this and 20· ·instruct you not to answer to the extent it involves 21· ·resolution of a potential litigation issue. 22· · · · · · MR. LEECH:· I don't think that's a valid ground 23· ·to instruct him not to answer.· It might not be 24· ·admissible, but it's certainly discoverable. 25· · · · · · MR. CARGILL:· Settlement negotiations and Page 253 ·1· ·reaching a settlement of a -- ·2· · · · · · MR. LEECH:· There's no privilege for that. ·3· · · · · · MR. CARGILL:· -- dispute.· Yes, there is to the ·4· ·extent it involved communications with counsel. ·5· · · · · · MR. LEECH:· To the extent it involved his private ·6· ·communication with counsel, sure.· I'm not asking about ·7· ·that.· I'm asking about his communications with Proficio. ·8· ·Communications between adverse parties in an adverse ·9· ·situation is not privileged. 10· · · · · · MR. CARGILL:· Okay. 11· · · · · · THE WITNESS:· Do you want me to answer it? 12· · · · · · MR. CARGILL:· Yeah. 13· · · · · · THE WITNESS:· Okay.· And what was the question? 14· · · · · · MR. LEECH:· Can you just read that back, please? 15· · · · · · (Record read) 16· · · · · · THE WITNESS:· I can't answer that.· You're asking 17· ·me to say what somebody else said was acceptable or not. 18· ·I can tell you -- 19· ·BY MR. LEECH: 20· · · ·Q.· ·Did Proficio -- 21· · · ·A.· ·Go ahead. 22· · · ·Q.· ·Go ahead.· Finish your answer. 23· · · ·A.· ·That's all right.· I mean, that's my answer.· I'm 24· ·done. 25· · · ·Q.· ·Did Proficio inform you whether they were okay Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 65 of 102 Page 254 ·1· ·with North American Marketing using Proficio web templates ·2· ·on behalf of Bank of Maumee? ·3· · · · · · MR. CARGILL:· Object to the form. ·4· · · · · · THE WITNESS:· I don't know about the term of "use ·5· ·of web templates."· What happened was John Miller was ·6· ·extremely pissed.· He saw less information that was ·7· ·Proficio's under a Resolute Bank kind of banner ad, web ·8· ·page, et cetera, et cetera.· And he was like, Dude, what ·9· ·are you doing?· And we worked it out.· We discussed it. I 10· ·think he ultimately understood that it was oversight.· It 11· ·was unintentional. 12· · · · · · What had happened was, I believe it was Scott 13· ·designed a website of what could be a website for Resolute 14· ·Bank.· Meant for it to be up so one person could see it 15· ·one day.· Forgot to take it down or instructed somebody to 16· ·take it down and they never took it down.· We provided 17· ·John Miller Google analytics showing how many people 18· ·visited that site.· It was never marketed, there was no 19· ·traffic that went there, there was no intent to harm or 20· ·damage Proficio.· And so we were -- I was -- I was fine 21· ·with that.· We did this back in, you know, 2012 as owners 22· ·at Bank of Maumee or Resolute Bank.· I think it was Bank 23· ·of Maumee at that point.· Simply something that could be. 24· ·BY MR. LEECH: 25· · · ·Q.· ·What is your current position at Resolute Bank? Page 255 ·1· · · ·A.· ·I'm a production manager. ·2· · · ·Q.· ·And what is -- what are your duties as production ·3· ·manager? ·4· · · · · · MR. CARGILL:· Objection.· Asked and answered. ·5· · · · · · MR. LEECH:· I never got to Resolute Bank when I ·6· ·went through his background before. ·7· · · · · · THE WITNESS:· I thought we did. ·8· · · · · · MR. CARGILL:· That's where you started. ·9· · · · · · THE WITNESS:· Maybe not. 10· · · · · · MR. CARGILL:· That's where you started this 11· ·morning. 12· · · · · · MR. LEECH:· Maybe. 13· · · · · · THE WITNESS:· I thought so too.· I can ask it 14· ·again -- answer it again. 15· · · · · · MR. CARGILL:· Production manager.· I manage 16· ·production. 17· · · · · · THE WITNESS:· We did go -- we did do the song and 18· ·dance. 19· · · · · · MR. CARGILL:· But go ahead. 20· · · · · · MR. LEECH:· That's fine.· I'll withdraw it. 21· ·BY MR. LEECH: 22· · · ·Q.· ·Does Scott Guild have any role at Resolute Bank? 23· · · ·A.· ·No. 24· · · ·Q.· ·Does North American Marketing have any current 25· ·affiliation with -- Page 256 ·1· · · ·A.· ·No. ·2· · · ·Q.· ·-- Resolute Bank? ·3· · · ·A.· ·No. ·4· · · ·Q.· ·Did North American Marketing ever have any ·5· ·relationship with Resolute Bank? ·6· · · ·A.· ·No. ·7· · · ·Q.· ·Or Bank of Maumee? ·8· · · ·A.· ·No. ·9· · · ·Q.· ·When you became employed at Resolute Bank, did 10· ·you bring any lead information with you? 11· · · · · · MR. CARGILL:· Objection to the extent this has 12· ·been asked and answered. 13· · · · · · THE WITNESS:· Did I bring any lead information 14· ·with me?· No, I don't believe so. 15· · · · · · And to clarify my answer a couple times ago, does 16· ·Scott have any role at Resolute Bank?· The answer is no, 17· ·but he does consult on technology and some lead stuff. 18· ·But he's not an employee and does not have a specific 19· ·role. 20· ·BY MR. LEECH: 21· · · ·Q.· ·So he's an independent consultant for Resolute 22· ·Bank? 23· · · ·A.· ·I don't know about consultant, but he's got a 24· ·company that provides some marketing services and some 25· ·technology services. Page 257 ·1· · · ·Q.· ·What happened to the lead information generated ·2· ·by North American Marketing when the Affiliate Manager ·3· ·Agreement terminated? ·4· · · ·A.· ·I don't know. ·5· · · ·Q.· ·Who would know? ·6· · · ·A.· ·Scott Guild.· If anyone, Scott Guild. ·7· · · ·Q.· ·Does North American Marketing stand to gain any ·8· ·financial benefit from this litigation? ·9· · · ·A.· ·Yes. 10· · · ·Q.· ·What benefit does it stand to gain? 11· · · · · · MR. CARGILL:· Objection.· That's -- that's 12· ·attorney-client privileged information. 13· · · · · · MR. LEECH:· The agreement between North American 14· ·Marketing and Proficio Mortgage Ventures is 15· ·attorney-client privilege? 16· · · · · · MR. CARGILL:· Yes, it is. 17· ·BY MR. LEECH: 18· · · ·Q.· ·Let's back up.· Is there an agreement between 19· ·North American Marketing and Proficio Mortgage Ventures 20· ·regarding this litigation? 21· · · ·A.· ·Yes. 22· · · ·Q.· ·When was that agreement entered into? 23· · · ·A.· ·I don't remember. 24· · · ·Q.· ·Was it entered into in 2014? 25· · · ·A.· ·I don't remember. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 66 of 102 Page 258 ·1· · · ·Q.· ·Was it entered prior to the filing of this ·2· ·litigation? ·3· · · ·A.· ·I believe so, but I'm not certain. ·4· · · ·Q.· ·Is North American Marketing providing Proficio ·5· ·with any financial resources in support of this ·6· ·litigation? ·7· · · ·A.· ·Any financial resources in support of this ·8· ·litigation?· There's an expense and proceeds allocation ·9· ·agreement, yes. 10· · · ·Q.· ·So North American Marketing is providing -- is 11· ·paying some of the expenses incurred by Proficio in 12· ·connection with this litigation? 13· · · ·A.· ·Yes. 14· · · ·Q.· ·And North American Marketing is entitled to 15· ·receive proceeds from this litigation? 16· · · ·A.· ·According to certain components of the agreement 17· ·if certain benchmarks happen, et cetera, et cetera, yes. 18· · · · · · MR. CARGILL:· For now I'll withdraw the 19· ·attorney-client privilege as to that agreement.· So just 20· ·go ahead as if you were going to. 21· · · · · · MR. LEECH:· Okay.· I'm going to request the 22· ·production of that agreement. 23· · · · · · MR. CARGILL:· Okay.· We'll have other objections 24· ·to that. 25· · · · · · MR. LEECH:· We'll -- since I'm on the clock here, Page 259 ·1· ·we'll discuss those objections at another time. ·2· · · · · · MR. CARGILL:· Yes. ·3· · · · · · MR. LEECH:· I certainly think it's something ·4· ·that's discoverable. ·5· · · · · · (Whereupon, the testimony from page 260 to ·6· ·page 262 has been marked confidential, excerpted, and ·7· ·bound separately) ·8 ·9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 263 ·1· · · · · · MR. LEECH:· Can we mark this as our next exhibit? ·2· · · · · · (Exhibit 16 marked) ·3· · · · · · THE WITNESS:· Thank you. ·4· ·BY MR. LEECH: ·5· · · ·Q.· ·Show you what's been produced here, financial ·6· ·statements for the year 2014 and 2013.· I'd like to direct ·7· ·your attention to page 7 of this document. ·8· · · ·A.· ·The seventh page or the one that's labeled seven? ·9· · · ·Q.· ·The one page numbered 7. 10· · · ·A.· ·Okay. 11· · · · · · MR. CARGILL:· I'll note for the record these 12· ·documents have not been authenticated.· They were not 13· ·produced by Proficio.· They have no indication on them 14· ·that it is a complete document.· With that said, go ahead. 15· ·BY MR. LEECH: 16· · · ·Q.· ·Just directing your attention to page No. 7 of 17· ·this document. 18· · · ·A.· ·I'm here. 19· · · ·Q.· ·Do you see the section marked "Acquisitions"? 20· · · ·A.· ·Yes. 21· · · ·Q.· ·There's a reference to the company completing the 22· ·purchase of certain assets of North American Marketing, 23· ·Inc. 24· · · ·A.· ·Yes. 25· · · ·Q.· ·The average purchase price was $280 in cash. Page 264 ·1· ·Now, my question is, is that in thousands or is that $280, ·2· ·just $280? ·3· · · ·A.· ·$280,000. ·4· · · ·Q.· ·$280,000. ·5· · · · · · What assets were referenced here? ·6· · · ·A.· ·There was a lot of furniture -- ·7· · · · · · MR. CARGILL:· Objection.· Lack of foundation. ·8· · · · · · THE WITNESS:· There was a lot of furniture, ·9· ·fixtures and equipment.· There was the development -- not 10· ·development, but the coding, the methodology of the CRM 11· ·system, the SugarCRM system.· There was the assignment of 12· ·various leases, rent -- not rent, but the building lease, 13· ·et cetera, et cetera.· There was an agreement not to 14· ·solicit a number of employees from Proficio.· And there 15· ·was an agreement for various, I believe, North American 16· ·Marketing lead lists that I believe were not yet 17· ·Proficio's data, I believe. 18· ·BY MR. LEECH: 19· · · ·Q.· ·So these were lead lists that had not been 20· ·transmitted to Proficio? 21· · · ·A.· ·That's my recollection, yes. 22· · · ·Q.· ·Was there a written document that dealt with this 23· ·transaction? 24· · · ·A.· ·Yes. 25· · · · · · MR. LEECH:· I'll ask that that be produced also. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 67 of 102 Page 265 ·1· ·BY MR. LEECH: ·2· · · ·Q.· ·Are there any other assets that you can recall ·3· ·that were conveyed to Proficio by North American ·4· ·Marketing, Inc.? ·5· · · ·A.· ·No, not that I can recall.· Phone numbers. I ·6· ·believe there was a list of phone numbers that we provided ·7· ·that we would transfer to them.· And to the best of my ·8· ·recollection, that was it. ·9· · · ·Q.· ·Going down below here, there's a little chart in 10· ·this section.· Do you see that chart? 11· · · ·A.· ·I do. 12· · · ·Q.· ·Table, I should say. 13· · · ·A.· ·Yep. 14· · · ·Q.· ·There's a column marked "NAM," which I assume is 15· ·North American Marketing.· Do you see that? 16· · · ·A.· ·Yeah.· Is that a question to me? 17· · · ·Q.· ·Yes. 18· · · ·A.· ·I don't know if it is or isn't.· I didn't do this 19· ·document. 20· · · ·Q.· ·There's a reference to a customer list and a 21· ·numerical value of 230. 22· · · · · · Does this table refresh your recollection as to 23· ·the value of the customer lists that were assigned -- that 24· ·were conveyed to Proficio as part of this transaction? 25· · · · · · MR. CARGILL:· Object to the form. Page 266 ·1· · · · · · THE WITNESS:· Yeah, I don't think so.· I don't ·2· ·think I've ever been foggy on my memory on that. ·3· ·BY MR. LEECH: ·4· · · ·Q.· ·Okay.· Well, do you recall the value of the ·5· ·customer lists that were transferred to North American ·6· ·Marketing -- or strike that. ·7· · · · · · Do you recall the value of the customer lists ·8· ·that were transferred to Proficio by North American ·9· ·Marketing? 10· · · ·A.· ·I don't recall that we agreed to a specific price 11· ·for a customer, like a breakout.· I believe that the 12· ·$280,000 I can -- I can relate to.· And again, this is my 13· ·best recollection.· It would all be in that agreement. 14· ·That we had any assigned -- you know, that we assigned 15· ·$230,000 to the value of the customer list.· So these are 16· ·not my numbers and it's not my recollection that the 17· ·customer list effectively were sold for $230,000.· That's 18· ·not my recollection.· It's possible, but it's not my 19· ·recollection. 20· · · ·Q.· ·Is it common in the HECM business for customers 21· ·to be loyal to a specific loan officer? 22· · · ·A.· ·So in the reverse mortgage business or mortgage 23· ·business? 24· · · ·Q.· ·In the reverse mortgage business. 25· · · ·A.· ·I would answer that two ways.· From -- you know, Page 267 ·1· ·is it customary or is it common?· I would say that it is ·2· ·common for what I would define a distributed retail or an ·3· ·outside loan officer.· That's a loan officer that in many ·4· ·cases has built his or her own relationship with these ·5· ·customers.· They probably have sat down at their kitchen ·6· ·table and originated a loan with them over the years. ·7· ·They may have met family members, consulted with family ·8· ·members. ·9· · · · · · For a consumer direct loan officer, that is 10· ·somebody that takes phone calls, sits in an office and 11· ·does not build as deep of a personal relationship with the 12· ·customer.· I would say that it is not -- that it is unique 13· ·to maintain personal relationships with customers.· It's 14· ·not impossible and it is not unheard of, but it is 15· ·certainly not common. 16· · · ·Q.· ·Did you bring any customers with you when you 17· ·transitioned from Proficio Mortgage Ventures to Resolute 18· ·Bank? 19· · · ·A.· ·I don't believe so. 20· · · · · · MR. CARGILL:· Object to the form. 21· · · · · · THE WITNESS:· I don't believe so. 22· ·BY MR. LEECH: 23· · · ·Q.· ·Do you have any knowledge about how The Federal 24· ·Savings Bank's -- strike that. 25· · · · · · Do you have any knowledge about how The Federal Page 268 ·1· ·Savings Bank obtains leads about potential reverse ·2· ·mortgage customers? ·3· · · ·A.· ·I've seen some exhibits come through over the ·4· ·last couple days or couple weeks that had some invoices. ·5· ·Outside of that, I don't know anything. ·6· · · ·Q.· ·You don't have any firsthand knowledge other than ·7· ·what you've seen in this litigation? ·8· · · ·A.· ·That's it, yeah. ·9· · · ·Q.· ·Do you know how The Federal Savings Bank markets 10· ·reverse mortgages? 11· · · ·A.· ·I do not. 12· · · ·Q.· ·Do you know whether The Federal Savings Bank used 13· ·any Proficio lead list? 14· · · ·A.· ·It's my assumption that they have, yes. 15· · · ·Q.· ·And what's your assumption based on? 16· · · ·A.· ·Information that I've obtained in this case. 17· · · ·Q.· ·Do you have any personal, firsthand knowledge of 18· ·The Federal Savings Bank using any Proficio lead list? 19· · · ·A.· ·Say that question again. 20· · · · · · MR. LEECH:· Can you read that back? 21· · · · · · (Record read) 22· · · · · · THE WITNESS:· What do you define as "Firsthand 23· ·knowledge"? 24· ·BY MR. LEECH: 25· · · ·Q.· ·Knowledge that you personally -- I mean, I don't Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 68 of 102 Page 269 ·1· ·know how to define "firsthand knowledge" better than ·2· ·defining it as firsthand knowledge.· Something that you ·3· ·personally observed. ·4· · · · · · MR. CARGILL:· Then object to the form. ·5· · · · · · THE WITNESS:· So, I mean, I saw an email that ·6· ·Eric sent to himself, basically, what I would conclude was ·7· ·sending customer information from himself to Federal ·8· ·Savings Bank employees.· And some of those borrowers or ·9· ·prospects or Proficio customers eventually became and 10· ·closed loans with The Federal Savings Bank.· And certainly 11· ·I saw letters written from customers that proclaim that 12· ·Federal Savings Bank employees that used to be Proficio 13· ·employees took their information with them and solicited 14· ·them when they went to The Federal Savings Bank. I 15· ·witnessed those letters, at least one or two of those 16· ·letters. 17· · · · · · And then this would be more secondhand.· Multiple 18· ·loan officers still working at Proficio told me that they 19· ·talked to customers that claim the same.· That their 20· ·ex-Proficio loan officer, now Federal Savings Bank loan 21· ·officer, contacted them, solicited them and was working 22· ·with them to close a loan. 23· · · · · · I saw and received case number transfer requests 24· ·from Federal Savings Bank to Proficio that was for loans 25· ·and borrowers that Proficio had been working on prior to Page 270 ·1· ·Eric and other employees leaving The Federal Savings -- or ·2· ·leaving Proficio. ·3· ·BY MR. LEECH: ·4· · · ·Q.· ·Any other basis to believe Federal Savings Bank ·5· ·used Proficio customer lists or lead lists? ·6· · · ·A.· ·I'd heard that various people speculated or that ·7· ·Eric was recruiting, that they had discussed that. I ·8· ·believe it was Steven Munoz or Russ Riddle, one of the two ·9· ·of them, walked out after they quit and basically said, 10· ·you know, We can -- we can do what we want with these 11· ·customers as long as the customer lets us know that they 12· ·want to work with us, or something along those lines. 13· · · · · · Other employees of Proficio that stayed with 14· ·Proficio that were originally contemplating going with 15· ·Eric told me that -- that, you know, Eric had been 16· ·planning to take lead lists.· In fact, they'd even sent 17· ·them lead lists.· Jesse Brewer was one of those people, 18· ·where Jesse even sent Eric a list of leads.· And the 19· ·intent, as Jesse explained it to me, was to take those 20· ·leads and use them at The Federal Savings Bank.· At that 21· ·time they were going to do it together.· I believe that 22· ·would be the extent of my -- of information I have. 23· · · ·Q.· ·What's your average UPB at Resolute Bank? 24· · · ·A.· ·I don't know off the top of my head. 25· · · ·Q.· ·Do you know how it compares to your averages UPB Page 271 ·1· ·for last year? ·2· · · · · · MR. CARGILL:· And I'm going to object -- give me ·3· ·a second. ·4· · · · · · THE WITNESS:· Relevance? ·5· · · · · · MR. CARGILL:· Well -- ·6· · · · · · THE WITNESS:· What does that have to do with this ·7· ·case? ·8· · · · · · MR. CARGILL:· I just will instruct the witness. ·9· ·I don't represent Resolute Bank, but he's testified that 10· ·he's an employee of Resolute Bank and that he should be 11· ·cognizant of -- if he has confidentiality obligations as 12· ·far as Resolute Bank's confidential and proprietary 13· ·information goes, just to be aware of that. 14· · · · · · THE WITNESS:· Yeah.· I appreciate that.· And I 15· ·do.· And, you know, so I'd rather not answer that 16· ·question.· Not only that, but I don't really remember it. 17· · · · · · MR. LEECH:· Are you instructing him not to 18· ·answer? 19· · · · · · MR. CARGILL:· Huh? 20· · · · · · MR. LEECH:· Are you instructing him not to 21· ·answer? 22· · · · · · MR. CARGILL:· No, I'm not instructing him not to 23· ·answer.· But I will also note that there was -- there was 24· ·a lot of information that was subpoenaed and requested 25· ·from Resolute Bank.· The court has issued an order on that Page 272 ·1· ·and knocked out most of it.· I think this would fall into ·2· ·the area of information that the court has decided is not ·3· ·relevant or proportional to this case.· So the ·4· ·objection -- that's the objection.· One of them. ·5· ·BY MR. LEECH: ·6· · · ·Q.· ·I think you said you don't know the answer to the ·7· ·question anyway, so why -- let's not fight over it. ·8· · · ·A.· ·I don't think I know the answer. ·9· · · · · · MR. CARGILL:· Hey, he didn't know a lot about a 10· ·lot of those spreadsheets, but you still asked questions. 11· · · · · · THE WITNESS:· That's true. 12· · · · · · MR. LEECH:· Well, he's answered the question.· He 13· ·says he doesn't know. 14· · · · · · All right.· Let's take a break.· I think I'm 15· ·done.· I think I'm going to have a little bit more, but I 16· ·know I'm very close to being done. 17· · · · · · MR. CARGILL:· I think you're very close either 18· ·way, whether you want to be or not. 19· · · · · · MR. LEECH:· Fair enough, Counsel.· Let's go off 20· ·the record. 21· · · · · · (Recess taken 5:30 p.m. to 5:36 p.m.) 22· ·BY MR. LEECH: 23· · · ·Q.· ·Did North American Marketing use a program called 24· ·Microsoft Access to store information related to lead 25· ·lists? Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 69 of 102 Page 273 ·1· · · ·A.· ·I did at one time. ·2· · · ·Q.· ·Approximately when did North American Marketing ·3· ·use -- ·4· · · ·A.· ·My last recollection of that was during the Evofi ·5· ·days or just after the Evofi days, but Scott Guild would ·6· ·know that for sure. ·7· · · ·Q.· ·And that's -- your last answer referred to ·8· ·Microsoft Access; correct? ·9· · · ·A.· ·Yes, Microsoft Access. 10· · · ·Q.· ·Do you recall -- pardon me.· Do you recall what 11· ·information was stored in Microsoft Access? 12· · · ·A.· ·I don't, no.· There was an actual CRM that was 13· ·built out of Microsoft Access during that period of time. 14· · · ·Q.· ·And what -- 15· · · ·A.· ·I don't recall if that was an Evofi product or if 16· ·that was a North American product and what the time frame 17· ·was for that, if that was post-Evofi or during Evofi. 18· ·Scott was the architect of that. 19· · · ·Q.· ·Do you know if Eric Naranjo played any role in 20· ·creation of that -- 21· · · ·A.· ·I don't believe he did, no. 22· · · ·Q.· ·-- program? 23· · · · · · Do you know if nonpublic customer information was 24· ·stored in that program? 25· · · ·A.· ·I believe it was. Page 274 ·1· · · · · · MR. CARGILL:· Object to the form. ·2· ·BY MR. LEECH: ·3· · · ·Q.· ·Were social security numbers stored in that ·4· ·program? ·5· · · ·A.· ·I don't recall. ·6· · · ·Q.· ·Borrower names? ·7· · · ·A.· ·I believe so. ·8· · · ·Q.· ·Borrower contact information? ·9· · · ·A.· ·I believe so. 10· · · ·Q.· ·Was there any passwords required to access the 11· ·information contained in that program? 12· · · ·A.· ·I believe so. 13· · · ·Q.· ·You believe so or you know? 14· · · ·A.· ·I believe so. 15· · · ·Q.· ·How many people had access to the information 16· ·contained in that program? 17· · · ·A.· ·I don't recall. 18· · · ·Q.· ·Did you have access to it? 19· · · ·A.· ·Yes. 20· · · ·Q.· ·Did Naranjo have access to it? 21· · · ·A.· ·I believe so. 22· · · ·Q.· ·Did Guild have access to it? 23· · · ·A.· ·I believe. 24· · · ·Q.· ·Scott Guild. 25· · · ·A.· ·He would have certainly.· He was the architect of Page 275 ·1· ·it, yeah. ·2· · · ·Q.· ·Did other employees of Evofi One have access to ·3· ·that program? ·4· · · ·A.· ·Again, time frame I'm cloudy on, whether it was ·5· ·an Evofi One product or whether it was during First ·6· ·National Bank of Layton.· But whatever employees were ·7· ·there on that at that period of time would have -- would ·8· ·have had access to that program, yes. ·9· · · ·Q.· ·Would those be any employees involved in mortgage 10· ·loan origination? 11· · · ·A.· ·Yes.· Potentially processing and operations as 12· ·well. 13· · · ·Q.· ·So those individuals would have had access to -- 14· · · ·A.· ·Potentially. 15· · · ·Q.· ·-- the CRM program built on Microsoft Access? 16· · · ·A.· ·Potentially, yes. 17· · · ·Q.· ·Other than that Access/CRM program, did North 18· ·American Marketing use any other programs to store its 19· ·confidential lead list information? 20· · · ·A.· ·You'd have to ask Scott.· I don't recall. 21· · · ·Q.· ·Describe for me the circumstances of how Steve 22· ·Munoz left Proficio Mortgage Ventures. 23· · · · · · MR. CARGILL:· Object to the form. 24· ·BY MR. LEECH: 25· · · ·Q.· ·You can answer. Page 276 ·1· · · ·A.· ·I don't recall the specifics.· I recall him, I ·2· ·believe, coming in telling me that he wasn't going to ·3· ·quit, that he didn't want to quit, the day -- either the ·4· ·day of or the day after Eric and Shawn and maybe a couple ·5· ·other people quit, and I believe the following day coming ·6· ·in quitting.· I don't know if he quit with us or he may ·7· ·have been -- he may have been terminated.· I don't recall. ·8· · · ·Q.· ·Do you recall who spoke to him when he quit or ·9· ·was terminated? 10· · · ·A.· ·I spoke to him during one of those conversations. 11· ·That's -- that's my recollection. 12· · · ·Q.· ·Did you terminate Mr. Munoz? 13· · · ·A.· ·I don't recall. 14· · · ·Q.· ·Is it possible that you terminated Mr. Munoz? 15· · · ·A.· ·It is, yes. 16· · · ·Q.· ·Did you need anyone's approval to terminate 17· ·Mr. Munoz? 18· · · ·A.· ·I believe Proficio's HR would have had to 19· ·finalize it or approve it, yes. 20· · · ·Q.· ·Anyone else? 21· · · ·A.· ·I would have consulted with the branch manager, 22· ·would have been Sarah Young.· That's it. 23· · · ·Q.· ·Directing your attention back to Ohlhausen 24· ·No. 12. 25· · · ·A.· ·Uh-huh. Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 70 of 102 Page 277 ·1· · · ·Q.· ·The first page.· Job Title for Eric Naranjo -- ·2· · · ·A.· ·Yes. ·3· · · ·Q.· ·-- is listed as Branch Manager.· Do you see that? ·4· · · ·A.· ·I do. ·5· · · ·Q.· ·Was Eric Naranjo ever a branch manager for ·6· ·Proficio Mortgage Ventures? ·7· · · ·A.· ·According to this document, he was. ·8· · · ·Q.· ·According to your recollection, was he ever a ·9· ·branch manager for Proficio Mortgage Ventures? 10· · · ·A.· ·We used those terms sometimes loosely.· So no, 11· ·not to my recollection.· He was always a -- to my 12· ·recollection, he was always the -- you know, a function of 13· ·his job was a consumer direct sales manager. 14· · · · · · MR. LEECH:· I don't have anything further. 15· · · · · · MR. CARGILL:· I don't have any questions.· And 16· ·Mr. Ohlhausen will reserve to read and sign. 17· · · · · · THE REPORTER:· And would you like a copy of the 18· ·transcript? 19· · · · · · MR. CARGILL:· We'll let you know. 20· · · · · · MR. LEECH:· I'll take one. 21· · · · · · (Deposition concluded at 5:42 p.m.) 22· · · · · · · · · · · · · · * * * 23 24 25 Page 278 ·1· · · · · · DECLARATION UNDER PENALTY OF PERJURY ·2 ·3· · · · · · I, ALEK OHLHAUSEN, do hereby certify under ·4· ·penalty of perjury that I have read the foregoing ·5· ·transcript of my deposition taken on July 7, 2016; that ·6· ·I have made such corrections as appear noted on the ·7· ·Deposition Errata Page, attached hereto, signed by me; ·8· ·that my testimony as contained herein, as corrected, is ·9· ·true and correct. 10 11 12· · · · · · Dated this ______ day of __________________, 13· ·2016, at ___________________________________________. 14 15 16 17 18· · · · · · · · · · · · · · · · · ________________________ 19· · · · · · · · · · · · · · · · · · · ·ALEK OHLHAUSEN 20 21 22 23 24 25 Page 279 ·1· · · · · · · · · ·DEPOSITION ERRATA SHEET ·2 · · ·Page No.______ Line No.______ ·3 · · ·Change:_______________________________________________ ·4 · · ·Reason for change:____________________________________ ·5 · · ·Page No.______ Line No.______ ·6 · · ·Change:_______________________________________________ ·7 · · ·Reason for change:____________________________________ ·8 · · ·Page No.______ Line No.______ ·9 · · ·Change:_______________________________________________ 10 · · ·Reason for change:____________________________________ 11 · · ·Page No.______ Line No.______ 12 · · ·Change:_______________________________________________ 13 · · ·Reason for change:____________________________________ 14 · · ·Page No.______ Line No.______ 15 · · ·Change:_______________________________________________ 16 · · ·Reason for change:____________________________________ 17 · · ·Page No.______ Line No.______ 18 · · ·Change:_______________________________________________ 19 · · ·Reason for change:____________________________________ 20 · · ·Page No.______ Line No.______ 21 · · ·Change:_______________________________________________ 22 · · ·Reason for change:____________________________________ 23 24· ·_________________________________· · _________________ · · ·ALEK OHLHAUSEN· · · · · · · · · · · ·Dated 25 Page 280 ·1· ·STATE OF NEVADA· · · · ) · · · · · · · · · · · · · · ) ·2· ·COUNTY OF CLARK· · · · ) ·3 ·4· · · · · · I, Becky J. Parker, RPR, a Certified Court · · ·Reporter duly licensed and qualified in and for the ·5· ·State of Nevada, do hereby certify that there came · · ·before me on the 7th day of July, 2016 at 3773 Howard ·6· ·Hughes Parkway, Suite 40 North, Las Vegas, Nevada, the · · ·following named person, to-wit:· ALEK OHLHAUSEN, who was ·7· ·duly sworn to testify the truth, the whole truth, and · · ·nothing but the truth of knowledge touching and ·8· ·concerning the matters in controversy in this cause; and · · ·that he was thereupon examined under oath and his ·9· ·examination reduced to typewriting under my supervision; · · ·that the deposition is a true record of the testimony 10· ·given by the witness. 11· · · · · · I further certify that pursuant to FRCP Rule · · ·30(e)(1) that the signature of the deponent: 12· · · · · · __X__ was requested by the deponent or party · · ·before the completion of the deposition; 13· · · · · · _____ was not requested by the deponent or a · · ·party before the completion of the deposition. 14 · · · · · · · I further certify that I am neither attorney or 15· ·counsel for, nor related to or employed by any of the · · ·parties to the action in which this deposition is taken, 16· ·and further that I am not a relative or employee of any · · ·attorney or counsel employed by the parties hereto, or 17· ·financially interested in the action. 18· · · · · · CERTIFIED TO BY ME on this 11th day of July, · · ·2016. 19 20 21 22 · · · · · · · · · · · ·__________________________________ 23 · · · · · · · · · · · ·Becky J. Parker, RPR, CCR No. 934 24 25 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 71 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 72 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 73 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 74 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 75 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 76 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 77 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 78 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 79 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 80 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 81 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 82 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 83 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 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01/27/17 Page 98 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 99 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 100 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 101 of 102 Case 2:15-cv-00510-RFB-VCF Document 89-2 Filed 01/27/17 Page 102 of 102 Exhibit C Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 1 of 25 çzrjg Cd idOdCCKYt orensics EXPERT DAMAGES REPORT In the matter of UNITED STATES DISTRICT COURT DISTRICT OF NEVADA PROFICIO MORTGAGE VENTURES LLC Plaintiff vs THE FEDERAL SAViNGS BANK Defendant Case No 215-CV-510-RFB-VCF Prepared by Diane Womacic CPA ABV CFF CFE September 2016 Jj7jt i_____ Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 2 of 25 PROFICIO MOR1GACE VEN IURLS ILC vs FEDFRAI sAVINGS BANk Case No 15-CV 510 RB VCF Expert Damages Report TABLE OF CONTENTS INTRODUCTION TI CREDENTIALS III MATERIALS REVIEWED IV CASE BACKGROUND COMPANY BACKGROUND FACTS AND CiRCUMSTANCES LOST PROFIT ANALYSIS CONCLUSION VI RIGHT TO MODIFY Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 3 of 25 PROFICIO MORTGAGE VENTURES LLC IHE FEDERAL SAVINGS BANK Case No 21 -RB-VCI Expert Damages Report INTRODUCTION RGL Forensics CRGL formerly known as Stahl Consulting Group PA has been engaged by counsel on behalf of Proficio Mortgage Venture LLC 4TMV or the Plaintiff in the matter of Proficio Mortgage Venture LLC The Federal Savings Bank FSB PMV has filed claim for damages and injunctive relief against The Federal Savings Bank for misappropriation of trade secrets unfair trade practices interference with business relationships and unjust enrichment RGL has been retained to analyze available information and assess potential damages related to lost profits including but not limited to origination fees servicing fees and mortgage premiums This report was prepared by Diane Womack Partner at RGL Forensics who is expected to testify at trial with the assistance of other firm members II CREDENTIALS RGL Forensics is privately-held consulting firm with well-established practices in forensic accounting consulting and trial services RGL performs financial investigations and provides advice and expert testimony on damages fraud accounting matters solvency insurance matters and valuation issues RGL is routinely retained in major litigations to perform analyses offmancial information and is experienced in the analysis processing and management of substantial amounts of data in order to assess litigation issues am Partner in RGLs Orlando office am Certified Public Accountant Accredited in Business Valuation Certified in Financial Forensics and Certified Fraud Examiner have more than 25 years of experience in accounting and financial matters and specialize in litigation consulting complex financial investigations and business valuations significant amount of this experience has been in performing financial analyses and providing valuation related services to different constituents in many different settings copy of my curriculum vitae is attached as Exhibit Included in this exhibit is listing of matters in which have given my expert testimony during the past four years and list of the articles have authored in the last 10 years RGL is compensated at rate of $300 per hour for my time incurred in performing the work necessary to prepare this report and to testify at trial or deposition in addition have been assisted by others working under my direction and supervision at hourly rates ranging from $95 to $235 RGLs fee is neither contingent upon my opinion nor upon the outcome of this litigation III MATERIALS REVIEWED In arriving at my opinion along with people working under my supervision have performed industry research and reviewed various materials and information produced in connection with this case This information is listed in Exhibit understand that additional depositions are scheduled to be taken and that discovery is ongoing It is possible that the testimony and/or the additional documents received in discovery may affect Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 4 of 25 PROEIC1O MORTGAGE \ENITJRES LI \s THE FEDERAL SAVINGS BANK Case No 5-CV5 O.RB.VCEj Expert Damages Report my opinions herein and reserve the right to supplement and/or amend the report as additional relevant mformatiun becomes available IV CASE BACKGROUND COMPANY BACKGROUND PMV is mortgage company that originates conventional mortgages FHA mortgages and Home Equity Conversion Mortgage HECM loans fhe Henderson Branch of PMV was located in Henderson Nevada lenderson Branch In December 2012 PMV entered into an Affiliate Manager Agreement AMA with North American Marketing tJAM As part of that Agreement NAM was obligated to provide the Plaintiff with consulting services which included lead generation marketing and identification of customers In return NAM was compensated for such services based in part upon the value of loans closed During the course of the Affiliate Management Agreement NAM as agent of PMV exclusively provided lead generations marketing and customer lists to the Plaintiff Thus the Plaintiff through its agent NAM developed compiled and paid for confidential proprietary marketing lists of potential customers It is our understanding that PMV working with its agent NAM analyzed the acquired customer data narrowed such data into smaller more manageable lists of customers and then contacted those narrowed groups of customer to initiate business relationship FACTS AND CIRCUMSTANCES On June 25 2014 Frank Naranjo Naranjo Russell Riddle CRiddle and Shawn OBrien OBrien terminated their employment with PMV Thereafter Naranjo Riddle and OBrien along with several other employees at the Henderson Branch became affiliated with FSB On June 30 2014 Riddle emailed the Plaintiffs proprietary customer list referred to as RUSSELL REFI BlackOpsNV from Plaintiff controlled email address to his personal Yahoo email address On July 2014 Naranjo emailed another Plaintiff proprietary customer list to himself OBrien and Riddle FSB and former Plaintiff employees have closed or caused to be closed at least eighty-five loan files on behalf of FSB for customers with whom PMV had relationships and/or who were included on the customer lists designated as Confidential Information by PMV and emailed by Riddle and Naranjo LOST PROFIT ANALYSIS As starting point in our analysis of the potential damages suffered by PMV we performed trending analysis related to income gross profit and operating income loss for PMV as whole and for PM\ without Hendersons contributions to each category Our findings indicated an upward tendency in operating income beginning in Ql 2014 folloved by substantial loss Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 5 of 25 PROFICIO MORTGAGE VEN CURES LLC iDE FEDERAL SAVINGS NAME Case Nc 15CV-SlO-RB VCF Expert Damages Report contributions from Henderson in Q4 2014 and QI 2015 For the periods of Q4 2012 through Q2 2014 Henderson contributed $4868329 of the $1 1.055388 in operating income realized by HECM or 44% For the periods of Q3 2014 through 2015 Henderson contributed loss of $441474 against $1.1 18356 of positive operating income tbr HECM or 39.5% To determine the potential damages attributed to the departure ofNaranjo OBrien and Riddle and others as well as the loss of PMVs proprietary customer information we evaluated the extent to which loans closed by FSB were associated with PMV customers or customer lists For the purposes of our analysis we utilized list of loans provided by FSB FFSB 004645111 discovery We compared the customers identified on the list to names included on PM Vs marketing list Our analysis disclosed 63 sixty-three records that were within the contents of the marketing list refer to Exhibit The 63 sixty-three loans identified represented $11200016 of funding Ten additional loans on the list were identified as PMV contacts based on customer letters in PMV files indicating that the loans were not finalized for variety of reason including customers who decided to go to another lender These ten loans represent an additional $l.364950 one million three-hundred sixty-four thousand nine-hundred fifty dollars of funding refer to Exhibit in addition to loan applications PMV provided other documentation including but not limited to call logs loan documentation appraisals and closing checklists This information revealed 12 twelve records with support showing relationship between the client and PMV These 12 twelve loans represent an additional $1750498 one million seven-hundred fifty thousand four- hundred ninety-eight dollars of funding refer to Exhibit Referring back to our original population of 90 ninety loans closed by FSB we have identified 85 eighty-five loans in total that were documented as PMV contacts or prospects and included in their confidential records Five records were excluded for lack of documentation These 85 eighty-five records for total loan amount of$l43 15463 fourteen million three-hundred fifteen thousand four-hundred sixty-three dollars represent the funding amount utilized in our damage calculation refer to Exhibit In order to determine the damages we analyzed information regarding premiums earned by PMV on loans funded in 2014 and 2015 Based on the information provided we were able to determine the average monthly premium percentage earned in each year The same analysis was perfonned for the branch identified as Henderson NV 920 for 2014 information to determine if the percentages were consistent with the percentages for the division as whole This analysis was conducted successfully for 2014 information Branch information for 2015 was not available for number of records and it was therefore not possible to accurately compute the percentages for 2015 The results of the analysis are found in Exhibit The analysis in Exhibit IT demonstrates that for the six months prior to the damage claim month of July 2014 the average monthly premium for PMV was 9.30% while in the same period for Henderson NV it was 9.63% For the calendar year 2014 the average monthly premium for the 4j Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 6 of 25 PROFIC.10 MORTGAGE VENTURES LLC vs THE FEDERAL SAVLNGS BANK Case No 15 CV-51O.RB.4VCF Expert Damae Report Plaintiff was 10.20% while for Henderson NV it was 10.35% Given the consistency of the results for 2014 we have utilized the more conservative average monthly premium percentage for the entire division for both calendar years 2014 and 2015 in our damage calculation I-IECM loans also typically generate revenue in the form of origination Fees and interest and expenses in the form of lender credits similar comparative analysis to the average monthly premium conducted in Exhibit I-I was applied to the origination fees lender credits and monthly interest collected the results of which are in Exhibits and respectively For purposes of consistency with this analysis data from the entire population was used to determine the percentages We also examined documents associated with various costs directly associated with loans These costs include commissions wire fees regulatory fees and bonuses Based on the information provided we have identified the following direct costs typically associated with funded loans Loan Officer Commission 500 Branch Manager Bonus 1000 Processing Manager Bonus 100 Reverse Vision 55 NRMLA Fee 15 WireFee II TOTAL FEES 1681 These costs were then attributed to the number of loans and subtracted from the calculated premium and other income to arrive at the calculation for lost profits associated with the funded loans Exhibit CONCLUSION Our analysis of documentation provided to date indicates that 85 eighty-five loans closed by FSB involved customers with which PMV had documented relationships or proprietary lead information Based on the analysis outlined above it is our opinion that these loans represented lost profit damages to PMV equaling approximately $1533200 one million five-hundred thirty- three thousand two hundred dollars Refer to Exhibit for the summary of this analysis It is important to note that during the course of our analysis we discovered four instances where client conducted subsequent transaction with FSB typically within one calendar year These subsequent transactions have been excluded from our damage calculation but represent additional potential opportunities that were lost by PMV VI R1G1 IT TO MODIFY This report is based on the information developed in the case to date and its use is restricted to use in this action understand that additional depositions are scheduled to be taken and that discovery SjPagc Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 7 of 25 PROFJCIO MORTGAGE VENTURES LLC vs THE FEDERAL SAVINGS BANE1 Case No 215-C V-S 1O-RB-WCF Expeti Darnagco Repzwt is ongoing It is possible that the testimony and/or the additional documents received in discovery may affect my opinions herein reserve the right to supplement and/or amend the report as additional relevant information becomes available xL Forensics Diane Woniack CPA ABY CFF CFE Partner September 2016 Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 8 of 25 PROFICID MORTGAGE VENTLRES LLC vs THE FEDERAL SAVINGS BANK Casv No 15 CV-IO.RB-VCF Expert Damages Report EXHIBITS Curriculum Vitae Diane Womack CPA CFF ABV CFE Materials Reviewed Summary of Damage Calculation Comparison of Marketing List to Identified Records for Damage Calculation Records Not on Marketing List Letter Issued Additional Research Population Identified for Damages Calculation Average Monthly Premium Calculation Average Monthly Origination Fee Calculation Average Monthly Lender Credit Calculation Average Monthly Interest Collected Calculation 71 Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 9 of 25 EXHIBiT CURRICULUM VITAE DIANE WOMACK CPA ABV CFF CFE EDUCATIONAL AND PROFESSIONAL DESIGNATION CPA Certified Public Accountant Florida New York ABY Accredited in Business Valuation American Institute of Certified Public Accountarns CFF Certified in Financial Forensics American Institute of Certified Public Accountants CFE Certified Fraud Examiner BA Accounting and English Cits University of New York Queens College New York NY VALUATION EXPERIENCE LITIGATION EXPERIENCE Mergers and Acquisitions Business Securities Litigation Damage Analysis Dissenting Forensic Investigations Stockholder Suits Estate Tax Real Estate and Construction Valuations Marital Dissolutions Solvency Analysis Bankruptcy Litigation Eminent Domain Public Breach of Contract Companies Closely FIeld Business Interruption Entities Professional Shareholder Disputes Practices EMPLOYMENT RGL Forensics Partner Orlando Florida and Tampa Florida July 2016 Present Stahl Consulting Group P.A Shareholder Orlando Florida and Tampa Florida April2008 June 2016 Navigant Consulting Inc Director Orlando Florida and Tampa Florida November 2005 August 2007 FTI Consulting Inc Managing Director New York New York January 2001 October 2005 Margolin Winer Evens LLP Partner Garden City New York November 1990 January 2001 Bellmarc Realty Controller New York New York July 1929 November 1990 Spicer Oppenheim Manager New York New York January 1982 July 1989 Designations are not itgulated by state or federal government Qualifications ror designation are ailable upon request Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 10 of 25 DIANE WOMACK CPA ABY CFF CFE CURRICULUM VITAE Continued PROFESSIONAL MEMBERSHIPS American Institute of Certified Public Accountants Association of Certified Fraud Examiners Florida Institute of Certified Public Accountants The Florida Bar Associate Member The Collaborative Family Law Group of Central Florida Orange County Bar Association Associate Member Tampa Bay Collaborative Law Group PUBLICATIONS New York Law Journal Common Business Valuation Errors March 1998 New York Law Journal Forensic Accounting in Criminal Cases July 1996 The Attorney of Nassau County The Accountants Role in Dispute Resolution October 1994 PROFESSIONAL ACTIVITIES AICPA/AAML 2016 Divorce Conference Committee member Florida Executive Women member AICPA CFF Credential Committee former member FICPA Relations with the Florida Bar Committee former vice-chair ICPA National Accreditation Committee former member AICPA Litigation and Dispute Resolution Committee former member ATCPA Task Force for the creation of the Forensic Competency Model former chair NY Stale Society of CPAs Committee for the Advancement of Women former chair NY State Society of CPAs Advisory Board for Career Opportunities in the Accounting Profession former member NY State Society cf CPAs Minority Recruitment Committee former chair Long Island Center for Business Professional Women Past President Long Island Center for Business Professional Women former Treasurer Financial Womens Association former member TEACHER/LECTURER AICPAIAAML Divorce Conference Ethical Conundrums May 19 2016 Florida Law Business Law Section Seminar Expert Exclusions Under Daubert August 31 2014 Wehinar- Presenter- Daubert Frye Challenges September 2013 Florida Bar Panel Discussion Leader Expert Challenges under Daubed -Floridas New Standard August 31 2013 AAMII 35th Annual Institute Daubed Challenges May 2013 Florida Law Business Law Section Seminar Daubeil Frye Challenges September 2012 Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 11 of 25 Trial and Deposition Testimonx Caption Reference Service Provided Timothy Geoghegan Circuit Court Testimony Barbara Geoghegan State of Florida 2016 Brevard County Amy Bush Circuit Court Deposition Shawn Bush State of Florida 2016 Orange County Brian Stone Circuit Court Testimony Stacey Stone State of Florida 2016 Pinellas County Brian Stone Circuit Court Testimony Stacey Stone State of Florida 2015 Pinellas County Brian Stone Circuit Court Deposition Stacey Stone State of Florida 2015 Pinellas County Abraha Circuit Court Testimony Tekelewold State of Florida 2015 Pinellas County Brian Stone Circuit Cout Testimony Stacey Stone State of Florida 2015 Pinellas County Mark Flood Circuit Court Testimony Blake Taylor afka Blake Taylor Flood State of Florida 2014 Pinellas County Weingarten Herndon Plaza JV Circuit Court Deposition Rec Warehouse Inc State of Florida 2014 DBA Leisure Bay Orange County Viena Perez-Jiminez Circuit Court Testimony Gary DeCainpo State of Florida 2014 Orange County Salsabeel Akhtar Khan Circuit Court Testimony Syed AmranAli State of Florida 2013 Orange County Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 12 of 25 EXifiBIT Materials Reviewed 2016 02 25 Amended Complaint Proficio Mortgage Ventures LLC Frank Erie Naranjo et 2016 03 16 Amended Complaint Proficio Mortgage Ventures LLC The Federal Savings Bank 03/22/2016 Defendants Answer to Amended Complaint 04/07/2016 Defendants Answer and Affirmative Defenses 2012 12 13 Affiliate Management Agreement between PMV and NAM PMV Monthly Review Packages dated 10/31/12 5/31/14 8/31/14 10/31/1411730/14 and 1/31/15 2/28/15 IECM Financial Packages dated 06/30/14 7/31/14 9/30/14 12/31/14 and 3/31/15 Confidential Settlement Agreement Profielo Bank Fee Schedule Russell Riddle Employment Agreement and Addendums Shawn OBrien Employment Information Frank Naranjo Employment Information Transcripts and Exhibits from the following depositions 09/12/2015 -Frank Naranjo 06/10/20 16 John Calk Condensed 07/21/2016 David Pittman 07/31/2016 Scott Guild 08/04/20 16 Rob Balmer Condensed Mortgage Funding Statements Purchase Advices Profieio Bank and Subsidiary Consolidated Financial Statements As of December 31 2014 and 2013 and for the Years Then Ended Together with Tndependent Auditors Report Electronic Spreadsheet PROFICI 000000463 Electronic Spreadsheet PROF1CI000000568 Annual I-IECM Endorsement Chart 6/15/16 Cash Disbursements By Vendor PROFICIO 0007890 North American Marketing Inc Highly Confidential AEO PROFICT00008224- PR0F1C100008225 Confidential Attorneys Eyes Only TFSB 004644 TFSB 004644 Confidential/ Attorneys Eyes Only TFSB 000354 TFSB 000360 HECM Consumer 1irect TFSB 004641 HECM Non-Consumer Direct TFSB 004642 Master Loan Files Confldential Loan Files Vendor Invoices Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 13 of 25 E X H IB IT C -S u m m a ry of D am ag e C a lc u la ti o n C a lc u la te d D am ag e fr o m Id e n ti fe d L o a n P o p u la ti o n In te r e s t PMV Ave PMV Ave C o s t to F u n d M o n th P5K F u n d e d it of L o a n s C a ic P re m iu m C o ll e c te d O r ig in a ti o n Fee L e n d e r C r e d it L o a n L o s t Net In c o m e FN EN EN FN FN FN 2 0 1 4 A u g u s t 3 9 1 6 8 4 2 6 3 40 1 2 5 9 175 1 6 8 1 3 7 0 6 S e p te m b e r 2 0 6 9 6 3 0 11 2 2 6 1 2 3 1 3 4 1 4 1 4 6 9 1 1 4 2 6 1 8 4 9 1 2 3 9 0 1 6 O c to b e r 2 6 3 3 1 1 5 13 2 9 4 2 4 1 1 3 2 3 4 8 4 1 1 2 0 7 6 1 2 1 8 5 3 3 0 1 3 6 2 N ov em be r 1 9 9 6 2 9 3 10 2 2 3 7 3 8 767 3 2 1 8 3 3 4 2 1 7 1 6 8 1 0 2 0 5 6 6 2 D e c e m b e r 9 9 7 4 6 9 1 0 6 4 3 2 324 1 8 1 4 2 1 3 6 1 9 1 1 7 6 7 9 9 5 1 2 T o ta l 7 7 3 5 6 7 5 42 8 5 4 7 9 7 3 7 9 6 1 4 1 4 6 4 8 0 1 9 7 7 0 6 0 2 8 4 9 2 5 1 2 0 1 5 J a n u a ry 4 9 3 0 1 3 5 3 9 0 1 352 7 5 8 2 9 2 8 5 5 0 4 3 4 7 5 0 6 F e b ru a ry 2 7 0 4 3 8 3 0 7 6 3 115 5 3 6 0 7 9 9 7 5 0 4 3 2 3 1 9 9 M a rc h 1 0 2 7 3 2 9 1 3 0 0 7 6 406 1 7 7 8 0 2 8 1 1 5 1 3 4 4 8 1 0 6 6 9 8 A p r il 1 9 4 0 7 1 9 13 2 5 1 9 4 6 500 3 0 9 8 7 5 7 4 2 3 2 1 8 5 3 2 0 4 1 5 7 May 1 3 1 4 4 5 0 1 7 6 7 1 1 359 2 5 4 8 7 3 8 0 6 5 1 3 4 4 8 1 5 1 0 4 3 J u n e 5 2 7 2 2 4 7 0 9 0 5 146 9 1 1 2 1 9 1 5 9 3 3 6 2 5 7 5 4 2 J u ly A u g u s t 1 5 1 9 8 0 1 9 4 7 5 55 2 4 3 1 4 8 2 5 1 6 8 1 1 5 4 5 5 S e p te m b e r 1 2 4 3 1 9 1 4 2 4 3 42 1 5 2 3 3 7 6 8 3 3 6 2 8 6 7 7 O c to b e r 7 3 0 3 1 6 8 5 7 1 0 249 8 9 9 4 2 0 2 7 0 5 0 4 3 6 9 6 4 0 T o ta l 6 5 7 9 7 8 9 43 8 3 3 7 2 9 2 2 2 4 1 0 9 2 5 6 1 8 8 9 0 8 7 2 2 8 3 6 8 4 0 1 8 G ra n d T o ta l 1 4 3 1 5 .4 6 3 85 1 6 8 8 5 2 7 6 0 1 9 2 5 0 7 2 0 2 6 9 4 0 5 1 4 2 8 8 5 1 5 3 3 2 7 5 R O U N D E D 1 5 3 3 9 9 j F O O T N O T E S A m o u n ts re fe re n c e d in E x h ib it P e rc e rl td g e s re fe re n c e d in E x h ib it In te r e s t is c a lc u la te d and c r e d it e d to the P la in ti ff p r io r to fu n d in g P e rc e n ta g e s re fe re n c e d in E x h ib it P e rc e n ta g e s re fe re n c e d in E x h ib it P e rc e n ta g e s re fe re n c e d in E x h ib it i Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 14 of 25 EXHIBIT Comparison of Marketing List to Identified Records for Damage Calculation First Name Last Name Name Loan Amount per FSB Close Date per FSB On Marketing List Yes or No Ernest Adams Ernest Adams 89252 9/3012014 OR Yes Millicent Allen Millicent Allen 33053 4/28/2015 Ml Yes Ted Anderson Ted Anderson 108908 10/31/2014 ID Yes Shirley Armstrong Shirley Armstrong 225020 12/10/2014 CA Yes Gloria Bautista Gloria Bautista 191832 1/30/2015 AZ yes Mary Beagin Mary Beagin 371671 11/26/2014 CA Yes Annette Benford Annette Benford 330980 10/8/2014 CA Yes Theresa Blazer Theresa Blazer 133800 4/8/2015 NV Yes Sheryn Boyle Sheryn Boyle 109350 12/23/2014 OR Yes Evelyn Braswell Evelyn Braswell 305140 4/22/2015 CA Yes William Burgess William Burgess 214496 4/29/2015 CA Yes Isaac Burns Isaac Burns 194398 5/22/2015 NV Yes Bob Castro Bob Castro 117884 9/25/2015 CA Yes David Cohen David Cohen 94614 4/24/2015 NV Yes Harry Cousins Harry Cousins 331760 10/2/2014 NV Yes Beatrix Dale Beatrix Dale 292559 10/29/2014 CA Yes Jon Davis Jon Davis 328584 11/26/2014 CA Yes Gary Desler Gary Desler 352236 5/28/2015 NV Yes Frances Donaldson Frances Donaldson 129992 3/30/2015 Ml Yes Alcira Eagles Alcira Eagles 102058 4/8/2015 NV Yes Marcia Evans Marcia Evans 74750 12/30/2014 FL Yes Sylvia Falcioni Sylvia Falcioni 121906 10/31/2014 NV Yes Jonathan Femons Jonathan Femons 212488 10/27/2014 CA Yes Daisy Flowers Daisy Flowers 251505 9/29/2014 CA Yes Jack Fuller Jack Fuller 115070 10/31/2014 FL Yes William Gibbs William Gibbs 118165 3/2/2015 FL Yes Raymond Gielniak Raymond Gielniak 119878 11/12/2014 Ml Yes Mary Ann Giglio Mary Ann Giglio 76672 2/25/2015 FL Yes John Goodman John Goodman 230569 1/27/2015 WA Yes Virginia Grantham Virginia Grantham 244096 4/24/2015 CA Yes Rosa Greene Rosa Greene 112971 5/22/2015 AZ Yes Doris Groskopf Dons Groskopf 230487 10/31/2014 NV Yes Norman Grossman Norman Grossman 308637 11/26/2014 CA Yes Gary Halvorson Gary Halvorson 211365 5/28/2015 WA Yes James Holloman James Holloman 141840 11/10/2014 OR Yes Ronald Ice Ronald Ice 109193 3/23/2015 ID Yes James Jones James Jones 72492 11/25/2014 CA Yes Thelma Jones Thelma Jones 123516 12/24/2014 FL Yes Larry Katz Larry Katz 123953 10/17/2014 NV Yes Preston Leavitt Preston Leavitt 197497 11/17/2014 CO Yes Darlene Loeb Darlene Loeb 165016 5/15/2015 NV Yes Mary Marshall Mary Marshall 46875 4/14/2015 NV Yes Larry Makie Larry Maxie 204288 9/30/2014 CA Yes lnez Mcmillin lnez Mcmillin 269735 9/30/2014 CA Yes Page of Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 15 of 25 EXHIBIT Comparison of Marketing List to Identified Records for Damage Calculation First Name Last Name Name Loan Amount per FSB Close Date per FSB State On Marketing List Yes or No Ann Meehan Ann Meehan 126904 6/30/2015 CA Yes Audrey Moftich Audrey Moftich 133545 2/19/2015 FL Yes Mary Nerone Mary Nerone 312225 4/29/2015 NV Yes Gordon Newman Gordon Newman 95432 11/26/2014 OR Yes John Orth John Orth 65022 3/30/ 2015 AZ Yes Billy Patchell Billy Patchell 305266 10/31/2014 CA Yes Charles Perrera Charles Perrera 169100 4/13/2015 CA Yes Randall Priest Jr Randall Priest Jr 101924 5/18/2015 FL Yes Karen Robertson Karen Robertson 232781 3/2/2015 OR Yes Kenneth Ronney Kenneth Ronney 111095 10/20/2014 CA Yes Carolyn Stanton Carolyn Stanton 312950 10/31/2014 CA Yes Annie Thomas Annie Thomas 392014 9/30/2014 CA Yes Jerold Thompson Jerold Thompson 70612 1/21/2015 CO Yes Susan Valiquette Susan Vallquette 400320 6/29/2015 CA Yes Patsy Varia Patsy Varia 87883 4/22/2015 CO Yes Ronald Watkins Ronald Watkins 72365 5/26/2015 GA Yes Dana Wilcox Dana Wilcox 140968 11/17/2014 NV Yes Elvena Wilcox Elvena Wilcox 71073 3/16/2015 AZ Yes Shirley Zimmerman Shirley Zimmerman 56977 9/26/2014 CA Yes LOAN AMO UNT ON MARKE11NG LIST 11200016 NUMBER OF RECORDS 63 Loan Amount Close Date per On Marketing First Name last Name Name per FSB FSB State List Yes or No Mary Barker Mary Barker 68154 8/28/2015 TX No Lorene Barns Lorene Barns 122130 9/30/2014 NC No Karen Chaihoub Karen Chalhoub 152280 7/2/2014 NV No Nancy Flynn Nancy Flynn 52375 9/19/2014 AZ No Michael Fontenot Michael Fontenot 35692 10/8/2014 TX No Ronald Forcum Ronald Forcum 89832 4/21/2015 OR No David Georgia David Georgia 79779 12/8/2014 NV No Cornelis Groen Cornelis Groen 299520 9/29/2014 CA No Wes Harris Wes Harris 219294 11/10/2014 FL No Louis Hector Louis Hector 212953 3/2/2015 IL No Rita Johnson Rita Johnson 233595 9/19/2014 CA No William Johnson William Johnson 258915 4/27/2015 CA No Michael Kauer Michael Kauer 280996 10/26/2015 WA No Linda McGarry Linda Mcgarry 104174 5/4/2015 FL No Mary Milford Mary Milford 39168 8/20/2014 CA No Alexander Morales Alexander Morales 107548 4/29/2015 MO No Shirley Mounce Shirley Mounce 172957 10/13/2015 TX No Ellis Richardson Ellis Richardson 196950 12/15/2014 TX No Barbara Rivers Barbara Rivers 187094 12/15/2014 Ml No Robert Scherf Robert Scherif 88150 3/6/2015 IL No DONALD SESSIONS Donald Sessions 6435 9/30/2015 TX No Marjorie Smith Marjorie Smith 98240 9/30/2014 CA No RAY TRAUTNER Ray Trautner 151980 8/28/2015 NJ No Sailard Vlaskovits Sailard Vlaskovits 241641 7/7/2015 CA No Edward Watson Edward Watson 60221 2/25/2015 CA No Audrey Watters Audrey Watters 276363 10/7/2015 CO No Page of Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 16 of 25 EXHIBIT Comoarison Marketine List to Identified Records for Damaee Calculation ipairAmount Close Date per On Marketing Last Name Name oerFSB list Yes or Nol Wilson Gerald Wilson 855031 7/31/2015 NV LOAN AMOUNT NOT ON MARKETING LIST 3921940 NUMBER OF RECORDS 27 TOTAL LOAN AMOUNT 15121956 TOTAL NUMBER OF RECORDS 90 FirstName Gerald No Page of Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 17 of 25 EXHIBIT Records Not on Marketing List Letter Issued MOUNT LETTER ISSUED 1364950 NUMBER OF RECORDS 10 First Name last Name N4pg Loan Amount per FS8 Close Date per ttt Letter Issued IYeilNo Mary Barker Mary Barker 68154 8/28/2015 TX No Karen Chaihoub Karen Chalhoub 152280 1/2/2014 NV No Nancy Flynn Nancy Flynn 52375 9/19/2014 AZ No David Georgia David Georgia 79779 12/8/2014 NV No Cornelis Groen Cornelis Groan 299520 9/29/2014 CA No Wes Harris Wes Harris 219294 11/10/2014 FL No Louis Hector Louis Hector 212953 3/2/2015 IL No Rita Johnson Ma Johnson 233595 9/19/2014 CA No William Johnson William Johnson 258915 4/27/2015 CA No Linda McGarry Linda Mcgarry 104174 5/4/2015 FL No Alexander Morales Alexander Morales 101548 4/29/2015 MO No DONALD SESSIONS Donald Sessions 6435 9/30/2015 TX No Marjorie Smith Marjorie Smith 98240 9/3012014 CA No Szilard Viaskovits Scilard Vlaskovits 241641 7/7/2015 CA No Edward Watson Edward Watson 60221 2/25/2015 CA No Audrey WaLters Audrey Walters 276363 10/7/2015 CO No Gerald Wilson Gerald Wilson 85503 7/31/2015 NV No LOAN AMOUNT NO LETTER ISSUED 2556991 NUMBER OF RECORDS 17 TOTAL LOAN AMOUNT 3921940 TOTAL NUMBER OF RECORDS 27 First Name Last Name Name Loan Amount per FSB Close Date per FR Letter Issued Qfçyp Ietter Reasoning Lorene Barns Lorene Barns 122130 9/30/2014 NC Yes Yes Withdrawn Michael Fontenot Michael Fontenot 35692 10/8/2014 TX yes Yes Withdrawn Ronald Forcum Ronald Forcum 89832 4/21/2015 OR Yes Yes Withdrawn Michael Kauer Michael Kauer 280996 10/26/2015 WA Yes No Incomplete Mary Milford Mary Milford 39168 8/20/2014 CA Yes Yes Withdrawn Shirley Mounce Shirley Mounce 172957 10/13/2015 TX yes No Incomplete Ellis Richardson Ellis Richardson 196950 12/15/2014 TX Yes Yes Withdrawn Barbara Rivers Barbara Rivers 187094 12/15/2014 Ml Yes Yes Withdrawn Robert Scherf Robert Scherif 88150 3/6/2015 IL Yes No Incomplete RAY TRAUTNER Ray Trautner 151980 8/2812015 NJ Yes No Incomplete LOAN Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 18 of 25 EXHIBIT Additional Research First Name Last Name Loan Amount per FSB Close Date per FSB pporting Docs Yes No fN Nancy Flynn Nancy Flynn 52375 9/19/2014 AZ Yes 12 David Georgia David Georgia 79779 12/8/2014 NV Yes Cornelis Groen Cornelis Groen 299520 9/29/2014 CA Yes Wes Harris Wes Harris 219294 11/10/2014 FL Yes Louis Hector Louis Hector 212953 3/2/2015 IL Yes Rita Johnson Rita Johnson 233595 9/19/2014 CA Yes Linda McCarry Unda Mcgarry 104174 5/412015 FL Yes Alexander Morales Alexander Morales 107548 4/29/2015 MO Yes DONALD SESSIONS Donald Sessions 6435 9/30/2015 TX Yes Marjorie Smith Marjorie Smith 98240 9/30/2014 CA Yes Edward Watson Edward Watson 50221 2/25/2015 CA Yes Audrey Watters Audrey Watters 276363 10/7/2015 CO Yes 113 LOAN AMOUNT SUPPORTING INFO 1750498 NUMBER OF RECORDS 12 First Name Last Name Name Loan Amount ner FSB flp Date per ffi State Supporting Does Yes No Mary Barker Mary Barker 68154 8/28/2015 TX No Karen Chalhoub Karen Chalhoub 152280 7/2/2014 NV No William Johnson William Johnson 258915 4/27/2015 CA No Szilard Viaskovits Szilard Vlaskovits 241641 7/7/2015 CA No Gerald Wilson Gerald Wilson 85503 7/31/2015 NV No LOAN AMOUNT NO SUPPORTING INFO 806493 NUMBER OF RECORDS TOTAL LOAN AMOUNT 2556991 TOTAL NUMBER OF RECORDS 17 FOOTNOTES No additional information provided Contact log PROFICI00002417 shows detail from 9/2013 through 1/2015 client closed with another lender Signed financing and/cr HUD docs PROFICI0000312O between client and Plaintiff Contact log PROFICI0000387O shows detail between 8/2014 and 9/2014 application package provided FSB Funded 9/2014 Signed financing and/cr HUD docs PROFICI00003979 between client and Plaintiff Signed financing and/or I-HiD docs PROFICI00004285 between client and Plaintiff Signed fflJD statement dated 11/29/12 between client and Plaintiff 22 months before FSB closing date Contact log PROFICI0000S12S shows detail from 3/2014 through 5/2014 application was approved Contact log shows client working with Plaintiff switched to FSB Contact log PROFICI0000S92S shows Plaintiff working th client from 7/2104 through 1/2015 Signed financing and/or HOD docs PROFICI0000S941 between client and Plaintiff Signed financing and/or HOD docs PROFICI00006S83 between client and Plaintiff Contact log PROFICI000068S4 shows package sent and returned placed on hold cancelled June 2015 FSB closed July 2015 Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 19 of 25 EXHIBIT Population Identified for Damages Calculation First Name Last Name Name Loan Amount per FSB Close Date per PSB State Alcira Eagles Alcira Eagles 102058 4/8/2015 NV Alexander Morales Alexander Morales 107548 4/29/2015 MO Ann Meehan Ann Meehan 126904 6/30/2015 CA Annette Benford Annette Benford 330980 10/8/2014 CA Annie Thomas Annie Thomas 392014 9/30/2014 CA Audrey Moftich Audrey Moftich 133545 2/19/2015 FL Audrey Watters Audrey Waters 276363 10/7/2015 CO Barbara Rivers Barbara Rivers 187094 12/15/2014 Ml Beatrix Dale Beatrix Dale 292559 10/29/2014 CA Billy Patchell Billy Patchell 305266 10/31/2014 CA Bob Castro Bob Castro 117884 9/25/2015 CA Carolyn Stanton Carolyn Stanton 312950 10/31/2014 CA Charles Perrera Charles Perrera 169100 4/13/2015 CA Cornelis Groen Cornelis Groen 299520 9/29/2014 CA Daisy Flowers Daisy Flowers 251505 9/29/2014 CA Dana Wilcox Dana Wilcox 140968 11/17/2014 NV Darlene Loeb Darlene Loeb 165016 5/15/2015 NV David Cohen David Cohen 94614 4/24/2015 NV David Georgia David Georgia 79779 12/8/2014 NV DONALD SESSIONS Donald Sessions 6435 9/30/2015 TX Doris Groskopf Doris Groskopf 230487 10/31/2014 NV Edward Watson Edward Watson 60221 2/25/2015 CA Ellis Richardson Ellis Richardson 196950 12/15/2014 TX Elvena Wilcox Elvena Wilcox 71073 3/16/2015 AZ Ernest Adams Ernest Adams 89252 9/30/2014 OR Evelyn Braswell Evelyn Braswell 305140 4/22/2015 CA Frances Donaldson Frances Donaldson 129992 3/30/2015 MI Gary Desler Gary Desler 352236 5/28/2015 NV Gary Halvorson Gary Halvorson 211365 5/28/2015 WA Gloria Bautista Gloria Bautista 191832 1/30/2015 AZ Gordon Newman Gordon Newman 95432 11/26/2014 OR Harry Cousins Harry Cousins 331760 10/2/2014 NV lnez Mcmillin lnez Mcmillin 269735 9130/2014 CA Isaac Burns Isaac Burns 194398 5/22/2015 NV Jack Fuller Jack Fuller 115070 10/31/2014 FL James Holloman James Holloman 141840 11/10/2014 OR James Jones James Jones 72492 11/25/2014 CA Jerold Thompson Jerold Thompson 70612 1/21/2015 CO John Orth John Orth 65022 3/30/2015 AZ John Goodman John Goodman 230569 1127/2015 WA Jon Davis Jon Davis 328584 11/26/2014 CA Jonathan Femons Jonathan Femons 212488 10/27/2014 CA Karen Robertson Karen Robertson 232781 3/2/2015 OR Kenneth Ronney Kenneth Ronney 111095 10/20/2014 CA Larry Katz Larry Katz 123953 10/17/2014 NV Larry Maxie Larry Maxie 204288 9/30/2014 CA Linda McGarry Linda Mcgarry 104174 5/4/2015 FL Lorene Barns Lorene Barns 122130 9/30/2014 NC Page of Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 20 of 25 EXHIBIT Population Identified for Damages Calculation First Name Last Name Name Loan Amount per FSR Close Date per FSB State Louis Hector Louis Hector 212953 3/212015 IL Marcia Evans Marcia Evans 74750 12/30/2014 FL Marjorie Smith Marjorie Smith 98240 9/30/2014 CA Mary Beagin Mary Beagin 371671 11/26/2014 CA Mary Marshall Mary Marshall 46875 4/14/2015 NV Mary Nerone Mary Nerone 312225 4/29/2015 NV Mary Milford Mary Milford 39168 8/20/2014 CA Mary Ann Gig io Mary Ann Giglio 76672 2/25/2015 FL Michael Fontenot Michael Fontenot 35692 10/8/2014 TX Michael Kauer Michael Kauer 280996 10/26/2015 WA Millicent Allen Millicent AlIen 33053 4/28/2015 MI Nancy Flynn Nancy Flynn 52375 9/19/2014 AZ Norman Grossman Norman Grossman 308637 11/26/2014 CA Patsy Vana Patsy Varia 87883 4/22/2015 CO Preston Leavitt Preston Leavitt 197497 11/17/2014 CO Randall Priest Jr Randall Priest Jr 101924 5/18/2015 FL RAY TRAUTNER Ray Trautner 151980 8/28/2015 NJ Raymond Gielniak Raymond Gielniak 119878 11/12/2014 Ml Rita Johnson Rita Johnson 233595 9/19/2014 CA Robert Scherf Robert Scherif 88150 3/6/2015 IL Ronald Ice Ronald Ice 109193 3/23/2015 ID Ronald Watkins Ronald Watkins 72365 5/26/2015 GA Ronald Forcum Ronald Forcum 89832 4/21/2015 OR Rosa Greene Rosa Greene 112971 5/2212015 AZ Sheryn Boyle Sheryn Boyle 109360 12/23/2014 OR Shirley Armstrong Shirley Armstrong 226020 12/10/2014 CA Shirley Zimmerman Shirley Zimmerman 56977 9/26/2014 CA Shirley Mounce Shirley Mounce 172957 10/13/2015 TX Susan Valiquette Susan Valiquette 400320 6/29/2015 CA Sylvia Falcioni Sylvia Falcioni 121906 10/31/2014 NV Ted Anderson Ted Anderson 108908 10/31/2014 ID Thelma Jones Thelma Jones 123516 12/24/2014 FL Theresa Blazer Theresa Blazer 133800 4/8/2015 NV Virginia Grantham Virginia Grantham 244096 4/24/2015 CA Wes Harris Wes Harris 219294 11/10/2014 FL William Burgess William Burgess 214496 4/29/2015 CA William Gibbs William Gibbs 118165 3/2/2015 FL LOAN AMOUNT FOR DAMAGES CALCULATION 14315463 NUMBER OF RECORDS 85 LOAN AMOUNT NO SUPPORTING INFO From Exhibit 806493 NUMBER OF RECORDS From Exhibit TOTAL LOAN AMOUNT Reconciles to Exhibit 15121956 TOTAL NUMBER OF RECORDS Reconciles to Exhibit 90 Page of Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 21 of 25 E X H II II T A v e ra g e M o n th ly P re m iu m C a lc u la ti o n TO TA L FOR ALL R E C O R D S IN P O P U L A T IO N -1 5 0 0 R E C O R D S TO TA L FOR R E C O R D S IN H E N D E R S O N O N L Y -2 0 3 R E C O R D S TO TA L FOR ALL R E C O R D S IN P O P U L A T IO N -1 O S O R E C O R D S 2 0 1 S M o n th P re m iu m C a lc u la te d F u n d in g UPS PMV Ave Mon P re m iu m /S 1 6 8 5 7 8 8 .6 6 1 5 4 1 9 4 0 2 .8 1 1 0 .9 3 2 9 % 1 4 6 6 4 2 4 .8 5 1 2 8 9 1 2 2 0 .4 5 1 1 .3 7 5 4 % 1 3 5 3 6 5 2 .9 6 1 0 6 9 1 0 4 3 .6 4 1 2 .6 6 1 6 % 1 7 4 9 7 9 1 .8 5 1 3 4 7 8 5 0 3 .2 9 1 2 9 8 2 1 % 1 7 3 2 5 4 0 .9 0 1 2 8 8 7 3 4 3 .4 2 1 3 .4 4 3 7 % 1 9 2 7 5 5 7 .2 9 1 4 3 3 2 7 1 1 46 1 3 .4 4 8 7 % 1 4 8 4 0 6 5 .2 4 1 2 3 0 8 4 3 8 .5 4 1 2 .0 5 7 3 % 1 1 0 7 4 0 1 .7 0 8 6 4 1 9 2 0 .2 1 1 2 .8 1 4 3 % 5 6 3 3 5 0 .2 4 4 9 1 7 3 0 0 .2 5 1 1 .4 5 6 5 % 10 3 1 5 6 2 4 3 8 2 6 8 9 3 6 6 .0 4 1 1 .7 3 6 0 % 11 3 3 4 8 1 8 4 7 2 8 4 9 8 7 7 .9 2 1 1 .7 4 8 5 % 12 4 6 7 0 4 9 .2 0 4 5 7 8 2 9 2 .3 9 1 0 .2 0 1 4 % G ra n d T o ta l 1 4 1 8 8 0 6 5 .7 3 1 IS 6 8 S 4 2 1 .0 2 1 2 .2 6 4 4 % 2 0 1 4 -2 0 1 5 T o ta l 201 M o n th P re m iu m C a lc u la te d F u n d in g UPS PMV Ave Mon P re m iu m 8 6 1 6 9 2 .9 3 1 2 8 3 3 9 1 7 .0 9 6 .7 1 4 2 % 4 8 6 6 6 6 .1 7 5 6 8 3 0 0 9 .9 8 8 .5 6 3 5 % 1 0 6 8 6 1 8 .9 8 1 0 7 8 4 5 8 0 .2 8 9 .9 0 8 8 % 1 6 0 5 0 0 3 .6 7 1 5 8 2 7 7 6 2 .2 1 1 0 .1 4 0 4 % 1 0 3 2 5 9 2 .6 7 1 0 3 7 1 7 1 7 .0 5 9 .9 5 5 9 % 1 2 5 6 4 2 4 .8 5 1 2 3 7 0 4 8 6 .3 1 1 0 .1 5 6 6 % 7 5 4 9 9 8 .0 8 7 1 3 3 0 4 6 .6 4 1 0 .5 8 4 5 % 1 4 1 1 5 0 2 14 1 2 9 6 9 6 9 2 8 7 1 0 .8 8 3 1 % 1 .8 0 7 9 0 4 .1 1 1 6 5 4 7 1 6 3 02 1 0 .9 2 5 8 % 10 2 0 4 4 1 3 5 .1 4 1 8 2 9 2 6 1 8 .8 2 1 1 .1 7 4 6 % 11 1 2 7 7 4 3 6 .6 0 1 1 3 9 7 8 4 9 .9 3 1 1 .2 0 7 7 % 12 li t3 9 6 Dv 1 6 0 9 5 2 4 3 .6 o 1 0 .6 7 0 2 % G ra n d T o ta l 1 S 3 2 4 3 7 1 .4 2 1 S O 3 0 1 0 8 7 .8 6 1 0 .1 9 5 4 % 2 0 1 4 M o n th P re m iu m C a lc u la te d F u n d in g UPS P M V A ve Mon P re m iu m 1 9 4 9 0 .9 2 2 5 0 8 0 1 .6 7 7 .7 7 1 4 % 7 8 3 3 1 .6 1 9 0 4 7 3 2 .7 7 8 .6 5 8 0 % 2 2 8 9 3 0 .5 0 2 3 1 6 7 3 8 .3 2 9 .8 8 1 6 % 1 2 8 1 3 3 .5 4 1 2 1 4 8 1 1 .7 0 1 0 5 4 7 6 % 1 5 6 2 1 8 .3 6 1 7 0 8 7 6 3 .4 3 9 .1 4 2 2 % 1 2 0 5 8 2 .6 1 1 2 0 2 4 3 6 .3 3 1 0 .0 2 8 2 % 1 0 7 4 7 6 .4 2 9 4 5 2 5 7 .9 3 1 1 .3 7 0 1 % 2 2 8 6 2 1 .2 9 2 1 3 9 8 1 4 4 1 1 0 .6 8 4 2 % 1 3 1 7 4 0 .8 1 1 2 0 1 0 2 3 .7 9 1 0 .9 6 9 0 % 10 1 2 7 5 2 4 .3 6 1 0 8 4 5 9 7 .6 5 1 1 .7 5 7 8 % 11 1 9 3 7 7 2 .0 8 1 7 4 0 3 4 7 .0 7 1 1 .1 3 4 1 % 12 2 0 0 9 5 6 .2 7 1 9 2 5 6 6 9 .1 9 iDA 3 5 7 % G ra n d T o ta l 1 7 2 1 7 7 8 .7 1 1 6 6 3 4 9 9 4 .2 6 1 0 .3 5 0 3 % 2 9 5 1 2 4 3 7 .1 4 2 6 S 9 9 2 5 0 8 .8 8 1 1 .0 9 5 2 % S o u rc e 158 D a m a g e c a lc u la ti o n PMV 2 0 1 4 L o a n M a s te r Inc T a b le 159 D a m a g e C a lc u la ti o n PMV 2 0 1 5 L o a n M a s te i lru T a b k Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 22 of 25 E X H IB IT A v e ra g e M o n th ly O ri g in a ti o n Fee C a lc u la ti o n T O T A L FOR ALL R E C O R D S IN P O P U L A T IO N 1 5 0 0 R E C O R D S 2 0 1 4 2 0 1 5 T o ta l 1 5 4 1 9 4 0 2 .8 1 1 .5 3 7 8 % T O T A L FOR R E C O R D S IN H E N D E R S O N O N L Y - 203 R E C O R D S 2 0 1 4 M o n th O ri g In a ti o n Fee F u n d in g UPR DI PMV Ave O ri g in a ti o n Fee A f6 C 2 0 1 4 M o n th O ri g in a ti o n Fee Al F u n d in g UPB PMV Ave O ri g in a ti o n Fee fA /6 C 3 9 2 2 2 0 -3 0 1 2 8 3 3 9 1 7 .0 9 3 .0 5 6 1 % 2 3 8 5 2 3 .7 4 5 .6 8 3 0 0 9 .9 8 4 .1 9 7 1 % 3 3 2 9 5 4 .3 1 1 0 7 8 4 5 8 0 .2 8 3 .0 8 7 3 % 4 5 6 3 2 4 .6 9 1 5 8 2 7 7 6 2 2 1 2 .8 8 3 1 % 2 6 0 8 8 8 .9 8 1 0 3 7 1 7 1 7 .0 5 2 .5 1 5 4 % 2 5 6 0 0 7 .7 3 1 2 3 7 0 4 8 6 .3 1 2 .0 6 9 5 % 2 2 9 2 6 4 .4 1 7 1 3 3 0 4 6 .6 4 3 .2 1 4 1 % 2 5 9 8 7 0 .0 0 1 2 9 6 9 6 9 2 .8 7 2 .0 0 3 7 % 3 0 4 2 2 5 .0 0 1 6 5 4 7 1 6 3 .0 2 1 .8 3 8 5 % 10 2 9 4 9 0 5 .2 9 1 8 2 9 2 6 1 8 .8 2 1 .6 1 2 2 % 11 2 0 7 3 0 7 00 1 1 3 9 7 3 4 9 9 3 1 .8 1 8 8 % 12 2 7 0 2 9 0 .0 0 1 6 0 9 5 2 4 3 .6 6 1 .6 7 9 3 % G ra n d T o ta l 3 5 0 2 7 8 1 .4 5 2 5 0 3 0 7 0 8 7 .8 6 2 .3 3 0 4 % T O T A L FOR ALL R E C O R D S IN P O P U L A T IO N 1 0 5 0 R E C O R D S 2 0 1 5 M o n th O ri g in a ti o n Fee F u n d in g UPB PMV Ave O ri g in a ti o n Fee 1 8 4 0 0 .0 0 2 5 0 8 0 1 .6 7 3 5 8 2 0 .0 0 9 0 4 7 3 2 .7 7 3 .9 5 9 2 % 4 0 6 0 0 .0 0 2 3 1 6 7 3 8 .3 2 1 .7 5 2 5 % 5 7 4 2 3 .6 2 1 2 1 4 8 1 1 .7 0 4 .7 2 7 0 % 4 2 6 7 0 .0 0 1 7 0 8 7 6 3 .4 3 2 .4 9 7 1 % 3 1 4 7 0 .0 0 1 2 0 2 4 3 6 .3 3 2 .6 1 7 2 % 2 6 9 6 0 .0 0 9 4 5 2 5 7 .9 3 2 .8 5 2 1 % 4 9 8 1 0 .0 0 2 1 3 9 8 1 4 .4 1 2 3 2 7 8 % 4 1 4 2 5 .0 0 1 2 0 1 0 2 3 .7 9 3 .4 4 9 1 % 10 3 0 2 8 0 .0 0 1 0 8 4 5 9 7 .6 5 2 .7 9 1 8 % 11 7 9 7 4 0 .0 0 1 7 4 0 .3 4 7 0 7 1 6 8 0 1 % 12 3 3 8 5 0 .0 0 1 9 2 5 6 6 9 .1 9 1 .7 5 7 8 % G ra n d T o ta l 4 3 7 9 4 8 .6 2 1 6 6 3 4 9 9 4 .2 6 2 .6 3 2 7 % 2 3 7 1 2 6 .1 5 2 5 5 5 1 0 .0 0 1 2 8 9 1 2 2 0 .4 5 1 .9 8 2 0 % 1 8 5 0 2 5 .0 0 1 0 6 9 1 0 4 3 6 4 1 .7 3 0 7 % 2 1 5 2 1 1 .0 0 1 3 4 7 8 5 0 3 .2 9 1 .5 9 6 7 % 2 4 9 8 8 0 .0 0 1 2 8 8 7 3 4 3 .4 2 1 .9 3 9 0 % 2 4 7 7 2 5 .0 0 1 4 3 3 2 7 1 1 .4 6 1 .7 2 8 4 % 1 7 7 9 3 1 .1 5 1 2 3 0 8 4 3 8 .5 4 1 .4 4 5 6 % 1 3 8 2 5 5 .0 0 8 6 4 1 9 2 0 .2 1 1 .5 9 9 8 % 6 0 2 3 0 .0 0 4 9 1 7 3 0 0 .8 5 1 2 2 4 9 % 10 3 3 1 2 0 .0 0 2 6 8 9 3 6 6 .0 4 1 .2 3 1 5 % 11 1 8 6 0 0 .0 0 2 8 4 9 8 7 7 .9 2 0 .6 5 2 7 % 12 4 2 2 0 0 .0 0 4 5 7 8 2 9 2 .3 9 0 .9 2 1 7 % G ra n d T o ta l 1 8 6 0 8 1 3 3 0 1 1 5 6 8 5 4 2 1 .0 2 1 .6 0 8 5 % 5 3 6 3 5 9 4 .7 5 2 6 5 9 9 2 5 0 8 .8 8 2 .0 1 6 4 % S o u rc e ESU D a m a g e C a lc u la ti o n PMV 2 0 1 4 L o a n M a s te r In c T a b le FSR D a m a g e C a lc u la ti o n PMV 2 0 1 5 L o a n M a s te r Inc T a b le Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 23 of 25 E X H IB IT J A v e ra g e M o n th ly L e n d e r C re d it C a lc u la ti o n T O T A L FOR ALL R E C O R D S IN P O P U L A T IO N 1 5 0 0 R E C O R D S 7 9 0 3 8 3 .4 9 T O T A L FOR R E C O R D S IN H E N D E R S O N O N L Y -2 0 3 R E C O R D S 2 5 0 8 0 1 .6 7 L 2 0 1 4 M o n th L e n d e r C re d it F u n d in g UPS PMV Ave L e n d e r C re d it A /B C 5 7 2 5 2 .3 3 1 2 8 3 3 9 1 7 .0 9 0 .4 4 6 1 % 3 1 3 7 4 .5 1 5 6 8 3 0 0 9 .9 8 0 .5 5 2 1 % 8 5 0 2 9 .8 6 1 0 7 8 4 5 8 0 .2 8 0 .7 2 8 4 % 2 7 1 2 9 3 .6 1 1 5 8 2 7 7 6 2 .2 1 1 .7 1 4 0 % 1 4 1 6 1 1 .4 8 1 0 3 7 1 7 1 7 .0 5 1 .3 6 5 4 % 2 0 8 1 3 1 .1 8 1 2 3 7 0 4 8 6 .3 1 1 .6 8 2 5 % 1 3 0 6 1 6 .3 5 7 1 3 3 0 4 6 .6 4 1 .8 3 1 1 % 2 7 4 8 3 0 .9 1 1 2 9 6 9 6 9 2 .8 7 2 .1 1 9 0 % 4 2 4 6 8 8 .4 0 1 6 5 4 7 1 6 3 .0 2 2.5 6 6 5 % 10 4 8 0 2 5 3 .1 5 1 8 2 9 2 6 1 8 .8 2 2 .6 2 5 4 % 11 2 8 0 8 2 3 .6 0 1 1 .3 9 7 .8 4 9 .9 3 2 .4 6 3 8 % 12 4 6 4 9 8 9 .1 7 1 6 0 9 5 2 4 3 .6 6 2 .8 8 9 0 % G ra n d T o ta l 2 8 5 0 8 9 4 .5 5 1 5 0 3 0 7 0 8 7 .8 5 1 .8 9 5 7 % 2 0 1 4 M o n th L e n d e r C re d it F u n d in g UPS PMV Ave L e n d e r C re d it A f8 C 0 .0 0 0 0 % 3 0 5 8 .8 9 9 0 4 7 3 2 .7 7 0 .3 3 8 1 % 3 1 1 6 8 .5 7 2 3 1 6 7 3 8 .3 2 1 .3 4 5 4 % 4 0 0 0 .0 0 1 2 1 4 8 1 1 J 0 0 .3 2 9 3 % 1 9 9 6 1 .9 5 1 7 0 8 7 6 3 .4 3 1 .1 6 8 2 % 4 3 6 9 .1 4 1 2 0 2 4 3 6 .3 3 0 .3 6 3 4 % 6 4 8 7 .2 3 9 4 5 2 5 7 .9 3 0 .6 8 6 3 % 4 5 2 7 .2 5 2 1 3 9 8 1 4 .4 1 0 .2 1 1 6 % 1 5 1 4 5 .4 8 1 2 0 1 0 2 3 .7 9 1 .2 6 1 0 % 10 2 1 5 9 0 4 8 1 0 8 4 5 9 7 .6 5 1 .9 9 0 6 % 11 4 2 8 5 1 .1 2 1 .7 4 0 3 4 7 .0 7 2 .4 6 2 2 % 12 3 3 9 7 5 .0 6 1 9 2 5 6 6 9 .1 9 1 .7 6 4 3 % G ra n d T o ta l 1 8 7 1 3 5 .1 7 1 6 6 3 4 9 9 4 .2 6 1 .1 2 4 9 % T O T A L FOR ALL R E C O R D S IN P O P U L A T IO N -1 0 5 0 R E C O R D S 2 0 1 5 M o n th L e n d e r C re d it F u n d in g UPS PMJ Ave L e n d e r C re d it A /B C 1 5 4 1 9 4 0 2 .8 1 1 .8 8 3 2 % 3 8 1 2 2 0 .0 9 1 2 8 9 1 2 2 0 .4 5 2 .9 S /2 % 2 9 2 5 8 3 .1 1 1 0 6 9 1 0 4 3 .6 4 2 .7 3 67% 3 9 8 8 1 0 .8 0 1 3 4 7 8 5 0 3 .2 9 2 .9 5 8 9 % 3 7 3 2 0 9 .9 5 1 2 .6 8 7 3 4 3 .4 2 2 .8 9 5 9 % 5 2 0 8 3 2 .7 3 1 4 3 3 2 7 1 1 .4 6 3 .6 3 3 9 % 4 2 9 9 5 5 .8 6 1 2 3 0 8 4 3 8 .5 4 3 .4 9 3 2 % 2 7 4 3 7 1 .2 7 8 6 4 1 9 2 0 .2 1 3 .1 7 4 9 % 1 4 9 0 5 6 .5 3 4 9 1 7 3 0 0 .8 5 3 .0 3 1 3 % 10 7 4 6 4 2 .1 8 2 6 8 9 3 6 6 .0 4 2 .7 7 5 5 % 11 1 2 3 6 1 2 .7 8 2 8 4 9 8 7 7 .9 2 4 .3 3 7 5 % 12 1 8 5 8 0 1 .5 7 4 5 7 8 2 9 2 .3 9 4 .0 5 8 3 % T o ta l 3 4 9 4 4 8 0 .3 6 1 1 5 6 8 5 4 2 1 .0 2 3 .0 2 0 1 % 2 0 1 4 2 0 1 5 T o ta l 6 3 4 5 3 7 4 .9 1 2 6 5 9 9 2 5 0 8 .8 8 2 .3 8 5 5 % S o u rc e F S I3 D a m a g e C a lc u la ti o n PMV 2 0 1 4 L o a n M a s te r Inc T a b le FS8 D a m a g e C a lc u la ti o n PMV 2 0 1 5 L o a n M a s te r Inc T a b le Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 24 of 25 E X H IB I1 A ve ra g e M o a th iv in te re s t C o ll e c te d C a lc u la ti o n T O T A L FOR ALL R E C O R D S IN P O P U L A T IO N 1 5 0 0 R E C O R D S 2 0 1 4 2 0 1 5 T o ta l 0 9 9 8 .7 1 1 5 4 1 9 4 0 2 .8 1 0 .0 7 1 3 % T O T A L FOR R E C O R D S IN H E N D E R S O N O N LY 203 R E C O R D S 2 5 0 8 0 1 .6 7 2 0 1 4 M o n th M o n th ly In te r e s t C o ll e c te d F u n rn n g u P a fu PMV Ave In te r e r s t C o ll e c te d A /s C 10 11 12 G ra n d T o ta l T O T A L FOR ALL R E C O R D S IN 8 8 4 9 .5 8 1 2 8 3 3 9 1 7 .0 9 0 .0 6 9 0 % 1 0 7 8 1 .1 8 5 6 8 3 0 0 9 .9 8 0 .1 8 9 7 % 3 0 5 1 0 .4 5 1 0 7 8 4 5 8 0 .2 8 0 .2 8 2 9 % 2 8 9 4 3 .7 5 1 5 8 2 7 7 6 2 .2 1 0 .1 8 2 9 % 1 8 1 2 4 .4 9 1 0 3 7 1 7 1 7 .0 5 0 .1 7 4 7 % 1 8 4 1 0 .5 7 1 2 3 7 0 4 8 6 .3 1 0 1 4 8 8 % 7 1 1 4 1 6 7 1 3 3 0 4 6 .6 4 0 .0 9 9 7 % 1 3 2 1 9 .4 2 1 2 9 6 9 6 9 2 .8 7 0 1 0 1 9 % 1 0 7 2 1 15 1 6 5 4 7 1 6 3 0 2 0 .0 6 4 8 % 9 1 9 2 77 1 8 2 9 2 6 1 8 .8 2 0 .0 5 0 3 % 4 3 8 0 .3 9 1 1 3 9 7 8 4 9 .9 3 0 .0 3 8 4 % 5 2 3 1 .5 1 1 5 0 9 5 2 4 3 .6 6 0 .0 3 2 5 % 1 6 6 4 7 6 .6 7 ts o .a o 7 n g i. e g fl .l iO t% P O P U lA T IO N 1 0 5 0 R E C O R D S M o n th M o n th ly In te r e s t C o ll e c te d F u n d in g UPB PMV Ave In te r e r s t C o ll e c te d A/ jQ 2 0 1 4 M o n th M o n th ly In te r e s t C o ll e c te d 4A F u n d in g UPB fe PMV Ave In te r e r a t C o ll e c te d A/ 83 4 9 3 .4 7 0 .1 9 6 8 % 2 3 8 4 .4 2 9 0 4 7 3 7 .7 7 2 6 3 5 % 1 0 1 1 6 .2 1 2 3 1 6 7 3 8 .3 2 0 .4 3 6 7 % 3 0 7 9 .9 2 1 2 1 4 8 1 1 .7 0 0 .2 5 3 5 % 3 3 9 7 4 4 1 7 0 8 7 6 3 4 3 0 .1 9 8 8 % 1 5 1 1 .8 4 1 2 0 2 4 3 6 3 3 0 .1 2 5 7 % 7 2 4 .9 1 9 4 5 2 5 7 .9 3 0 .0 7 6 7 % 1 4 6 9 .4 9 2 1 3 9 8 1 4 .4 1 0 .0 6 8 7 % 7 0 0 .3 5 1 2 0 1 0 2 3 .7 9 0 .0 5 8 3 % 10 3 5 0 .7 9 1 0 8 4 5 9 7 .6 5 0 .0 3 2 3 % 11 1 0 1 7 .0 8 1 7 4 0 3 4 7 .0 7 0 .0 5 8 4 % 12 7 3 4 .1 6 1 9 2 5 6 6 9 .1 9 0 .0 3 8 1 % G ra n d T o ta l a c e a o .o s 1 6 5 3 4 Q 6 4 .2 6 1 1 9 6 2 % 5 5 0 1 15 1 2 8 9 1 2 2 4 1 4 5 0 .0 4 2 7 % 4 2 2 3 .1 9 1 0 6 9 1 0 4 3 .6 4 0 .0 3 9 5 % 3 4 7 1 .5 7 1 3 4 7 9 5 0 3 .2 9 0 .0 2 5 8 % 3 5 2 0 .5 1 1 2 8 8 7 3 4 3 .4 2 0 .0 2 7 3 % 3 9 6 0 .6 3 1 4 3 3 2 7 1 1 .4 6 0 .0 2 7 6 % 3 4 5 6 .8 1 1 2 3 0 8 4 3 8 5 4 0 .0 2 8 1 % 3 1 0 4 .3 4 8 6 4 1 9 2 0 .2 1 0 .0 3 5 9 % 1 5 7 9 .6 6 4 9 1 7 3 0 0 .8 5 0 .0 3 4 2 % 10 9 1 6 .7 0 2 6 8 9 3 6 6 .0 4 0 3 4 1 % 11 1 7 6 4 .1 8 2 8 4 9 8 7 7 .9 2 0 .0 6 1 9 % 12 9 7 1 .5 8 4 5 7 8 2 9 2 .3 9 0 0 2 1 2 % G ra n d T o ta l 4 3 5 6 9 .1 3 1 1 5 6 8 5 4 2 1 .0 2 0 .0 3 7 7 % 2 0 9 0 4 8 .0 0 2 6 S 9 9 2 S 0 j_ 0 0 7 8 6 % S o u rc e FIB D a m a g e C a lc u la ti o n PMV 2 0 1 4 L o a n M a s te r Inc T a b le FS8 D a m a g e C a lc u la ti o n PMV 7 0 1 5 L o a n M a s te r sc T a b ir Case 2:15-cv-00510-RFB-VCF Document 89-3 Filed 01/27/17 Page 25 of 25 Exhibit D Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 1 of 58 Page 1 ·1· · · · · · ·IN THE UNITED STATES DISTRICT COURT ·2· · · · · · · · · · ·DISTRICT OF NEVADA ·3· · · · · · · · · · · · · · -o0o- ·4 ·5· PROFICIO MORTGAGE· · · · · · ) · · VENTURES, LLC,· · · · · · · ·) ·6· · · · · · · · · · · · · · · ·)· Civil No. · · · · ·Plaintiff,· · · · · · · )· 2:15-CV-510-RFB-(VCF) ·7· · · · · · · · · · · · · · · ·) · · v.· · · · · · · · · · · · · ·) ·8· · · · · · · · · · · · · · · ·) · · THE FEDERAL SAVINGS BANK,· · ) ·9· · · · · · · · · · · · · · · ·) · · · · · Defendant.· · · · · · ·) 10· _____________________________) 11 12· · · · · · · · ·DEPOSITION OF DAVID PITTMAN 13· · · · · · · · · ·Taken on July 21, 2016 14· · · · · · · · · · · · at 9:31 a.m. 15 16 · · · · · · · · ·At Ray Quinney & Nebeker, P.C. 17· · · · · · · 36 South State Street, Suite 1400 18· · · · · · · · ·Salt Lake City, Utah 84111 19 20 21 22 23· Reported by:· Michelle Mallonee, RPR, CSR 24 25 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 2 of 58 Page 2 ·1· · · · · · · · · · · · ·APPEARANCES ·2 ·3· FOR PLAINTIFF PROFICIO MORTGAGE VENTURES, LLC: ·4· THOMAS S. CARGILL, ESQ. · · FOLEY & LARDNER LLP ·5· · · 111 North Orange Avenue, Suite 1800 · · · · Orlando, Florida 32801-2386 ·6· · · Telephone:· (407) 244-7129 · · · · Email: tcargill@foley.com ·7 ·8 · · FOR DEFENDANT FEDERAL SAVINGS BANK: ·9 · · STEVEN H. LEECH, ESQ. 10· GOZDECKI, DEL GIUDICE, AMERICUS, FARKAS & BROCATO LLP · · · · One East Wacker Drive, Suite 1700 11· · · Chicago, Illinois 60601 · · · · Telephone:· (312) 782-5010 12· · · Email: s.leech@gozdel.com 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 3 ·1· · · · · · · · · · · · · I N D E X · · WITNESS· · · · · · · · · · · · · · · · · · · · ·PAGE ·2 ·3 · · Examination by Mr. Leech· · · · · · · · · · · · · 5 ·4 · · Examination by Mr. Cargill· · · · · · · · · · · 152 ·5 ·6 ·7 ·8 ·9 10 11 12 13 14· · · · · · · · · · · ·E X H I B I T S 15 · · EXHIBIT NO.· · · · DESCRIPTION· · · · · · · · · ·PAGE 16 · · Exhibit 1 - Affiliate Manager Agreement, Bates· · ·37 17· · · · · labeled PROFICIO0000935 - 0000940 18· Exhibit 2 - Letter dated August 5, 2014, signed· · 54 · · · · · · by Steve Chapton and John Miller, Bates 19· · · · · labeled PROFICIO0007883 20· Exhibit 3 - Transition Expense Agreement, Bates· · 57 · · · · · · labeled PROFICIO0007884 - 0007888 21 · · Exhibit 4 - North American Marketing, Inc.· · · · ·67 22· · · · · Transaction Report, August 15, 2012 to · · · · · · January 5, 2016, Bates labeled 23· · · · · PROFICIO0007889_AEO 24 25 Page 4 ·1· Exhibit 5 - North American Marketing, Inc.· · · · ·70 · · · · · · summary of total paid, Bates labeled ·2· · · · · PROFICIO0008224 - PROFICIO0008225 ·3· Exhibit 6 - List of alleged improperly-closed· · · 77 · · · · · · loans ·4 · · Exhibit 7 - Confidential Settlement Communication· 79 ·5· · · · · dated January 13, 2016 ·6· Exhibit 8 - Expenses and Proceeds Allocation· · · 122 · · · · · · Agreement, Bates labeled PROFICIO008435 - ·7· · · · · 008439 (Attorneys Eyes Only - bound · · · · · · under separate cover) ·8 · · Exhibit 9 - Asset Mortgage Agreement, Bates· · · ·139 ·9· · · · · labeled PROFICIO008410 - 008434 10 11 12· · · · · · · · · · ·CERTIFIED QUESTIONS 13· PAGE· · · · ·LINE 14· 125· · · · · ·16 15· 126· · · · · · 4 16· 126· · · · · ·18 17· 127· · · · · ·17 18· 128· · · · · · 6 19 20 21 22 23 24 25 Page 5 ·1· · · · · · · · · · P R O C E E D I N G S ·2· · · · · · · · · · · ·DAVID PITTMAN, ·3· · · · · · · · having been first duly sworn, ·4· · · · · ·was examined and testified as follows: ·5· · · · · · · · · · · · ·EXAMINATION ·6· BY MR. LEECH: ·7· · · Q.· ·Let the record reflect that this is the ·8· deposition of David Pittman, taken in the case of ·9· Proficio Mortgage Ventures, LLC, versus The Federal 10· Savings Bank, presently pending in the United States 11· District Court for the District of Nevada. 12· · · · · ·Mr. Pittman, could you state and spell your 13· first and last name for the record, please? 14· · · A.· ·David Pittman, D-A-V-I-D, P-I-T-T-M-A-N. 15· · · Q.· ·Have you ever given a deposition before? 16· · · A.· ·I've given a sworn statement to the FDIC. 17· · · Q.· ·I have just a few preliminary ground rules to 18· help make the process go easier. 19· · · · · ·As you can see, we have the court reporter here. 20· She is taking everything down by shorthand; therefore, 21· it's important that you and I do not talk over one 22· another.· It is very difficult for the court reporter to 23· take down who's talking when multiple people are talking 24· at once.· So I will do my best to let you finish your 25· answer, and I would ask that you let me finish my Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 3 of 58 Page 6 ·1· question before you begin speaking; is that fair? ·2· · · A.· ·Yes. ·3· · · Q.· ·Also, you need to answer my questions out loud ·4· verbally.· The court reporter cannot take down shakes of ·5· the head or nods of the head.· And words like "uh-uh" or ·6· "huh-uh" do not come out very clear in the transcript, so ·7· I'd ask you to answer out loud. ·8· · · · · ·If at any point in time you don't understand my ·9· question, please let me know and I will do my best to 10· either rephrase it or clarify it in some way.· If you do 11· answer my question, I will presume you understood it; is 12· that fair? 13· · · A.· ·Yes. 14· · · Q.· ·We can take a break at any time.· I would only 15· ask that if a question is pending that you first answer 16· the question before we take a break; is that fair? 17· · · A.· ·Yes. 18· · · Q.· ·What did you do -- strike that. 19· · · · · ·Aside from meeting with your attorney, what did 20· you do to prepare for this deposition? 21· · · A.· ·That's about it. 22· · · Q.· ·And what is the highest level of education that 23· you've received? 24· · · A.· ·I have a master's of accountancy. 25· · · Q.· ·And where is that from? Page 7 ·1· · · A.· ·From what school? ·2· · · Q.· ·Yes. ·3· · · A.· ·Weber State University. ·4· · · Q.· ·And when did you graduate? ·5· · · A.· ·Oh, geez.· Two thousand -- December 2003. ·6· · · Q.· ·Do you also have a bachelor's degree? ·7· · · A.· ·In accounting. ·8· · · Q.· ·And where was that from? ·9· · · A.· ·Same school, Weber State. 10· · · Q.· ·And when did you get your bachelor's degree? 11· · · A.· ·I think December 2012 -- or 2002. 12· · · Q.· ·And after you got your master's in accountancy, 13· what was the first position that you obtained 14· employment-wise? 15· · · A.· ·I was a staff auditor for Deloitte & Touche. 16· · · Q.· ·And how long were you in that role? 17· · · A.· ·In that role specifically, two years. 18· · · Q.· ·And did your role change during your employment 19· at Deloitte Touche? 20· · · A.· ·Yes. 21· · · Q.· ·What was your next position there? 22· · · A.· ·I was a senior auditor. 23· · · Q.· ·And approximately when was that? 24· · · A.· ·2006. 25· · · Q.· ·And what was the position you had after being a Page 8 ·1· senior auditor? ·2· · · A.· ·I -- I terminated my employment with Deloitte in ·3· 2009. ·4· · · Q.· ·And who was your next employer? ·5· · · A.· ·Woodlands Commercial Bank. ·6· · · Q.· ·And what was your role at Woodlands Commercial ·7· Bank? ·8· · · A.· ·Assistant controller/controller. ·9· · · Q.· ·And what were your duties as assistant 10· controller and controller? 11· · · A.· ·Managed the day-to-day accounting; prepared 12· monthly and weekly financial statements for both the 13· management and board; regulatory reporting, such as call 14· reports; managed -- you know, oversee the financial 15· reporting of the organization. 16· · · Q.· ·And what is a "call report"? 17· · · A.· ·It's a monthly report that is prepared by all 18· financial institutions.· Actually -- well, I shouldn't 19· say all financial.· Like banks that are federally insured 20· by the FDIC. 21· · · Q.· ·And is that reported to the FDIC or just some 22· other body? 23· · · A.· ·To the FDIC. 24· · · Q.· ·Okay.· How long were you in your position at 25· Woodlands Commercial Bank? Page 9 ·1· · · A.· ·Until February of 2012. ·2· · · Q.· ·And what was your next position after that? ·3· · · A.· ·Controller at Proficio Bank in March of '12. ·4· · · Q.· ·And were your duties as controller at Proficio ·5· Bank the same as your duties at -- ·6· · · A.· ·Somewhat, yeah. similar. ·7· · · Q.· ·-- Woodland? ·8· · · A.· ·Sorry.· Similar. ·9· · · · · ·MR. CARGILL:· Just a reminder, let him -- 10· · · · · ·THE WITNESS:· Yeah. 11· · · · · ·MR. CARGILL:· -- get the entire question out. 12· · · · · ·THE WITNESS:· I caught myself.· Yes. 13· · · Q.· ·(BY MR. LEECH:)· How were they different? 14· · · A.· ·How were they different? 15· · · Q.· ·Umm-hmm. 16· · · A.· ·Well, it's a different institution, different 17· types of products, et cetera.· So there's -- but overall, 18· they're fairly similar. 19· · · Q.· ·And are you still in that role at Proficio? 20· · · A.· ·I'm currently their CFO. 21· · · Q.· ·And when did you become the CFO? 22· · · A.· ·Late 2015. 23· · · Q.· ·So a fairly new role for you? 24· · · A.· ·Yeah.· That's when it was official. 25· · · Q.· ·And were you acting CFO before? Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 4 of 58 Page 10 ·1· · · A.· ·Acting CFO probably for a while, yeah. ·2· · · Q.· ·And how long about were you acting CFO? ·3· · · A.· ·Probably six months prior. ·4· · · Q.· ·So since about June of 2015? ·5· · · A.· ·Sure.· Yeah. ·6· · · Q.· ·And what are your duties as the CFO? ·7· · · A.· ·Besides, you know, over -- ensuring what -- the ·8· controller/assistant controllers -- managing the entire ·9· finance department; working with the president, board of 10· directors on a strategic point of view of the 11· institution. 12· · · Q.· ·And -- oh, go ahead. 13· · · A.· ·To -- to grow and strengthen the financial -- 14· the finances of the organization. 15· · · Q.· ·Any other duties? 16· · · A.· ·No. 17· · · Q.· ·So what sort of financial products does Proficio 18· Bank market? 19· · · · · ·MR. CARGILL:· Object to the form. 20· · · Q.· ·(BY MR. LEECH:)· How would you describe it? 21· What financial -- what financial activities does Proficio 22· Bank engage in with respect to consumers? 23· · · A.· ·At what time frame? 24· · · Q.· ·Let's go, say, starting in 2012. 25· · · · · ·MR. CARGILL:· Object to the form and vague. Page 11 ·1· · · · · ·THE WITNESS:· Are you -- what -- can you ·2· clarify? ·3· · · Q.· ·(BY MR. LEECH:)· Sure.· What type of financial ·4· services does Proficio Bank offer to the consumer? ·5· · · A.· ·In 2012? ·6· · · Q.· ·Yes. ·7· · · A.· ·Okay.· 2012, we offered -- we had kind of two ·8· legs of the bank.· We had a -- we have a commercial ·9· division, which offers commercial loans to businesses, as 10· well as a mortgage division -- or mortgage subsidiary in 11· 2012. 12· · · Q.· ·Now was that mortgage subsidiary Proficio 13· Mortgage Ventures, LLC? 14· · · A.· ·Yes. 15· · · Q.· ·And is that a wholly-owned subsidiary? 16· · · A.· ·Yes. 17· · · Q.· ·And was that the same basic setup that you had 18· in 2013? 19· · · A.· ·Yes. 20· · · Q.· ·How about 2014? 21· · · A.· ·Yes.· And to clarify, in 2014, the mortgage 22· division was -- the role, I guess, was becoming less 23· significant. 24· · · Q.· ·As a percentage of revenues in 2012 and 2013, 25· about how significant was the mortgage division? Page 12 ·1· · · A.· ·What was the time frame? ·2· · · Q.· ·2012-2013. ·3· · · A.· ·Probably -- I'm going to have to speculate on ·4· this without looking at those numbers.· But in the 70 -- ·5· 65, 70 percent range. ·6· · · Q.· ·So 65 to 70 percent of the bank's revenues were ·7· generated by Proficio Mortgage Ventures, LLC? ·8· · · A.· ·Yes. ·9· · · Q.· ·And how about profits?· What in the 2012-2013 10· time frame -- to the best of your recollection, what 11· percent of the profits were generated by Proficio 12· Mortgage Ventures, LLC? 13· · · A.· ·Probably 50 percent.· I -- that's a -- an 14· estimate.· Yeah, I'd have to double check my records. 15· It's a while ago. 16· · · Q.· ·And then you mentioned in 2014 that the mortgage 17· division became less significant. 18· · · · · ·After it became less significant, approximately 19· what percentage of the revenues was generated by Proficio 20· Mortgage Ventures, LLC? 21· · · A.· ·The revenues, you said? 22· · · Q.· ·Revenues. 23· · · A.· ·The revenues, probably closer to 60, 55. 24· · · Q.· ·And how about the profits after it became less 25· significant? Page 13 ·1· · · A.· ·In '14, it was still -- you know, we were -- we ·2· were decreasing the size of the mortgage company, but ·3· still keeping probably around a 50-50 split between ·4· commercial and mortgage. ·5· · · Q.· ·And then how about 2015?· What was the -- what ·6· lines of business was Proficio engaged in? ·7· · · A.· ·We still had a mortgage division -- or a ·8· subsidiary, excuse me, and still had the same commercial ·9· division. 10· · · Q.· ·Any other financial services -- 11· · · A.· ·No. 12· · · Q.· ·-- in 2015? 13· · · A.· ·No. 14· · · Q.· ·And for 2015, what was the percentage of 15· revenues generated by the mortgage subsidiary? 16· · · A.· ·Revenues?· Probably about the same. 17· · · Q.· ·So 55 percent to 60 percent or thereabouts? 18· · · A.· ·Yeah, probably anywhere between 55 to 19· 65 percent. 20· · · Q.· ·And how about the percentage of the profits 21· generated by the mortgage division? 22· · · A.· ·About the same. 23· · · Q.· ·So again, about 50 percent? 24· · · A.· ·About 50 percent, yeah. 25· · · Q.· ·And what types of mortgages did the mortgage Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 5 of 58 Page 14 ·1· subsidiary offer? ·2· · · A.· ·What time frame? ·3· · · Q.· ·Well, let's start with 2012. ·4· · · A.· ·They offered forward -- traditional forward ·5· mortgages. ·6· · · Q.· ·And is that the only mortgage product that they ·7· offered in 2012? ·8· · · A.· ·Yeah.· To my best -- yeah, that was the emphasis ·9· for sure. 10· · · Q.· ·And how about 2013? 11· · · A.· ·Oh, let me back -- may I clarify? 12· · · Q.· ·Sure. 13· · · A.· ·In 2012, late 2012, we did offer reverse 14· mortgages.· So by the fourth quarter, I think we had 15· reverse mortgages. 16· · · Q.· ·Were you involved at all in the decision for the 17· mortgage subsidiary to enter the reverse mortgage space? 18· · · A.· ·Yes. 19· · · Q.· ·What were the -- so who else was involved in 20· making that decision? 21· · · A.· ·Who else was involved at Proficio? 22· · · Q.· ·Yes. 23· · · A.· ·Okay.· Brett Carter, Stephen Bennett, Grant Jex, 24· Richard Holley, Ed Haidenthaller.· That's who I can 25· recall at the moment. Page 15 ·1· · · Q.· ·And what was Brett Carter's position at the ·2· time? ·3· · · A.· ·President of the mortgage company. ·4· · · Q.· ·And how about Stephen Bennett? ·5· · · A.· ·He was -- I don't recall his official title. ·6· · · Q.· ·Do you recall his duties? ·7· · · A.· ·He was kind of a project manager. ·8· · · Q.· ·Okay.· And then Grant Jex? ·9· · · A.· ·Risk manager. 10· · · Q.· ·And Richard Holley? 11· · · A.· ·President of the bank, Proficio Bank. 12· · · Q.· ·And the last name you mentioned was Ed 13· "Haidenhaller"? 14· · · A.· ·Haidenthaller. 15· · · Q.· ·Haidenthaller.· And what was his role? 16· · · A.· ·CFO. 17· · · Q.· ·So at that time in 2012, did you report to Ed? 18· · · A.· ·Yes. 19· · · Q.· ·And what were the factors that influenced 20· Proficio to enter the reverse mortgage space? 21· · · A.· ·I wasn't really privy to a lot of those 22· decisions or discussions. 23· · · Q.· ·What discussions were you privy to? 24· · · · · ·MR. CARGILL:· Object to the form. 25· · · Q.· ·(BY MR. LEECH:)· Let me clarify. Page 16 ·1· · · · · ·What discussions were you privy to regarding ·2· Proficio's decision to enter the reverse mortgage space? ·3· · · A.· ·I was there to assist in reviewing their -- the ·4· potential financial impact of the reverse mortgage ·5· division. ·6· · · Q.· ·And was Proficio planning to start a reverse ·7· mortgage division from scratch, or was it going to bring ·8· in a reverse mortgage division that had been operating ·9· elsewhere? 10· · · A.· ·We were looking to partner with a group that had 11· been operating in that space. 12· · · Q.· ·And what was that group? 13· · · · · ·MR. CARGILL:· Object to the form. 14· · · Q.· ·(BY MR. LEECH:)· You can answer. 15· · · A.· ·The -- the group was a group of employees 16· from -- what were they?· I mean, I guess we had 17· individuals we were working with with North American 18· Marketing that had a group of employees from a previous 19· bank that was looking for a place to --· to originate 20· reverse mortgages. 21· · · Q.· ·So you mentioned that you were there to assist 22· in reviewing the financial impact on the bank; is that 23· correct? 24· · · A.· ·Umm-hmm. 25· · · Q.· ·And what did you review to assess the potential Page 17 ·1· financial impact for the bank? ·2· · · A.· ·We looked at historical margins, volume ·3· production levels, overhead costs, both fixed and ·4· variable. ·5· · · Q.· ·Did you look at anything else? ·6· · · A.· ·Not that I can recall. ·7· · · Q.· ·Did you look at loan production volume? ·8· · · A.· ·Yes, I did.· Yeah, I did say that. ·9· · · Q.· ·Okay.· I may not have heard you. 10· · · A.· ·That's okay. 11· · · Q.· ·Was that pursuant to -- strike that. 12· · · · · ·Who provided this information to you for your 13· review? 14· · · A.· ·I think Ben Sillitoe provided what I received. 15· · · Q.· ·And what was Ben Sillitoe's role at the time? 16· · · A.· ·I believe he was a former employee of First 17· National Bank of Layton. 18· · · Q.· ·So he was not a person at Proficio? 19· · · A.· ·No, no, no. 20· · · Q.· ·Okay.· So was he part of the group that you were 21· looking -- "you" being Proficio -- were looking to 22· partner with? 23· · · A.· ·Yes. 24· · · Q.· ·And you mentioned you were working with North 25· American Marketing. Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 6 of 58 Page 18 ·1· · · · · ·Was that the name of the company? ·2· · · A.· ·Yes. ·3· · · Q.· ·Were there any other companies that you were ·4· looking -- or just -- that you were looking to partner ·5· with at that time? ·6· · · A.· ·That I was part of -- that I was involved with, ·7· no. ·8· · · Q.· ·Okay.· Did Proficio Bank have any nondisclosure ·9· agreements or any agreements regarding the discussions 10· between North American Marketing and Proficio Bank? 11· · · A.· ·Not that I know of.· I wasn't privy to that 12· information. 13· · · Q.· ·Okay.· So Mr. Sillitoe provided you with the 14· financial data that you mentioned earlier. 15· · · · · ·You weren't aware that it was covered by any 16· kind of nondisclosure agreement or anything of that 17· nature? 18· · · · · ·MR. CARGILL:· Objection.· Asked and answered. 19· · · Q.· ·(BY MR. LEECH:)· Go ahead. 20· · · A.· ·It was our normal course of business to enter 21· into those agreements.· I did not see one, so I -- I 22· can't speak to the fact whether we had one or not.· I was 23· instructed by the CFO to assist. 24· · · Q.· ·Okay.· Did you participate in any discussions 25· with First National Bank of Layton regarding this Page 19 ·1· potential arrangement? ·2· · · A.· ·No. ·3· · · Q.· ·Do you know if anyone at Proficio Bank did? ·4· · · A.· ·I do not, no. ·5· · · Q.· ·To the best of your recollection -- well, strike ·6· that. ·7· · · · · ·So the reverse mortgage division got off the ·8· ground at Proficio in about the fourth quarter of 2012. ·9· · · · · ·Do you recall approximately what percentage of 10· revenues for that quarter the reverse mortgage division 11· accounted for just with respect to the mortgage 12· subsidiary? 13· · · A.· ·No.· Without looking at my records, I -- I 14· couldn't even speculate. 15· · · Q.· ·But that would be reflected in your records? 16· · · A.· ·Yes. 17· · · Q.· ·And then in 2013, what types of mortgage 18· products did Proficio Mortgage Ventures offer? 19· · · A.· ·Both reverse and forward. 20· · · Q.· ·And talking about Proficio Mortgage Ventures, 21· this -- that company offered mortgages exclusively to the 22· consumer and not to commercial properties; is that 23· correct? 24· · · A.· ·Correct. 25· · · Q.· ·And it was all residential mortgages? Page 20 ·1· · · A.· ·Yes. ·2· · · Q.· ·And that was true for the entire time frame ·3· between 2012 and 2015? ·4· · · A.· ·To the best -- yes. ·5· · · Q.· ·In 2013, do you recall approximately what ·6· percentage of the revenues of the mortgage subsidiary ·7· were from reverse mortgages? ·8· · · A.· ·I would have -- I couldn't guess on that.· I'd ·9· have to look at my records.· Volume-wise, I can give you, 10· but not ... 11· · · Q.· ·To the best of your recollection. 12· · · A.· ·So what percentage of revenue from reverse 13· mortgages consisted of the overall revenue at Proficio 14· Mortgage Ventures?· Is that your question? 15· · · Q.· ·Yes. 16· · · A.· ·Maybe 30 percent, could be less. 17· · · · · ·MR. CARGILL:· Did you specify a year? 18· · · · · ·MR. LEECH:· 2013. 19· · · · · ·THE WITNESS:· Yeah. 20· · · Q.· ·(BY MR. LEECH:)· How about percentage of the 21· profits for Proficio Mortgage Ventures in 2013?· What 22· percentage of the profits came from reverse mortgages? 23· · · A.· ·In '13? 24· · · Q.· ·In '13. 25· · · A.· ·Maybe 30, 35 percent.· That's my best, you know, Page 21 ·1· estimate. ·2· · · Q.· ·And how about in 2014?· What percentage of the ·3· revenues for the mortgage subsidiary came from reverse ·4· mortgages? ·5· · · A.· ·Probably 30, 35. ·6· · · Q.· ·And how about the profits for 2014? ·7· · · A.· ·About the same. ·8· · · Q.· ·Thirty to 35 percent -- ·9· · · A.· ·Yes. 10· · · Q.· ·-- of the profits for 20 -- 11· · · A.· ·For 2014? 12· · · Q.· ·Yes. 13· · · A.· ·Yes. 14· · · Q.· ·How about 2015?· What percentage of the mortgage 15· subsidiary's revenues came from reverse mortgages? 16· · · A.· ·Ninety percent. 17· · · Q.· ·What percentage of the profits in 2014 came from 18· reverse mortgages for the mortgage subsidiary? 19· · · A.· ·Ninety percent. 20· · · · · ·MR. CARGILL:· I think you meant 2015. 21· · · · · ·THE WITNESS:· Did you say '14? 22· · · Q.· ·(BY MR. LEECH:)· If I said '14, I misspoke. 23· I'll just rephrase the question. 24· · · · · ·In 2015, what percentage of the profits for the 25· mortgage subsidiary came from reverse mortgages? Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 7 of 58 Page 22 ·1· · · A.· ·Ninety percent in 2015. ·2· · · Q.· ·And what was the -- strike that. ·3· · · · · ·Obviously, there was a big jump in percentages ·4· of -- in the relative percent of reverse mortgages. ·5· · · · · ·Do you know the reason why that jump took place? ·6· · · A.· ·Yes. ·7· · · Q.· ·And what was that reason? ·8· · · A.· ·In January of 2015, we wound down and shut down ·9· the forwarding mortgage division. 10· · · Q.· ·And then you mentioned loan volume. 11· · · · · ·Do you know what the loan volume for Proficio 12· Mortgage Ventures was in the reverse mortgage space for 13· 2012? 14· · · A.· ·Around 25 to 30 million a month. 15· · · · · ·Well, in 2012? 16· · · Q.· ·Yes. 17· · · A.· ·It will be less than that.· Sorry. 18· · · · · ·Probably 15 to 20 million a month. 19· · · Q.· ·What was the loan volume for reverse mortgages 20· only in 2014? 21· · · A.· ·2014? 22· · · Q.· ·Yes.· Strike that. 23· · · · · ·2013. 24· · · A.· ·2013, 25 to 30 million a month. 25· · · Q.· ·And how about 2015? Page 23 ·1· · · A.· ·2015? ·2· · · Q.· ·Yes.· Volume? ·3· · · A.· ·Volume.· On average -- ·4· · · · · ·MR. CARGILL:· You're skipping '14? ·5· · · Q.· ·(BY MR. LEECH:)· Oh, sorry.· I apologize.· Let's ·6· try this again. ·7· · · · · ·For 2014, what was the volume in reverse ·8· mortgages for Proficio Mortgage Ventures? ·9· · · A.· ·In 2014, approximately 15 to 20 million. 10· · · Q.· ·And that's per month? 11· · · A.· ·Per month, correct. 12· · · Q.· ·For 2015, what was the volume of reverse 13· mortgages for Proficio Mortgage Ventures? 14· · · A.· ·On average, 10 million a month. 15· · · Q.· ·And do you know the approximate number of loans 16· that were being closed per month in 2015? 17· · · A.· ·I'd have to do a quick -- you know, to look. 18· · · · · ·On average, we did about -- in '15? 19· · · Q.· ·In '15. 20· · · A.· ·Average loan size was probably $120,000, so 100 21· loans -- 90 -- 80, 85 loans. 22· · · Q.· ·What was the average loan size?· I'm sorry, I 23· just didn't hear. 24· · · A.· ·Average loan size was 120,000. 25· · · Q.· ·And how about for 2014?· What was the average Page 24 ·1· loan size? ·2· · · A.· ·About the same. ·3· · · Q.· ·In 2013, what was the average loan size?· Again, ·4· reverse mortgages. ·5· · · A.· ·Yeah.· Probably 150.· No, maybe not that high. ·6· Probably more 140, 135. ·7· · · Q.· ·In 2012, do you recall what the average loan ·8· size was? ·9· · · A.· ·About the same. 10· · · Q.· ·So what was that? 11· · · A.· ·135, 140,000. 12· · · Q.· ·So how does Proficio Mortgage Ventures generate 13· revenue from a closed-reverse mortgage loan? 14· · · A.· ·We sell the loan to the secondary market. 15· · · Q.· ·Just to back up real quick. 16· · · · · ·When we're talking about reverse mortgage loans, 17· are you familiar with the term "home equity conversion 18· mortgage"? 19· · · A.· ·Yes. 20· · · Q.· ·Is that an FHA-insured reverse mortgage? 21· · · A.· ·Yes. 22· · · Q.· ·Other than -- strike that. 23· · · · · ·Is that type of loan also known as a "HECM"? 24· · · A.· ·Yes. 25· · · Q.· ·Other than HECM loans, did Proficio Mortgage Page 25 ·1· Ventures originate any type of -- any other type of ·2· reverse mortgage loan? ·3· · · A.· ·To my knowledge, no. ·4· · · Q.· ·Did Proficio Mortgage Ventures ever originate ·5· any private label reverse mortgage loans? ·6· · · A.· ·Not that I know of. ·7· · · Q.· ·So to the best of your knowledge, all of the ·8· loans originated by Proficio Mortgage Ventures were ·9· FHA-insured reverse mortgage loans? 10· · · A.· ·Yes. 11· · · Q.· ·Now, you mentioned that you sell the closed 12· mortgage loan to the secondary market. 13· · · · · ·Can you explain that process for me? 14· · · A.· ·Yeah.· We have agreements with -- when I say 15· "we," Proficio Mortgage Ventures has agreements with 16· investors that purchase these loans from us.· Yeah.· They 17· buy it as a premium, and it's about a four- to ten-day 18· turnaround between funding and selling. 19· · · Q.· ·You mentioned agreements with investors. 20· · · · · ·Are these standing agreements that are just in 21· place over a long period of time, or are these kind of -- 22· are these more like one-time deals for each individual 23· loan? 24· · · · · ·MR. CARGILL:· Object to the form. 25· · · · · ·THE WITNESS:· They are standing agreements Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 8 of 58 Page 26 ·1· with -- with -- and by "standing," what do you mean by ·2· "standing"?· Maybe I should clarify that first. ·3· · · Q.· ·(BY MR. LEECH:)· Sure. ·4· · · A.· ·I think I understand, but I want to clarify. ·5· · · Q.· ·Yeah.· I'm talking about, like an agreement ·6· that's open-ended that -- where, you know, you get the ·7· reverse mortgage loan.· You can call them up and say, ·8· "Pursuant to our existing agreement, we want to sell you ·9· this loan," versus a scenario where you close a mortgage 10· loan, and then you're looking around in the market and 11· you have to do a deal with an investor. 12· · · · · ·Does that make more sense to you? 13· · · · · ·MR. CARGILL:· And I'll just object to the extent 14· it calls for a legal interpretation of a contract or an 15· agreement. 16· · · · · ·But go ahead. 17· · · · · ·THE WITNESS:· Thank you. 18· · · · · ·These were agreements that were not open-ended 19· but for a specific period of time, either 12, 24, maybe 20· 36 months, where we had a relationship with them to -- to 21· work -- to sell these loans to them. 22· · · Q.· ·(BY MR. LEECH:)· And were these agreements in 23· writing? 24· · · A.· ·In contract form?· Yes. 25· · · Q.· ·And how many investors did Proficio Mortgage Page 27 ·1· Ventures have agreements with in 2014? ·2· · · A.· ·'14? ·3· · · Q.· ·Yeah. ·4· · · A.· ·A handful, probably five to ten. ·5· · · Q.· ·And did Proficio Mortgage Ventures in 2014 ever ·6· sell reverse mortgages to the secondary market outside of ·7· those five to ten investor relationships? ·8· · · A.· ·In 2014, not that I know of or recall. ·9· · · Q.· ·In 2015, about how many investor agreements did 10· Proficio Mortgage Ventures have in place? 11· · · A.· ·Five to ten. 12· · · Q.· ·And in 2015, did Proficio Mortgage Ventures ever 13· sell reverse mortgages to the secondary market outside of 14· those five to ten investor relationships? 15· · · A.· ·No. 16· · · Q.· ·You mentioned that the investors purchased the 17· reverse mortgage loan at a premium. 18· · · A.· ·Umm-hmm. 19· · · Q.· ·And what do you mean when you use the word 20· "premium"? 21· · · A.· ·In -- so a premium would be the amount above the 22· stated principal balance of the loan.· So the -- the 23· amount above the -- the profit, basically. 24· · · Q.· ·So let me just back up slightly. 25· · · A.· ·Okay. Page 28 ·1· · · Q.· ·When a mortgage loan closes, Proficio Mortgage ·2· Ventures would provide the borrower with the principal ·3· balance of the loan. ·4· · · · · ·So just to give an example:· Let's say it's a ·5· $100,000 reverse mortgage.· It closes, and Proficio ·6· Mortgage Ventures wires out 100,000 to wherever it's ·7· supposed to go pursuant to the closing documents. ·8· · · · · ·Is that a fair statement of the closing process? ·9· · · A.· ·Proficio Mortgage Ventures would fund the 10· principal balance, yes. 11· · · Q.· ·Okay.· And then when Proficio Mortgage Ventures 12· sold the mortgage loan to the investor on the secondary 13· market, the investor would repay the $100,000 principal 14· that Proficio funded -- strike that.· "Repay" is the 15· wrong word.· Let me try this again. 16· · · · · ·So when Proficio Mortgage Ventures sold the 17· reverse mortgage loan on the secondary market, the 18· investor would pay Proficio an amount equal to the 19· principal balance plus the premium; is that correct? 20· · · A.· ·Yes. 21· · · Q.· ·And so the premium is essentially the amount of 22· money that Proficio Mortgage Ventures brings in from that 23· reverse mortgage loan? 24· · · A.· ·It is the revenue on that loan, yes. 25· · · Q.· ·Okay.· Are there any other sources of revenue Page 29 ·1· associated with a closed reverse mortgage loan for ·2· Proficio Mortgage Ventures? ·3· · · · · ·MR. CARGILL:· Object to the form. ·4· · · · · ·THE WITNESS:· Is there other revenue sources ·5· from those loans? ·6· · · Q.· ·(BY MR. LEECH:)· From those loans. ·7· · · A.· ·That we sell in the secondary? ·8· · · Q.· ·That you close. ·9· · · A.· ·That we close? 10· · · Q.· ·Yeah. 11· · · A.· ·We have a small amount of interest income on 12· those loans. 13· · · Q.· ·Any other sources of revenue associated with 14· those loans? 15· · · A.· ·Outside of the premium and interest? 16· · · Q.· ·Correct. 17· · · A.· ·No. 18· · · Q.· ·Does Proficio Mortgage generate any fees to 19· itself in connection with those loans? 20· · · A.· ·Yes. 21· · · Q.· ·What type of fees are associated with these 22· mortgage loans? 23· · · A.· ·Origination fees. 24· · · Q.· ·Okay.· Any other fees? 25· · · A.· ·No, those are the main ones.· It's really just Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 9 of 58 Page 30 ·1· an origination fee. ·2· · · Q.· ·And what does the origination fee represent? ·3· · · · · ·MR. CARGILL:· Object to the form. ·4· · · · · ·THE WITNESS:· An origination fee is a standard ·5· fee that's generally charged to most mortgages, both ·6· reverse and forward, and represents income to the ·7· institution. ·8· · · Q.· ·(BY MR. LEECH:)· Okay.· And is that being ·9· charged to the borrower? 10· · · A.· ·Yes. 11· · · Q.· ·Is that fee paid out of the proceeds of the loan 12· closing, or is that a fee that's charged over and above 13· the principal balance that's advanced to the borrower? 14· · · A.· ·The fee could be paid -- it could be from the 15· proceeds, it could also be paid from the borrower. 16· · · Q.· ·Approximately how large is the origination fee 17· for each reverse mortgage? 18· · · A.· ·It depends on the size of the loan, but anywhere 19· from $2500 to 6000. 20· · · Q.· ·You mentioned a small amount of interest income 21· associated with these reverse mortgage loans. 22· · · · · ·What is the source of that interest income? 23· · · A.· ·The interest income is from the loan itself.· So 24· like any loan, mortgage, car loan, interest is accrued on 25· a daily basis.· And the interest that the bank -- or Page 31 ·1· the -- Proficio Mortgage receives is the four to ten ·2· business days that the -- PMV owns that loan prior to ·3· sale. ·4· · · Q.· ·Okay.· So it would just be interest income for, ·5· I'm sorry, how many business days? ·6· · · A.· ·Four to ten. ·7· · · Q.· ·So just that four- to ten-day period would be ·8· the interest period? ·9· · · A.· ·Yes. 10· · · Q.· ·At any time did Proficio Mortgage Ventures hold 11· reverse mortgage loans until maturity? 12· · · A.· ·No. 13· · · Q.· ·So all of the reverse mortgage loans originated 14· by Proficio were sold to the secondary market? 15· · · A.· ·Yes. 16· · · Q.· ·Are you familiar with the process by which 17· Proficio Mortgage Ventures went about obtaining -- 18· locating borrowers for reverse mortgage loans? 19· · · A.· ·At a high level, yes. 20· · · Q.· ·What is your understanding of that process? 21· · · · · ·MR. CARGILL:· Object to the form.· Vague. 22· · · · · ·THE WITNESS:· What's the question again? 23· · · Q.· ·(BY MR. LEECH:)· What is your understanding of 24· the process by which Proficio Mortgage Ventures went 25· about locating borrowers for reverse mortgage loans? Page 32 ·1· · · A.· ·We had leads that were generated and given to ·2· LOs that would -- would work on leads to bring in loans, ·3· whether it was leads we purchased or created in-house or ·4· from -- we use a term called "boots on the ground," a ·5· relationship between the loan officer and their ·6· relationships where they would bring in borrowers. ·7· · · Q.· ·And just to be clear, by "LOs," you mean loan ·8· officers? ·9· · · A.· ·Loan officers.· Sorry. 10· · · Q.· ·Oh, that's fine.· I just want to make sure we're 11· all talking on the same page. 12· · · A.· ·Yes. 13· · · Q.· ·How are the loan officers compensated at 14· Proficio Mortgage Ventures? 15· · · A.· ·They had -- each had their own compensation 16· agreement and were compensated on closed loans -- funded 17· loans. 18· · · Q.· ·Were they paid a salary? 19· · · A.· ·Yes. 20· · · Q.· ·Do you recall the average salary of a loan 21· officer at Proficio Mortgage Ventures? 22· · · · · ·MR. CARGILL:· Object to the form. 23· · · · · ·THE WITNESS:· $25,000. 24· · · Q.· ·(BY MR. LEECH:)· And that would be per year? 25· · · A.· ·Per year. Page 33 ·1· · · Q.· ·And you mentioned they were compensated on ·2· funded loans? ·3· · · A.· ·Umm-hmm. ·4· · · Q.· ·Is that a "yes"? ·5· · · A.· ·Yes. ·6· · · Q.· ·Was that a flat fee per funded loan, or was that ·7· a percentage of the principal balance of the funded loan? ·8· How did that work? ·9· · · A.· ·It was -- each loan officer had their own 10· compensation.· Some were compensated as a percentage of 11· the principal balance, others were on a flat fee per 12· loan. 13· · · Q.· ·Do you recall approximately how many loan 14· officers Proficio Mortgage Ventures had in 2012? 15· · · A.· ·In reverse and forward? 16· · · Q.· ·In reverse. 17· · · A.· ·In reverse? 18· · · Q.· ·Umm-hmm. 19· · · A.· ·In 2012, probably 30, 40. 20· · · Q.· ·How about in 2013? 21· · · A.· ·2013 was -- I -- I -- I don't know.· I would 22· think probably around 100, 120, maybe. 23· · · Q.· ·How about in 2014? 24· · · A.· ·Seventy, 80. 25· · · Q.· ·And in 2015? Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 10 of 58 Page 34 ·1· · · A.· ·2015, probably 40, 50. ·2· · · · · ·MR. CARGILL:· And Counsel, just to clarify:· Are ·3· you asking for an average for the whole year when you say ·4· a "given year"? ·5· · · · · ·MR. LEECH:· Just approximately, yeah. ·6· · · · · ·MR. CARGILL:· Okay. ·7· · · · · ·THE WITNESS:· Okay. ·8· · · Q.· ·(BY MR. LEECH:)· And of those loan officers, do ·9· you recall approximately how many received flat fee 10· commissions versus how many received commissions based on 11· the percentage of a principal balance? 12· · · A.· ·I -- I don't. 13· · · Q.· ·So what types of expenses did Proficio Mortgage 14· Ventures incur in connection with a closed reverse 15· mortgage loan? 16· · · A.· ·We had your typical fixed costs:· Occupancy, 17· rents, and you had salary, benefits, commissions, 18· professional fees, legal, accounting, professionals, 19· consultants, licensing costs, some marketing.· Some IT 20· infrastructure, also, which would include your loan 21· operating systems and other systems used to generate 22· loans.· Postage.· Travel costs.· Loan fees -- or 23· loan-related costs, so appraisals and other items. 24· · · Q.· ·Any other expenses associated with a closed 25· reverse mortgage loan? Page 35 ·1· · · A.· ·Like -- no.· Those are the -- the main costs. ·2· · · Q.· ·And what -- do you understand if I use the ·3· phrase "marginal costs" in reverse -- in connection with ·4· a reverse mortgage loan? ·5· · · A.· ·No.· Maybe can you clarify "marginal costs"? ·6· · · Q.· ·How about "variable costs"? ·7· · · A.· ·Yes. ·8· · · Q.· ·Okay.· Of the costs that you just described, ·9· what types of costs would constitute variable costs in 10· the reverse mortgage loan business? 11· · · A.· ·Commissions.· Loan-related costs, such as 12· appraisals.· There's not a lot of variable cost. 13· · · Q.· ·Any other variable cost that you can think of? 14· · · A.· ·I'm trying to think.· Did I say commissions? 15· · · Q.· ·Umm-hmm. 16· · · A.· ·Loan fees.· That's -- that's about it. 17· · · Q.· ·So would it be fair to characterize the other 18· costs that you enumerated as "fixed costs"? 19· · · A.· ·Yes. 20· · · Q.· ·You mentioned that Proficio Mortgage Ventures 21· funded the reverse mortgage loans. 22· · · A.· ·Um-hmm. 23· · · Q.· ·How did Proficio Mortgage Ventures fund these 24· loans?· And what I mean is, did it borrow the money from 25· another financial institution?· Did it fund it with money Page 36 ·1· that was already in its own accounts?· How did it -- what ·2· was the source of the funds used to fund the loan? ·3· · · A.· ·Proficio Mortgage Ventures would use the funds ·4· in their own accounts at first.· But if they at any point ·5· needed more, there was a warehouse -- there was an ·6· agreement between Proficio Mortgage Ventures and Proficio ·7· Bank, where the bank would lend Proficio Mortgage ·8· Ventures the money needed to fund those loans. ·9· · · Q.· ·Did Proficio Mortgage Ventures use any 10· third-party lending arrangements to fund its closed 11· reversed mortgage loans? 12· · · A.· ·No. 13· · · Q.· ·Did it use any third-party financial 14· arrangements to fund its operations in general? 15· · · A.· ·No.· Oh -- no. 16· · · Q.· ·You mentioned you had a warehouse lending 17· relationship with -- strike that. 18· · · · · ·You mentioned Proficio Mortgage Ventures had a 19· warehouse lending relationship with Proficio Bank in 20· connection with funding reverse mortgage loans. 21· · · · · ·Did Proficio Mortgage Ventures have any lending 22· arrangements with Proficio Bank in connection with its 23· operations? 24· · · · · ·MR. CARGILL:· Object to the form. 25· · · · · ·THE WITNESS:· So can you clarify that? Page 37 ·1· · · Q.· ·(BY MR. LEECH:)· In order to operate, Proficio ·2· Mortgage Ventures has to spend money? ·3· · · A.· ·Umm-hmm. ·4· · · Q.· ·Did it have -- did it borrow money from Proficio ·5· Bank for its operations? ·6· · · A.· ·No. ·7· · · Q.· ·So did it fund its operations out of its ·8· retained earnings, or was it funded through equity ·9· contributions by Proficio Bank? 10· · · A.· ·The operations were generally self-funded.· The 11· institution generally -- or Proficio Mortgage generally, 12· and specifically the reverse division, had significant 13· profits to fund itself. 14· · · Q.· ·So it funded itself out of retained earnings? 15· · · A.· ·Yes, out of retained earnings, yeah. 16· · · Q.· ·Can we take a quick break? 17· · · · · ·MR. CARGILL:· Sure. 18· · ·(A break was taken from 10:28 a.m. to 10:31 a.m.) 19· · · Q.· ·(BY MR. LEECH:)· Let's go back on.· Showing you 20· what we'll mark as Exhibit 1. 21· · · · ·(Exhibit 1 was marked for identification.) 22· · · Q.· ·Do you recognize this document? 23· · · A.· ·Can you give me just a second? 24· · · Q.· ·Sure, take your time. 25· · · A.· ·Just to make sure it's -- yeah. Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 11 of 58 Page 38 ·1· · · · · ·Yes, I do. ·2· · · Q.· ·What is this document? ·3· · · A.· ·It's an Affiliate Manager Agreement. ·4· · · Q.· ·And who is it between? ·5· · · A.· ·As it states in the document, Proficio Mortgage ·6· Ventures, LLC, and North American Marketing, Inc. ·7· · · Q.· ·Now, is North -- was North America Marketing, ·8· Inc., the -- strike that. ·9· · · · · ·North American Marketing, Inc., was the entity 10· that Proficio Bank was in discussions with about bringing 11· over a team of reverse mortgage -- like a reverse 12· mortgage division; is that correct? 13· · · A.· ·Yes. 14· · · Q.· ·In the reverse mortgage space, did Proficio 15· Mortgage Ventures have any other affiliate manager 16· agreements with any other entity? 17· · · A.· ·In what space? 18· · · Q.· ·Reverse mortgage? 19· · · A.· ·No, I don't think so.· No, not that I can 20· recall.· There we go. 21· · · Q.· ·I direct your attention to Section 3 of this 22· agreement entitled "Affiliate Manager Compensation." 23· · · · · ·Do you see that provision? 24· · · A.· ·Yes. 25· · · Q.· ·It states, "As compensation for the services Page 39 ·1· defined herein, the affiliate manager will receive, on a ·2· monthly basis, an amount equal to 100 percent of the ·3· monthly group profit." ·4· · · · · ·Do you see that provision? ·5· · · A.· ·Yes. ·6· · · Q.· ·Does that accurately represent the terms of the ·7· compensation for the affiliate manager? ·8· · · · · ·MR. CARGILL:· Objection to the extent the ·9· document speaks for itself. 10· · · · · ·THE WITNESS:· Yeah.· It says as the document 11· says that, yeah. 12· · · Q.· ·(BY MR. LEECH:)· Are you familiar with how group 13· profit is calculated pursuant to this agreement? 14· · · A.· ·Yes. 15· · · Q.· ·And do you know what group is referred to in 16· connection with this agreement? 17· · · A.· ·It was the group that North American Marketing 18· provided services to. 19· · · · · ·MR. CARGILL:· Objection to the extent the 20· document defines what the group is. 21· · · Q.· ·(BY MR. LEECH:)· And where was that group 22· located? 23· · · A.· ·There was multiple locations. 24· · · Q.· ·And they were all brought over by North American 25· Marketing? Page 40 ·1· · · · · ·MR. CARGILL:· Object to the form. ·2· · · · · ·THE WITNESS:· I believe North American Marketing ·3· assisted in most, if not all, of the group, yes. ·4· · · Q.· ·(BY MR. LEECH:)· Looking at Section 3(a)(i), ·5· there's a reference that, "For each Branch assigned to ·6· the Group, a monthly Branch Profit will be calculated by ·7· the Affiliate Manager under the supervision of PMV, as ·8· described in Appendix A." ·9· · · · · ·Are you familiar with an Appendix A to this 10· agreement? 11· · · A.· ·Not that I can recall. 12· · · Q.· ·Do you know if an Appendix A ever existed to 13· this agreement? 14· · · A.· ·Not that I -- I -- I don't know. 15· · · Q.· ·If you go down to Section 3(a)(ii). 16· · · A.· ·Two, okay. 17· · · Q.· ·There's a reference to a group margin as defined 18· in Schedule 1. 19· · · · · ·Are you aware of any Schedule 1 to this 20· agreement? 21· · · A.· ·Not -- not that I can recall. 22· · · Q.· ·Okay.· So, looking at this agreement if you need 23· to, can you explain to me what revenues associated with a 24· closed reverse mortgage loan would be credited to the 25· group as group revenue? Page 41 ·1· · · A.· ·We discussed this already, have we not? ·2· · · Q.· ·I just want to make sure I understand how ·3· this -- how it works in connection with this agreement. ·4· We discussed it generally. ·5· · · A.· ·Yes.· So as we discussed earlier, the revenues ·6· are the premium, the interest, and the -- the fees. ·7· · · Q.· ·Okay.· And those are all the things we discussed ·8· earlier? ·9· · · A.· ·Yes. 10· · · Q.· ·Nothing in addition to what we discussed 11· earlier? 12· · · A.· ·No. 13· · · Q.· ·All right.· Then if we go down to Section 14· (3)(b), there's a section called "Group Expenses"? 15· · · A.· ·Umm-hmm. 16· · · Q.· ·Looking at this agreement -- section if you need 17· to, what expenses would be credited to the group pursuant 18· to this agreement? 19· · · · · ·MR. CARGILL:· Objection to the extent the 20· document speaks for itself. 21· · · · · ·THE WITNESS:· Yeah.· It basically lays out the 22· fees there -- or the expenses. 23· · · Q.· ·(BY MR. LEECH:)· And other than the expenses we 24· have already discussed associated with the closed reverse 25· mortgage loan, are there any other expenses that would be Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 12 of 58 Page 42 ·1· credited to the group pursuant to this agreement? ·2· · · A.· ·No, not that I can recall. ·3· · · Q.· ·Looking at Section 3(b)(ii) subitem (i), it ·4· says, "Payments to fund mandatory Group reserve ·5· accounts." ·6· · · A.· ·Umm-hmm. ·7· · · Q.· ·What are -- what were the mandatory group ·8· reserve accounts? ·9· · · A.· ·This was a reserve account to reserve for losses 10· on unanticipated expenses and if there was a problem loan 11· that, after it sold, we had to compensate an investor 12· for.· Also, to have a -- in reserve, monies to cover 13· expenses if -- I guess I already said to cover expenses 14· already, abnormal expenses. 15· · · Q.· ·And how typical was it for Proficio Mortgage 16· Ventures to have to compensate an investor for a sold 17· reverse mortgage loan? 18· · · A.· ·Very rare. 19· · · Q.· ·Do you recall approximately how large the 20· payments were to fund the mandatory group reserve 21· accounts? 22· · · A.· ·I think we calculated a two-month reserve of all 23· operational expenses, plus we maintained about 12 1/2 24· basis points on the average loan balance on the balance 25· sheet. Page 43 ·1· · · Q.· ·How many BPs again?· I'm sorry. ·2· · · A.· ·Twelve, 12 1/2. ·3· · · Q.· ·And what's the loan balance you're referring to? ·4· Would that be the balance of the loans being held by ·5· Proficio Mortgage? ·6· · · A.· ·Yes, at any given time -- well, at the end of ·7· each month, I should say. ·8· · · Q.· ·So those would be the reverse -- the balances ·9· for the reverse mortgage loans that were advanced to 10· consumers that were still on the books awaiting sale to 11· the secondary market; is that correct? 12· · · A.· ·Those were the -- yes, those were the loans that 13· were funded to the consumer and waiting for sale. 14· · · Q.· ·Okay.· And you mentioned the two-month reserve 15· of all operational expenses. 16· · · · · ·Approximately how much was that? 17· · · A.· ·For the group? 18· · · Q.· ·For the group. 19· · · A.· ·Geez. 20· · · · · ·MR. CARGILL:· Object to the form.· Vague. 21· · · · · ·THE WITNESS:· Thanks. 22· · · · · ·In what year? 23· · · Q.· ·(BY MR. LEECH:)· Let's start in 2012. 24· · · A.· ·In '12, probably 2- to 300,000, to my best 25· recollection. Page 44 ·1· · · Q.· ·So 200- to $3,000 [sic]? ·2· · · A.· ·300,000. ·3· · · Q.· ·-- per month would be the group's operational ·4· expenses? ·5· · · A.· ·No.· You asked what the reserve was, correct? ·6· · · Q.· ·I might have.· And I'm not trying to confuse ·7· you. ·8· · · A.· ·No, I -- ·9· · · Q.· ·So let me just rephrase it. 10· · · · · ·In 2012, what was the group's monthly 11· operational expense? 12· · · A.· ·2012 groups, probably 100 to $50,000 [sic], if I 13· remember correctly. 14· · · Q.· ·100 to 150? 15· · · A.· ·About $150,000 a month. 16· · · Q.· ·And that would include all of the expenses that 17· we've previously discussed? 18· · · A.· ·Yes. 19· · · Q.· ·In 2013, what was the group's operational 20· expenses?· I don't know if -- 21· · · A.· ·Would you mind if I got a calculator out? 22· · · Q.· ·By all means.· Go right ahead. 23· · · A.· ·I want to be a little more exact -- 24· · · Q.· ·Sure.· That's entirely fair. 25· · · A.· ·-- with my estimates in my head.· Just need to Page 45 ·1· turn it on. ·2· · · · · ·2013, is that what we're discussing? ·3· · · Q.· ·Yes, 2013 monthly operational expenses for the ·4· group. ·5· · · A.· ·Approximately 300,000. ·6· · · Q.· ·And what were the group's monthly operational ·7· expenses in 2014? ·8· · · A.· ·180. ·9· · · Q.· ·How about in 2015?· What were the monthly 10· operational expenses of the group? 11· · · A.· ·About 100,000. 12· · · Q.· ·And what accounted for the decline in the 13· group's operational expenses from 2013 to 2014? 14· · · A.· ·Can you state that again? 15· · · Q.· ·Sure.· What accounted for the decline in the 16· group's monthly operational expenses from 2013 to 2014? 17· · · A.· ·Production levels, for the most part. 18· · · Q.· ·So the production levels dropped and, as a 19· result, the operational expenses declined as well? 20· · · A.· ·Yes. 21· · · Q.· ·Turning to Section 3(b)(iii). 22· · · A.· ·3(b), F -- or? 23· · · Q.· ·Little Roman -- 24· · · A.· ·-- numeral two? 25· · · Q.· ·Three.· So it's on page 3 at the top. Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 13 of 58 Page 46 ·1· · · A.· ·Got it. ·2· · · Q.· ·Now, this Section is entitled "PMV Management ·3· Fees." ·4· · · · · ·What is your understanding of the PMV management ·5· fees? ·6· · · A.· ·These were fees associated with the, kind of, ·7· corporate-level Proficio Mortgage Ventures, whether a ·8· group -- so a company -- that were to be allocated down ·9· to the group -- I think. 10· · · · · ·Is that clear?· Probably not. 11· · · Q.· ·(BY MR. LEECH:)· That's okay.· I think I 12· understand where you're going.· I'll try to make it 13· clearer. 14· · · · · ·So were these fees that were payable to Proficio 15· that were allocated as expenses to the group referred to 16· in this agreement? 17· · · A.· ·These were not fees paid by -- did you say paid 18· by Proficio Mortgage Ventures? 19· · · Q.· ·Paid to. 20· · · A.· ·Paid to.· These were fees paid to Proficio 21· Mortgage Ventures from the group in this agreement. 22· · · Q.· ·Okay.· And these were expenses that were charged 23· as group expenses; is that correct? 24· · · A.· ·Yes. 25· · · Q.· ·And the fees are set forth in a chart in this Page 47 ·1· agreement. ·2· · · · · ·Do you see that chart? ·3· · · A.· ·Yes. ·4· · · Q.· ·There's a -- the first line is "Employee ·5· boarding," and then it says a one-time fee of $100 per ·6· employee. ·7· · · · · ·Was that a fee that was charged by Proficio to ·8· the group expenses? ·9· · · A.· ·Yes. 10· · · Q.· ·And then there's -- on the second line, it looks 11· like part of it is crossed out.· But the part that's not 12· crossed out is "Payroll Processing Expenses," and the fee 13· associated with that is "Actual cost estimated at $35 per 14· employee per month when a payroll is run." 15· · · · · ·Do you see that line? 16· · · A.· ·Yes. 17· · · Q.· ·Can you explain how that cost is determined? 18· · · A.· ·I can't recall how that was -- the $35, is that 19· what you're referring to? 20· · · Q.· ·Yes. 21· · · A.· ·That cost?· I can't remember specifically how 22· that was calculated. 23· · · Q.· ·Was that a fee that was paid to Proficio 24· Mortgage Ventures however? 25· · · A.· ·Yes. Page 48 ·1· · · Q.· ·And then the third line down, everything is ·2· crossed out relating to email, licensing, and help desk ·3· services, as well as a fee associated with that. ·4· · · · · ·Do you know if that fee was ever paid to ·5· Proficio Mortgage Ventures, the crossed-off fee? ·6· · · A.· ·Not that I can recall. ·7· · · Q.· ·And the fourth line down is "Loan Fulfillment ·8· and Quality Control," and the fee is $135 per closed ·9· loan. 10· · · · · ·Do you see that line? 11· · · A.· ·Yes. 12· · · Q.· ·What sort of services did Proficio Mortgage 13· Ventures provide to the group in connection with loan 14· fulfillment and quality control? 15· · · A.· ·Specific to this agreement? 16· · · Q.· ·Specific to this group, yes. 17· · · A.· ·I can only speculate because I didn't write this 18· and wasn't part of it.· But I assume they're referring to 19· compliance and audit-related duties that were performed 20· by Proficio Mortgage Ventures on these loans. 21· · · Q.· ·Okay.· And that fee was a flat fee of $135 per 22· closed loan? 23· · · A.· ·Yes. 24· · · Q.· ·And that fee was paid to Proficio Mortgage 25· Ventures? Page 49 ·1· · · A.· ·Yes. ·2· · · Q.· ·And then the last line in that chart is "PMV ·3· Management," and the fee is "70 bps on closed loan ·4· production." ·5· · · · · ·What services were encompassed under the term ·6· "PMV management"? ·7· · · A.· ·So you want me to explain what services PMV ·8· management provided to the group? ·9· · · Q.· ·What services did PMV provide to the group that 10· fell under the umbrella of "PMV management"? 11· · · A.· ·PMV provided oversight, compliance, licensing, 12· funding as needed, as we discussed earlier.· What else? 13· Accounting, HR.· Did I say compliance? 14· · · Q.· ·I think so. 15· · · A.· ·I think so.· IT.· Yeah. 16· · · Q.· ·Any other? 17· · · A.· ·Those are the major ones, yeah. 18· · · Q.· ·Any others that you can think of sitting here? 19· · · A.· ·No. 20· · · Q.· ·And for all of those services, it was paid 70 21· bps on closed loan production; is that correct? 22· · · A.· ·Yes. 23· · · Q.· ·And when it says "70 bps," that means 70 basis 24· points, correct? 25· · · A.· ·Correct. Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 14 of 58 Page 50 ·1· · · Q.· ·What is a "basis point"? ·2· · · A.· ·It is a fraction of a percentage, 1/100 of a ·3· percent. ·4· · · Q.· ·So 100 basis points equals 1 percent? ·5· · · A.· ·Correct. ·6· · · Q.· ·And when it says "70 basis points on closed loan ·7· production," would that be the principal balance of the ·8· loan? ·9· · · A.· ·Yes. 10· · · Q.· ·So pursuant to this agreement -- strike that. 11· · · · · ·Is it your understanding that pursuant to this 12· agreement, the group profit was calculated by taking the 13· group revenues and subtracting the group expenses? 14· · · A.· ·Yes. 15· · · Q.· ·Okay.· And those group expenses included these 16· particular fees to Proficio Mortgage Ventures set forth 17· in this chart? 18· · · A.· ·Yes. 19· · · Q.· ·And then -- then it is also your understanding 20· that 100 percent of the group profit was paid to North 21· American Marketing, the affiliate manager? 22· · · A.· ·Yes. 23· · · Q.· ·So the only revenues that Proficio Mortgage 24· Ventures would have retained in connection with any given 25· closed reverse mortgage loan was this $135 flat fee and Page 51 ·1· the 70 basis points of that loan's balance? ·2· · · A.· ·You said what "revenues" or "profits"? ·3· · · Q.· ·I said revenues. ·4· · · A.· ·Okay.· Revenues, all revenues were Proficio ·5· Mortgage Ventures. ·6· · · Q.· ·Okay. ·7· · · A.· ·Okay. ·8· · · Q.· ·And then what -- what amount of the profits were ·9· retained by Proficio Mortgage Ventures? 10· · · A.· ·Profits was these fees that were -- we see here 11· in the 70 basis points. 12· · · Q.· ·So the sole profits Proficio Mortgage Ventures 13· earned in connection with a closed reverse mortgage loan 14· was this $135 per closed loan flat fee and the 70 basis 15· points on the balance of the loan? 16· · · A.· ·The profits, yes. 17· · · Q.· ·And everything else was paid to North American 18· Marketing? 19· · · A.· ·The difference between expenses and the revenues 20· and these fees, yes. 21· · · Q.· ·I want to direct your attention to Section 8 on 22· the next page. 23· · · A.· ·Okay. 24· · · Q.· ·It references that the "Agreement may be 25· terminated by either party by giving 90 days' advanced Page 52 ·1· written notice to the other party." ·2· · · · · ·Is that correct? ·3· · · A.· ·That's what it states, yes. ·4· · · Q.· ·So that was the minimum amount of lead time to ·5· terminate the agreement? ·6· · · A.· ·Yes. ·7· · · Q.· ·And then looking at Section 9, which refers to ·8· modification of the compensation plan, was this ·9· agreement, during the lifetime of the relationship 10· between North American Marketing and Proficio Mortgage 11· Ventures, ever modified? 12· · · A.· ·Not that I can recall. 13· · · Q.· ·If we could back up to Section 6(f) still on 14· this page. 15· · · A.· ·Okay. 16· · · Q.· ·It refers to the "Reserve Retainer Period"? 17· · · A.· ·Umm-hmm, yes. 18· · · Q.· ·And sets forth a time frame after termination in 19· which the reserve would be released to -- to the group. 20· · · · · ·Now, what is your understanding of what it means 21· for the reserve to be released? 22· · · A.· ·The reserve that we spoke to earlier 23· regarding -- that it speaks to in the document? 24· · · Q.· ·Umm-hmm. 25· · · A.· ·After a termination of this agreement, the Page 53 ·1· reserves -- reserves could be released after all expenses ·2· and costs are accounted for. ·3· · · Q.· ·And would those reserves become part of the ·4· group profit that was payable to North American ·5· Marketing? ·6· · · A.· ·Would the reserve -- state your question again. ·7· · · Q.· ·If and when the reserve was released, would it ·8· be credited to the profit that would be payable to North ·9· American Marketing? 10· · · A.· ·Yes, after all expenses. 11· · · Q.· ·Right.· And then turning to the next page, 12· Section 13. 13· · · A.· ·Okay. 14· · · Q.· ·Can you review that section and let me know 15· when you're finished. 16· · · A.· ·Thirteen? 17· · · Q.· ·Yes. 18· · · A.· ·Okay. 19· · · Q.· ·Now, this section references that, "Upon 20· termination of the Agreement, the Group continues to earn 21· revenue and be assessed customary expenses for a period 22· of six months after the termination date." 23· · · · · ·Can you explain to me how that worked? 24· · · A.· ·As it states, loans -- you know, any loan 25· revenues that came in would be offset by any expenses for Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 15 of 58 Page 54 ·1· those loans.· And the group and trailing expenses and ·2· anything left over, if any, would be distributed to the ·3· affiliate manager. ·4· · · Q.· ·And that would continue for a period of six ·5· months past the effective date of the termination of the ·6· agreement? ·7· · · A.· ·Yes, per this agreement, yes. ·8· · · Q.· ·Let me show you what we'll mark as Exhibit 2. ·9· · · · ·(Exhibit-2 was marked for identification.) 10· · · · · ·THE WITNESS:· Do you need this, or is this for 11· me? 12· · · · · ·THE REPORTER:· I'll take it -- 13· · · Q.· ·(BY MR. LEECH:)· You can keep that in front of 14· you if you need to refer to it.· But at the end, we'll 15· give it to the court reporter. 16· · · A.· ·Okay.· Okay. 17· · · Q.· ·Showing you what's been marked as Deposition 18· Exhibit 2, do you recognize this document? 19· · · A.· ·I think I may have seen it.· Do you mind if I 20· read through it really quick? 21· · · Q.· ·Absolutely.· Just let me know when you're 22· finished reviewing it. 23· · · A.· ·Okay. 24· · · Q.· ·Okay.· Do you recognize this document? 25· · · A.· ·I think I may have seen it before, yes. Page 55 ·1· · · Q.· ·What is your understanding of this document? ·2· · · A.· ·It's a notification to North American Marketing ·3· from Proficio Mortgage Ventures terminating the affiliate ·4· agreement. ·5· · · Q.· ·And that was the affiliate agreement we just ·6· discussed? ·7· · · A.· ·Yes. ·8· · · Q.· ·And according to this document, the effective ·9· date of the termination is November 3, 2014; is that 10· correct? 11· · · A.· ·That's the effective date of the termination, 12· yes. 13· · · Q.· ·And was that, in fact, the actual effective date 14· of the termination between -- of the Affiliate Manager 15· Agreement between Proficio Mortgage Ventures and North 16· American Marketing? 17· · · A.· ·Yes. 18· · · Q.· ·And then as we discussed, North American 19· Marketing -- well, strike that. 20· · · · · ·As we discussed, pursuant to the Affiliate 21· Manager Agreement, revenues for loans closed in that 22· six-month period following November 3, 2014, would be 23· credited to the group, expenses would be assessed to the 24· group, and the net profits would be payable to North 25· American Marketing; is that correct? Page 56 ·1· · · A.· ·Pursuant to the Affiliate Manager Agreement, ·2· yes. ·3· · · Q.· ·Okay.· And so that period was a six-month ·4· period, starting on November 3, 2014? ·5· · · A.· ·Yes. ·6· · · Q.· ·Did you have any involvement in the decision to ·7· terminate the Affiliate Manager Agreement between North ·8· American Marketing and Proficio Mortgage Ventures? ·9· · · · · ·MR. CARGILL:· Objection.· Vague. 10· · · · · ·THE WITNESS:· Did I -- was I involved in the 11· decision? 12· · · · · ·I worked with the management of both Proficio 13· Mortgage -- yeah, with Proficio Mortgage Ventures and 14· Proficio Bank, you know, constantly.· So yeah, I was 15· involved. 16· · · Q.· ·(BY MR. LEECH:)· What was your role in the 17· decision to terminate the Affiliate Manager Agreement 18· between North American Marketing and Proficio Mortgage 19· Ventures? 20· · · A.· ·Provided, as I would have in my role, financial 21· information, profit/loss statements, discussed the trends 22· of the organization -- or the group at the time.· That's 23· probably it. 24· · · Q.· ·And was the group profitable at the time of the 25· termination? Page 57 ·1· · · A.· ·I believe so, yeah. ·2· · · Q.· ·And how were the trends looking? ·3· · · A.· ·It was -- ·4· · · · · ·MR. CARGILL:· Objection.· Vague. ·5· · · · · ·THE WITNESS:· Trends from what period? ·6· · · Q.· ·(BY MR. LEECH:)· You mentioned as part of your ·7· involvement in the decision to terminate the Affiliate ·8· Manager Agreement that you looked at the trends of the ·9· group. 10· · · · · ·Is that what you said? 11· · · A.· ·Umm-hmm. 12· · · Q.· ·What did you see when you looked at the trends 13· in the group? 14· · · A.· ·I think, as we discussed, volume was lower in 15· '14 than '13 and '12, and we were seeing lower volumes. 16· · · Q.· ·So the trends were declining? 17· · · A.· ·Yeah, yes. 18· · · Q.· ·And what was the rationale for the termination? 19· · · A.· ·I wasn't really involved with that. 20· · · Q.· ·So you don't know? 21· · · A.· ·I don't. 22· · · Q.· ·I'll show you what we'll mark as Exhibit 3. 23· · · · ·(Exhibit-3 was marked for identification.) 24· · · Q.· ·Can you review this document and let me know 25· when you've had an opportunity to do so? Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 16 of 58 Page 58 ·1· · · A.· ·Okay. ·2· · · Q.· ·Do you recognize this document? ·3· · · A.· ·Yes. ·4· · · Q.· ·What is this document? ·5· · · A.· ·It's a -- a document for a Transactional Expense ·6· Agreement between Proficio Mortgage Ventures and North ·7· American Marketing. ·8· · · Q.· ·This refers to a period called the "Transition ·9· period" that the agreement defines as beginning 10· November 3, 2014, and ending May 2, 2015. 11· · · · · ·Was there the same six-month transitional -- was 12· this the same six-month period called for in the 13· Affiliate Manager Agreement? 14· · · A.· ·Yeah, that's -- it was the six months it's 15· referring to -- intending to be so, yes. 16· · · Q.· ·This agreement refers to two separate profit & 17· loss statements. 18· · · · · ·Are you familiar with those separate profit & 19· loss statements? 20· · · A.· ·Yes. 21· · · Q.· ·Did you play any role in preparing those 22· separate profit & loss statements? 23· · · A.· ·Preparing?· No. 24· · · Q.· ·Who was involved in preparing those? 25· · · A.· ·Ben Sillitoe.· Amber -- oh, shoot.· I forgot her Page 59 ·1· last name -- Ford. ·2· · · Q.· ·Anyone else? ·3· · · A.· ·Those would have been the two preparing them. ·4· · · Q.· ·So what was the purpose behind keeping two ·5· separate profit & loss statements? ·6· · · A.· ·The -- to differentiate expenses and revenues ·7· between the period -- or for those loans that were -- ·8· "originate" is not the right word -- were associated with ·9· the -- that were associated with the NAM affiliate 10· manager group and the new Proficio Mortgage Venture 11· reverse division not associated with the affiliate 12· manager group. 13· · · Q.· ·Okay.· So let's step back a little bit. 14· · · · · ·When Proficio Mortgage Ventures decided to 15· terminate the North American Marketing Affiliate Manager 16· Agreement, what was its plans for HECM space? 17· · · A.· ·To continue to -- to work in that space and to 18· grow the business. 19· · · Q.· ·And how was this going to be different than the 20· North American Marketing era? 21· · · A.· ·We were stepping in and taking over the services 22· that they were providing to us per the agreement. 23· · · Q.· ·And those services were set forth in the 24· Affiliate Manager Agreement that we've already discussed? 25· · · A.· ·Yes. Page 60 ·1· · · Q.· ·Would it be fair to say North American Marketing ·2· was essentially running the reverse mortgage department ·3· for Proficio Mortgage Ventures? ·4· · · A.· ·No. ·5· · · · · ·MR. CARGILL:· Object to the form. ·6· · · Q.· ·(BY MR. LEECH:)· Okay.· Why not? ·7· · · A.· ·Why not?· Because they provided the services. ·8· As stated in the agreement, the operations were run by ·9· Proficio Mortgage employees. 10· · · Q.· ·And who were those employees who ran the 11· operations? 12· · · A.· ·Sales managers, the loan officers, Brett Carter, 13· the other execute -- manager-level individuals at 14· Proficio Mortgage Ventures, and the bank. 15· · · Q.· ·Who recruited the sales managers? 16· · · A.· ·Who recruited? 17· · · Q.· ·Yes. 18· · · A.· ·I think -- 19· · · · · ·MR. CARGILL:· Objection to the extent it's vague 20· and calls for speculation. 21· · · · · ·THE WITNESS:· I -- I -- there was -- I don't 22· know who recruited whom or what, yeah. 23· · · Q.· ·(BY MR. LEECH:)· Let's go back to Exhibit 1 -- 24· · · A.· ·Okay. 25· · · Q.· ·-- the Affiliate Manager Agreement real quick. Page 61 ·1· · · · · ·We can look at Section 1, the duties of the ·2· affiliate manager. ·3· · · A.· ·Yep. ·4· · · Q.· ·The first one is -- there's one subsection here, ·5· Section 1(a), that refers to management consulting ·6· services? ·7· · · A.· ·Yes. ·8· · · Q.· ·Among those services, it refers to recruiting ·9· services. 10· · · · · ·So the affiliate manager was providing 11· recruiting services to Proficio Mortgage Ventures; is 12· that correct? 13· · · · · ·MR. CARGILL:· Objection to the extent it 14· misstates the document.· The document says, "The 15· Affiliate Manager will assist PMV in the identification 16· of potential retail mortgage origination offices and 17· individual mortgage loan originators." 18· · · · · ·MR. LEECH:· Thank you, Counsel. 19· · · Q.· ·(BY MR. LEECH:)· My question is:· What 20· recruiting services did the affiliate manager provide to 21· Proficio Mortgage Ventures? 22· · · A.· ·They assisted, as the document says. 23· · · Q.· ·Okay.· So with respect to recruiting, what did 24· Proficio Mortgage Ventures do at this time pursuant to 25· the -- strike that. Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 17 of 58 Page 62 ·1· · · · · ·During the time period the Affiliate Manager ·2· Agreement was in effect, what recruiting services did ·3· Proficio Mortgage Ventures perform?· What role did it ·4· play in recruiting that was not done by North American ·5· Marketing? ·6· · · A.· ·I wasn't specifically involved in the ·7· recruiting, so I couldn't really speak to that.· But I ·8· know recruiting was done by Proficio Mortgage Ventures. ·9· · · Q.· ·And then there's a reference to "Lead Generation 10· & Marketing Services" below "Recruiting Services"? 11· · · A.· ·Yes. 12· · · Q.· ·When the North American Marketing agreement was 13· terminated, was lead generation and marketing something 14· that was taken over by Proficio? 15· · · A.· ·Yes. 16· · · Q.· ·And how did that work? 17· · · A.· ·What do you mean? 18· · · Q.· ·What did Proficio begin to do that it wasn't 19· doing previously? 20· · · A.· ·We hired a -- a marketing lead VP, and she, you 21· know, continued to -- to grow -- I couldn't really speak 22· to what she did specifically -- but help generate leads 23· and marketing material for the group. 24· · · Q.· ·And that was the service that had previously 25· been performed by North American Marketing? Page 63 ·1· · · A.· ·Yes. ·2· · · Q.· ·So going back to the Transition Expense ·3· Agreement. ·4· · · A.· ·Umm-hmm. ·5· · · Q.· ·And I apologize if I've asked this already. ·6· · · A.· ·No, that's okay. ·7· · · Q.· ·How was it determined which loan transaction ·8· would be assigned to the Proficio P&L or North American ·9· Marketing P&L? 10· · · A.· ·It was based on the application date, the 11· application that was prior to the termination date of 12· November 3.· It would be considered the, I guess -- what 13· are we calling it?· The NAM P&L?· Is that what we want to 14· call it? 15· · · Q.· ·You tell me.· Is that how you understood it? 16· · · A.· ·Yeah -- 17· · · · · ·MR. CARGILL:· Well, objection to the extent the 18· document lays this out and speaks for itself. 19· · · · · ·THE WITNESS:· Yes.· So it says the "NAM P&L," 20· yes. 21· · · Q.· ·(BY MR. LEECH:)· So if the application was 22· received prior to November 3, 2014, the transaction 23· would be assigned to the North American Marketing P&L. 24· · · · · ·And would the -- would that be subject to the 25· Affiliate Manager Agreement? Page 64 ·1· · · A.· ·Subject to? ·2· · · · · ·MR. CARGILL:· Objection to the extent it calls ·3· for a legal conclusion. ·4· · · · · ·THE WITNESS:· Yeah.· I couldn't speak to how ·5· this works between both -- I'm not a lawyer. ·6· · · Q.· ·(BY MR. LEECH:)· Okay.· And I don't mean to ask ·7· you a legal -- ·8· · · A.· ·Yeah. ·9· · · Q.· ·-- question.· I'm trying to get at how was 10· the -- strike that. 11· · · · · ·Let's say if there's a loan transaction that's 12· assigned to the North American Marketing P&L, how would 13· the profits -- who would receive the profits from that 14· loan transaction? 15· · · A.· ·The profits? 16· · · Q.· ·Yes. 17· · · A.· ·The net profits would go to NAM. 18· · · Q.· ·Okay.· And if the loan transaction was assigned 19· to the Proficio P&L, who would receive those profits? 20· · · A.· ·Proficio.· You said profits? 21· · · Q.· ·Profits. 22· · · A.· ·Proficio. 23· · · Q.· ·And I'm assuming revenue worked the same way it 24· worked previously, whereby Proficio received all of the 25· revenue? Page 65 ·1· · · A.· ·Yes. ·2· · · Q.· ·Okay.· And so the profits -- so when we talk ·3· about net profits, we're talking about the revenues from ·4· the transaction -- which we've already discussed -- and ·5· then the expenses that would be assigned to the P&L. ·6· Those are set forth here in this agreement? ·7· · · A.· ·Yes. ·8· · · Q.· ·And these include the variable loan expenses per ·9· loan as well as the allocation of certain fixed 10· operating -- 11· · · A.· ·Yes. 12· · · Q.· ·-- expenses? 13· · · A.· ·Yes. 14· · · Q.· ·And those are broken down by percentages in the 15· dates at the bottom of page 1; is that correct? 16· · · A.· ·Yes. 17· · · Q.· ·And then also it goes on for the shared labor 18· expenses.· Those are all broken down by time period as to 19· how they're going to be allocated to each profit & loss 20· statement; is that correct? 21· · · A.· ·Yes. 22· · · Q.· ·Were there any other agreements, to your 23· knowledge, that addressed the allocation of profits or 24· losses between Proficio Mortgage Ventures and North 25· American Marketing after the time the North American Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 18 of 58 Page 66 ·1· Marketing Affiliate Manager Agreement was terminated? ·2· · · A.· ·Not to my recollection. ·3· · · Q.· ·With respect to this agreement, how would a loan ·4· transaction be allocated? ·5· · · · · ·To which P&L would the loan transaction be ·6· allocated if the application came in after November 3, ·7· 2014, but the lead was from a lead list that had been ·8· provided to Proficio prior to November 3, 2014? ·9· · · A.· ·As the document states, it's based on 10· application date, not lead date.· So when was the 11· application date?· I need to know that to answer your 12· question. 13· · · Q.· ·Okay.· Do you know if the affiliate manager -- 14· strike that. 15· · · · · ·Do you know if the relationship between North 16· American Marketing and Proficio Mortgage Ventures set 17· forth in the Affiliate Manager Agreement was the type of 18· relationship that was permitted by RESPA? 19· · · A.· ·I can't speak to that.· I don't know. 20· · · Q.· ·Do you know in any way at all whether it was in 21· compliance with the banking financial regulations? 22· · · A.· ·I'm -- 23· · · · · ·MR. CARGILL:· Objection to the extent it calls 24· for a legal understanding or conclusion. 25· · · · · ·THE WITNESS:· I have a degree in accounting. I Page 67 ·1· can't answer that. ·2· · · Q.· ·(BY MR. LEECH:)· Okay.· I'll show you what ·3· we'll mark as Exhibit 4. ·4· · · · ·(Exhibit-4 was marked for identification.) ·5· · · Q.· ·Do you recognize this document? ·6· · · A.· ·No, not specifically, no. ·7· · · Q.· ·I'll represent that it was a document that was ·8· produced by Proficio Mortgage Ventures in this case.· And ·9· it appears to be a North American Marketing, Inc., 10· transaction report from August 15, 2012, to January 5, 11· 2016. 12· · · · · ·Do you see that? 13· · · A.· ·Yes. 14· · · · · ·MR. CARGILL:· I'll also just note for the record 15· that this may have been an Excel file that was then 16· transformed into a paper version. 17· · · · · ·THE WITNESS:· Okay. 18· · · · · ·MR. LEECH:· And yes, I will say, Counsel, this 19· was a document produced in native Excel format, I believe 20· with the file name as printed in the heading, "Proficio 21· 0007889_AEO," and all I did was print it. 22· · · · · ·MR. CARGILL:· Okay. 23· · · · · ·MR. LEECH:· So this is -- 24· · · · · ·THE WITNESS:· Okay. 25· · · Q.· ·(BY MR. LEECH:)· Are you familiar with the Page 68 ·1· format of this document -- not the document itself, but ·2· the type of report that it is? ·3· · · A.· ·No.· This isn't a standard report that I know ·4· of. ·5· · · Q.· ·Okay.· So this is not a report that the bank ·6· would use -- that Proficio Bank would use?· Sorry. ·7· · · A.· ·This is not something we would normally use. ·8· I'm not sure what -- what we're getting at on this, to be ·9· exact. 10· · · Q.· ·So do you -- so, I mean, you see there's dates? 11· · · A.· ·Yeah. 12· · · Q.· ·The name is Proficio Mortgage Ventures for all 13· of these entries? 14· · · A.· ·Yeah. 15· · · Q.· ·The account is listed as "Services." 16· · · A.· ·Okay. 17· · · Q.· ·And the amount -- and there are varying amounts 18· in the far right column. 19· · · · · ·Do you see all of that? 20· · · A.· ·Yeah, I see all that.· Yeah. 21· · · Q.· ·And when we flip to the second page, we see -- 22· well, strike that. 23· · · · · ·Starting at the first page, we see that the 24· first -- the date of the first entry is August 15, 2012? 25· · · A.· ·Yep. Page 69 ·1· · · Q.· ·And the last date is April 30, 2015? ·2· · · A.· ·Umm-hmm. ·3· · · Q.· ·And then the total for "Services" is listed as ·4· $10,365,214.33. ·5· · · · · ·Do you see that? ·6· · · A.· ·Yes. ·7· · · Q.· ·Do you know if that's the amount of money that ·8· Proficio Mortgage Ventures paid to North American ·9· Marketing during the time period indicated by this 10· report? 11· · · A.· ·It's probably approximately.· I would have to 12· verify it.· This isn't our report. 13· · · Q.· ·Okay. 14· · · A.· ·This isn't a bank report or a Proficio Mortgage 15· Ventures report. 16· · · Q.· ·Okay.· And you don't know whose report it is? 17· · · A.· ·It says "North American Marketing, Inc." on the 18· document. 19· · · Q.· ·Right.· That's kind of my question.· Is that -- 20· does this refer to -- and you probably don't know, 21· because we've already asked you about the report. 22· · · · · ·But that was one of my questions, is:· Do you 23· know if that heading, "North American Marketing 24· Transaction Report" refers to payments made by North 25· American Marketing or payments made to North American Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 19 of 58 Page 70 ·1· Marketing? ·2· · · A.· ·I -- I can't answer that. ·3· · · · · ·MR. CARGILL:· Counsel, you may want to ask him ·4· if this is something he produced. ·5· · · Q.· ·(BY MR. LEECH:)· Did you produce this document? ·6· · · A.· ·No. ·7· · · Q.· ·Okay. ·8· · · A.· ·Before we move forward, can we take a quick ·9· break? 10· · · · · ·MR. LEECH:· Sure. 11· · ·(A break was taken from 11:23 a.m. to 11:28 a.m.) 12· · · Q.· ·(BY MR. LEECH:)· All right.· Let's go back on. 13· · · · · ·Showing you what we'll mark as the next exhibit. 14· · · · ·(Exhibit-5 was marked for identification.) 15· · · Q.· ·Do you recognize this document? 16· · · A.· ·It looks familiar. 17· · · Q.· ·Okay.· What is this document? 18· · · A.· ·It looks like a download from our accounting 19· system related to probably payments to or -- to -- to -- 20· yeah, payments to North American Marketing from Proficio 21· Mortgage Ventures. 22· · · Q.· ·So this is a form that you're familiar with? 23· · · A.· ·Yes. 24· · · Q.· ·Okay.· And these would represent payments to 25· North American Marketing made by Proficio Mortgage Page 71 ·1· Ventures? ·2· · · A.· ·I -- I believe so. ·3· · · Q.· ·And what accounting system does Proficio ·4· Mortgage Ventures use? ·5· · · A.· ·AMB, American Mortgage Banking, I believe is ·6· what it stands for. ·7· · · Q.· ·And the way this was produced to me, I don't ·8· have the column headings on this. ·9· · · A.· ·Yeah. 10· · · Q.· ·And I'm hoping that you can tell me what these 11· columns represent. 12· · · A.· ·Okay. 13· · · Q.· ·So what would the first column represent, the 14· one that's "HECM" all the way down? 15· · · A.· ·"HECM" is -- it looks like it's the division. 16· · · Q.· ·Okay. 17· · · A.· ·Okay.· Yep. 18· · · Q.· ·And the second column just lists "North American 19· Marketing"? 20· · · A.· ·Yeah. 21· · · Q.· ·What would that column be? 22· · · A.· ·Probably vendor. 23· · · Q.· ·The third column appears to be single letters, 24· Cs and Ws is what they look like. 25· · · · · ·Do you know what that column refers to? Page 72 ·1· · · A.· ·It looks like "check" or "wire." ·2· · · · · ·THE WITNESS:· And Counsel, if this wasn't ·3· produced to you in Excel format, I don't see why it ·4· shouldn't have been, so we will. ·5· · · Q.· ·(BY MR. LEECH:)· Okay.· If you could produce ·6· it, Tom, in Excel format, that would be fine. ·7· · · · · ·This was produced -- you can tell by the fact ·8· the Bates number was burned on the bottom of it that's ·9· how it was produced.· When they're native -- when I go in 10· and print, I have to make it appear on the header so I 11· know what it is.· But this was how it was produced to me. 12· · · · · ·MR. CARGILL:· Okay. 13· · · Q.· ·(BY MR. LEECH:)· And then the column in the 14· following column appears to be numbers. 15· · · · · ·Do you know what that would refer to? 16· · · A.· ·I would think it's probably a check number or a 17· reference number of some sort. 18· · · Q.· ·And the next column is a date column.· I assume 19· that's the date the payment was made? 20· · · A.· ·Yeah.· Made or -- it could be also -- it's 21· probably made, but it could also be the date on which it 22· was accounted for. 23· · · · · ·Does that make sense? 24· · · Q.· ·Sure.· The date -- 25· · · A.· ·Accounting rules -- Page 73 ·1· · · Q.· ·-- it accrued? ·2· · · A.· ·Yeah, the effective date or the payment date. ·3· I'm assuming this is payment date, but it could be ·4· effective date. ·5· · · Q.· ·So would it be the date of accrual? ·6· · · A.· ·It's probably date of payment here. ·7· · · Q.· ·Probably. ·8· · · · · ·Okay.· But it could also be date of accrual? ·9· · · A.· ·Could be, yeah.· There's both in the system, and 10· without seeing the header, I think -- 11· · · Q.· ·Sure. 12· · · A.· ·-- I would want to double check. 13· · · Q.· ·And there's -- and then the next column over is 14· another number. 15· · · · · ·Do you know what that number would refer to? 16· · · A.· ·Well, looking at both pages, there's numbers 17· and/or comments to it.· It may be a reference to either 18· an invoice or a period of time -- 19· · · Q.· ·Okay. 20· · · A.· ·-- for the transaction, or whatever.· Yeah. 21· · · Q.· ·And then the next two columns are amounts. 22· · · A.· ·Umm-hmm. 23· · · Q.· ·And they're numbers, and they appear to be 24· equal. 25· · · · · ·Do you know in each column -- Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 20 of 58 Page 74 ·1· · · A.· ·Yes. ·2· · · Q.· ·You see there are two number columns? ·3· · · A.· ·I do see both. ·4· · · · · ·I would believe the first one -- in our system, ·5· we have an "Amount" column.· And there appears to be ·6· almost a third column; we're not talking about that blank ·7· space. ·8· · · Q.· ·Okay. ·9· · · A.· ·One would be credit, and the other one would 10· maybe be debit.· I don't know.· You know, in some of -- 11· I'd have to look up the -- the main with the headers. 12· · · · · ·But in our system, you have an amount column, 13· you have a debit column, you have a credit column.· And 14· as expenses, you know, these would all be debits.· So I'm 15· assuming this is like a debit column on the far right, 16· the amount column on the left, with a blank space maybe 17· representing a credit column.· But -- yeah. 18· · · Q.· ·Okay.· That makes sense. 19· · · · · ·And then there's a number with a hyphen, 20· following what looks like the dollar amount column? 21· · · A.· ·Umm-hmm. 22· · · Q.· ·Would that be the account number? 23· · · A.· ·So it's an account number with a branch or group 24· or location number. 25· · · Q.· ·So what would be the account number and what Page 75 ·1· would be the branch or group location, whatever you want ·2· to call them? ·3· · · A.· ·The account number is the first -- it's before ·4· the dash, on the left of the dash. ·5· · · Q.· ·Okay.· And the location number is, then, the ·6· number to the right of the dash? ·7· · · A.· ·Yes. ·8· · · Q.· ·And then the last column looks to be like it's a ·9· description of the transaction? 10· · · A.· ·Yes, that's what it looks like to me. 11· · · Q.· ·So just based on looking at this, to the best of 12· your understanding, the numbers -- the amounts reflected 13· on this document are debits to an expense account 14· associated with North American Marketing? 15· · · A.· ·Yes. 16· · · Q.· ·And that would reflect payments made by Proficio 17· Mortgage Ventures to North American Marketing? 18· · · A.· ·Yes. 19· · · Q.· ·Okay.· And if we flip to the next page -- 20· · · A.· ·Okay. 21· · · Q.· ·-- we see that the last date is April 7, 2015. 22· · · A.· ·Umm-hmm. 23· · · Q.· ·Do you know if there were any payments past 24· April 7, 2015, that were made to North American 25· Marketing? Page 76 ·1· · · A.· ·There may have been.· I'd have to double check ·2· the accounting system.· I'm not sure what the parameters ·3· were on this report, so. ·4· · · Q.· ·Sure.· And the reason -- and the reason I ask is ·5· that the total of the amount appears just kind of in a ·6· little number floating below there -- ·7· · · A.· ·Yep. ·8· · · Q.· ·-- $9,847,069.74. ·9· · · · · ·Do you see that? 10· · · A.· ·Yes. 11· · · Q.· ·To me, that appears to be the total paid to 12· North American Marketing as summarized by this report; is 13· that correct? 14· · · A.· ·That's what it appears to me as well. 15· · · Q.· ·And I -- I just note that it's -- the number 16· here on Exhibit 5 is different from the number that was 17· on Exhibit 4.· And I'm trying to understand the 18· discrepancy. 19· · · A.· ·Difference of approximately 500,000?· I'd -- 20· we'd have to do a reconciliation of the two.· I -- I 21· couldn't speak to why there's a difference at the moment. 22· · · Q.· ·But you could run an updated report that would 23· show if there were any additional payments after April 7, 24· 2015? 25· · · A.· ·Yeah.· We could run an updated report of this, Page 77 ·1· yes. ·2· · · Q.· ·Just real quick, one last question on this one. ·3· · · · · ·To your knowledge, does this truly and ·4· accurately summarize all payments made to North American ·5· Marketing by Proficio Mortgage Ventures from the date of ·6· October 10, 2012, through the date of April 7, 2015? ·7· · · A.· ·Yes.· Again, as I said earlier, I'd have to look ·8· at the parameters at which the report was run.· It may be ·9· a little before or a little after, so. 10· · · Q.· ·And there are payments made after November 3, 11· 2014, that are set forth on this agreement? 12· · · A.· ·Yes. 13· · · Q.· ·And those payments would have related to loans 14· that had -- to loan applications that had been made prior 15· to November 3, 2014? 16· · · A.· ·Yes. 17· · · Q.· ·And those were -- those payments were made 18· pursuant to the two agreements we've discussed:· The 19· Affiliate Manager Agreement and the Transition Expense 20· Agreement, correct? 21· · · A.· ·Yes. 22· · · Q.· ·I'll show you what we've marked as Exhibit 6. 23· · · · ·(Exhibit-6 was marked for identification.) 24· · · A.· ·Okay. 25· · · Q.· ·Do you recognize this list? Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 21 of 58 Page 78 ·1· · · A.· ·Not specifically, no. ·2· · · Q.· ·Do you recognize it generally? ·3· · · A.· ·Yeah, I think so.· It looks like a list of loans ·4· with borrower names.· I'm assuming that's what -- I'm ·5· speculating here, but we have names, amounts closed by ·6· FS- -- "Loan Amount per FSB," and "Close Date per FSB." ·7· I would assume the names are probably a borrower name. ·8· · · Q.· ·I'll represent that this is a list that's been ·9· provided to Federal Savings Bank by Proficio Mortgage 10· Ventures of loans that it claimed -- claims Federal 11· Savings Bank improperly closed with information taken 12· from Proficio Mortgage Ventures. 13· · · A.· ·Okay. 14· · · Q.· ·Are you familiar with that claim? 15· · · A.· ·Yes. 16· · · Q.· ·Did you have any role in identifying the 17· borrowers that were allegedly taken by Federal Savings 18· Bank? 19· · · A.· ·No.· Identifying the borrowers?· No. 20· · · Q.· ·So you don't know how these names were 21· determined by Proficio Mortgage Ventures? 22· · · A.· ·I know of individuals that worked on that, 23· and -- but to the details of what they did, I don't. I 24· couldn't speak to it. 25· · · Q.· ·Okay.· Who were the individuals who put this Page 79 ·1· list together? ·2· · · A.· ·Scott Guild; Chad, is it Mickleberry, ·3· "Muckleberry"?· Can I consult here? ·4· · · Q.· ·No, it's okay. ·5· · · A.· ·Is that good enough? ·6· · · Q.· ·I know who you're referring to. ·7· · · · · ·So who else besides Scott and Chad? ·8· · · A.· ·Alek Ohlhausen may have been involved a little ·9· bit.· But I think Scott and Chad were the main drivers, 10· the main individuals driving the list. 11· · · Q.· ·Do you know if any of these individuals ever 12· made an application with Proficio Mortgage Ventures? 13· · · A.· ·I couldn't speak specifically.· They may or may 14· not have. 15· · · Q.· ·Let me show you what we'll mark as 7. 16· · · · ·(Exhibit-7 was marked for identification.) 17· · · · · ·MR. CARGILL:· Hold on. 18· · · · · ·MR. LEECH:· Yep, I have to, Counsel. 19· · · · · ·MR. CARGILL:· You're going to introduce a 20· confidential settlement communication as an exhibit? 21· · · · · ·MR. LEECH:· It's incorporated by reference in 22· your interrogatory answers as being the current damages 23· claim of Proficio Mortgage Ventures, LLC.· We have to 24· discuss it. 25· · · · · ·And I recognize there might be limitations on Page 80 ·1· the admissibility of a confidential settlement ·2· communication.· But if you're going to incorporate it as ·3· an interrogatory answer, I mean, this is of record here ·4· as your damages claim.· This is not a compromised offer, ·5· really, at this point, because it's identified in your ·6· interrogatory answers. ·7· · · · · ·MR. CARGILL:· Let's go off the record for a ·8· second -- for a minute. ·9· · · · · ·MR. LEECH:· Okay. 10· · · · · ·(A discussion was held off the record.) 11· · · · · ·MR. CARGILL:· Okay.· Let's go back on the 12· record. 13· · · · · ·I will object to the admissibility of this 14· document for any purposes.· I will not object to counsel 15· questioning the witness about this document for purposes 16· of this deposition. 17· · · · · ·And I'll note that, as I think we already have, 18· that it is a confidential settlement communication. 19· · · · · ·MR. LEECH:· And I will note for the record that 20· this document is referenced in Proficio Mortgage 21· Ventures' Answers to Interrogatories as being its 22· computation of its claimed damages in this case.· And to 23· the extent counsel wants to reference the document as its 24· claimed damages in its case, I think it is admissible for 25· purposes; however, that's for another -- Page 81 ·1· · · · · ·MR. CARGILL:· The attachment is referenced as a ·2· calculation of damages.· The correspondence, the ·3· settlement correspondence between counsel, is not ·4· admissible.· But the attachment is referenced as a ·5· calculation of damages. ·6· · · · · ·MR. LEECH:· Okay.· So your objection, then, is ·7· just directed at the first two pages of this exhibit? ·8· · · · · ·MR. CARGILL:· No.· It's -- it's to the ·9· admissibility of the entire document. 10· · · · · ·MR. LEECH:· Including the chart calculating your 11· damages? 12· · · · · ·MR. CARGILL:· At this time, yes. 13· · · · · ·MR. LEECH:· Okay.· Well, I mean, obviously, we 14· disagree.· I disagree with the merits of the objection. 15· But for purposes of the deposition, I think we can just 16· proceed. 17· · · · · ·MR. CARGILL:· And I'll instruct the witness to 18· read through the entire document before you answer any 19· questions on it. 20· · · · · ·MR. LEECH:· Please go ahead and review the 21· document, and please let me know when you're finished. 22· · · · · · · · ·(Pause in the proceedings.) 23· · · · · ·MR. CARGILL:· I'll change my mind and clarify. 24· · · · · ·I do not object to the admissibility of the last 25· three pages of this document. Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 22 of 58 Page 82 ·1· · · · · ·THE WITNESS:· Okay. ·2· · · Q.· ·(BY MR. LEECH:)· Okay.· Have you had an ·3· opportunity to review this document? ·4· · · A.· ·I have. ·5· · · Q.· ·Are you familiar with this document at all? ·6· · · A.· ·Not the first two pages, no. ·7· · · Q.· ·Okay.· Are you familiar with the third page of ·8· this document? ·9· · · A.· ·Yes. 10· · · Q.· ·What is the third page of this document? 11· · · A.· ·It is a calculation of the lost premiums on 12· loans, the list of loans we discussed earlier that PMV 13· has claimed that FSB took, stole, closed improperly, I 14· guess, from PMV. 15· · · Q.· ·Okay.· Then looking at the columns on this 16· chart, I see a "month" and "year" column? 17· · · A.· ·Yes. 18· · · Q.· ·Is that your understanding the date the loan 19· closed? 20· · · A.· ·Yes. 21· · · Q.· ·And before I go further -- 22· · · A.· ·Or I should clarify that:· Funded. 23· · · Q.· ·Funded by Federal Savings Bank? 24· · · A.· ·Correct. 25· · · Q.· ·Okay. Page 83 ·1· · · · · ·MR. CARGILL:· Objection to the extent it ·2· misstates the document.· It's the month the loan closed, ·3· not the date. ·4· · · · · ·THE WITNESS:· Oh, yes, correct. ·5· · · Q.· ·(BY MR. LEECH:)· And before we go any further, ·6· did you prepare this chart? ·7· · · A.· ·Yes. ·8· · · Q.· ·Okay.· And in preparing it, did you rely on the ·9· list of loans that you were provided that are on the next 10· two pages of this exhibit? 11· · · A.· ·Yes. 12· · · Q.· ·So we talked about the "month" column, which is 13· the month the loan was funded by Federal Savings Bank, 14· correct? 15· · · A.· ·Umm-hmm, correct. 16· · · Q.· ·The next column says "FSB Funded $." 17· · · · · ·What does that column represent? 18· · · A.· ·That should be the sum of loans that funded in 19· that month. 20· · · Q.· ·Okay.· So the principal balance of the loans 21· that were funded in that month? 22· · · A.· ·Correct, the sum of those loans. 23· · · Q.· ·The sum of those principal balances? 24· · · A.· ·Yeah. 25· · · Q.· ·Okay.· So when we look at the line for Page 84 ·1· July 2014 -- ·2· · · A.· ·Umm-hmm. ·3· · · Q.· ·-- we see $152,280 was the amount funded.· And ·4· then the next column over is "# of Loans."· I assume ·5· that's the number of loans that were funded in that ·6· month? ·7· · · A.· ·Yes. ·8· · · Q.· ·So when I read those columns together, I ·9· would -- I can conclude that there's one loan in the 10· amount -- with an unpaid balance in the amount of 11· $152,280 that was funded by Federal Savings Bank in July 12· of 2014? 13· · · A.· ·Yes. 14· · · Q.· ·And then for August when we look down, it's 15· 449,928 is the amount listed under the "FSB Funded $," 16· and the number of loans listed is "3."· So we can 17· conclude that there are three loans that were funded by 18· Federal Savings Bank with an aggregate total balance of 19· $449,928, correct? 20· · · A.· ·Yes. 21· · · Q.· ·And that's true for all of the rows on this 22· chart? 23· · · A.· ·Yes. 24· · · Q.· ·The next column over is "PMV Average Premium." 25· · · · · ·What does that represent? Page 85 ·1· · · A.· ·That represents PMV's average principal for the ·2· month of July 2014 that PMV was receiving on their loans ·3· that they sold in that month. ·4· · · Q.· ·And you said "average principal." ·5· · · · · ·Did you mean "average premium"? ·6· · · A.· ·Average premium, yes, I did.· Thank you. ·7· · · Q.· ·And how did you calculate the average premium? ·8· · · A.· ·It was -- I calculated it using the total loans ·9· that were in that month of July and divided by the total 10· premium received from -- from the sale of those loans. 11· · · Q.· ·Which produced the percentage that is listed on 12· this chart? 13· · · A.· ·Correct. 14· · · Q.· ·Do you have records supporting your calculation? 15· · · A.· ·I do. 16· · · Q.· ·And in the next column over, it says "Calc. 17· Premium." 18· · · · · ·What does that column represent? 19· · · A.· ·"Calculated premium" is what it stands for.· And 20· it is the calculated premium on the loans associated 21· with -- in column -- I guess the "FSB Funded" column, so 22· it is the 10.58 percent of the $152,280 for the month of 23· July. 24· · · Q.· ·So that calculated premium column, that's 25· produced by multiplying the number in the "FSB Funded" Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 23 of 58 Page 86 ·1· column times the percentage in the "PMV Average Premium" ·2· column; is that correct? ·3· · · A.· ·Yes. ·4· · · Q.· ·Okay.· And then the next column over is the ·5· "Cost to Fund Loan." ·6· · · · · ·What does that represent? ·7· · · A.· ·That represents the average commissions to loan ·8· officers, sales managers, processors.· Also loan fees ·9· from our LOS, couple other things. 10· · · · · ·There's fees on loans from an organization 11· called "MERS."· It relates to title -- it represents 12· those loan fees associated with loans.· And that is the 13· cost per loan, because you have one loan in the month of 14· July times those costs. 15· · · · · ·And then flowing down, to calculate that, 16· it's -- it's the total "Cost to Fund a Loan" times the 17· number of loans in that "# of Loans" column per month. 18· · · Q.· ·Okay.· So that's the cost to fund an individual 19· loan, or is that the total to fund all of the loans in 20· the "# of Loans" column? 21· · · A.· ·So the number of loan -- in the number -- say 22· again?· I want to make sure we're -- say that again? 23· · · Q.· ·Okay.· Let me -- 24· · · A.· ·Yeah. 25· · · Q.· ·-- let's go down and use a real example here. Page 87 ·1· · · A.· ·Yep. ·2· · · Q.· ·In August of 2014, the "# of Loans" column lists ·3· the number "3." ·4· · · A.· ·Yep. ·5· · · Q.· ·The cost to fund loan is $3171. ·6· · · · · ·My question is:· Is that a per-loan cost, or is ·7· that the aggregate cost to fund three loans? ·8· · · A.· ·Aggregate cost to fund three loans. ·9· · · Q.· ·Okay.· And how did you determine those costs? 10· · · A.· ·Those were -- how did I determine the costs to 11· fund loans? 12· · · Q.· ·Yes. 13· · · A.· ·Those are the costs that we have to fund those 14· loans, the variable costs to fund those loans. 15· · · Q.· ·So are there any other variable costs -- strike 16· that. 17· · · · · ·Were there any other variable costs that you did 18· not take into account in determining that number? 19· · · A.· ·Not that I -- not that I can think of at the 20· moment. 21· · · Q.· ·And are there records that reflect how you 22· calculated that number? 23· · · A.· ·Yes. 24· · · · · ·And when you say "records," do I have support 25· for those numbers?· Is that what you're asking? Page 88 ·1· · · Q.· ·Yes. ·2· · · A.· ·Yes. ·3· · · Q.· ·I mean, if someone else -- if I wanted to put ·4· that number together -- ·5· · · A.· ·Yes. ·6· · · Q.· ·-- I could go to documents, and I could put that ·7· number together? ·8· · · A.· ·Yes. ·9· · · · · ·MR. CARGILL:· Just objection to the extent that 10· any of those could be covered by attorney-client 11· privilege or work product privilege. 12· · · Q.· ·(BY MR. LEECH:)· So with respect to records used 13· to generate the numbers for the PMV average premium and 14· the cost to fund the loan, other than records 15· communicated to your attorney or created for purposes of 16· this litigation, are there records kept in the ordinary 17· course of Proficio Mortgage Ventures' business that could 18· be used to determine the values in those two columns? 19· · · A.· ·Yes. 20· · · Q.· ·Okay. 21· · · · · ·MR. CARGILL:· That's good, Counsel.· That's 22· good. 23· · · · · ·MR. LEECH:· It's a non-objection to form, I 24· guess. 25· · · · · ·THE WITNESS:· That was a good question. Page 89 ·1· · · Q.· ·(BY MR. LEECH:)· And then the last column is ·2· "Lost Net Income."· And how is this -- well, strike that. ·3· · · · · ·What does this column represent? ·4· · · A.· ·It's representing the net lost income from this ·5· calculation form.· So it -- it -- the formula to get to ·6· that is the column calculated -- or "Calc. Premium," less ·7· "Cost to Fund Loan" to get to a total amount, revenues ·8· less cost. ·9· · · Q.· ·And that would just be a simple subtraction from 10· those two columns? 11· · · A.· ·Yeah.· For example, August, the 48,966 plus 3171 12· thousand dollars [sic], if I can do math, is 45,795. 13· · · Q.· ·So the cost to fund the loan, would that include 14· the appraisal cost? 15· · · A.· ·No. 16· · · Q.· ·Why not? 17· · · A.· ·Why not?· Generally, most of the time those 18· appraisal costs were covered by the borrower. 19· · · Q.· ·Would it include any title company costs? 20· · · A.· ·I believe -- I'd have to double check my 21· calculation. 22· · · Q.· ·And how would you do that? 23· · · A.· ·I'd have to look at my records and how this was 24· on the spreadsheet that we calculated this. 25· · · Q.· ·Would that normally be a cost associated with Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 24 of 58 Page 90 ·1· closing a loan? ·2· · · A.· ·No, generally the title costs are net to the ·3· premium -- or the principal balance.· It's not a cost to ·4· the organization. ·5· · · Q.· ·Is it Proficio's custom and practice to give any ·6· kind of lender credits to borrowers when it closes a ·7· reverse mortgage? ·8· · · A.· ·Is it -- what was -- is it customary?· Is that ·9· what you asked?· Or what was the -- 10· · · Q.· ·Let's strike that question. 11· · · · · ·Are you familiar with the term "lender 12· credit" -- 13· · · A.· ·Yes. 14· · · Q.· ·-- in the context of the reverse mortgage 15· industry? 16· · · A.· ·Yes. 17· · · Q.· ·What is a lender credit? 18· · · A.· ·A lender credit is a benefit to the borrower 19· that the mortgage company gives to either offset 20· origination fees, appraisal fees, et cetera. 21· · · Q.· ·Did Proficio ever give lender credits to its 22· borrowers? 23· · · A.· ·Yes. 24· · · Q.· ·How often did it do so? 25· · · A.· ·I couldn't speculate on the percentage of that Page 91 ·1· at the moment. ·2· · · Q.· ·To the best of your recollection. ·3· · · · · ·MR. CARGILL:· Objection.· Asked and answered. ·4· · · Q.· ·(BY MR. LEECH:)· Go ahead and answer. ·5· · · A.· ·Maybe -- ·6· · · · · ·MR. CARGILL:· And calls for speculation, ·7· obviously. ·8· · · · · ·THE WITNESS:· 30 percent, maybe. ·9· · · Q.· ·(BY MR. LEECH:)· And those credits are used to 10· offset costs, like title company costs, origination 11· fees -- 12· · · A.· ·Um-hmm. 13· · · Q.· ·-- and appraisal fees? 14· · · · · ·Any other costs that Proficio would give a 15· credit to offset potentially? 16· · · A.· ·No. 17· · · · · ·And something to note, the premium does not 18· include origination fees.· So just wanted to note that 19· the premium is the premium from the investor.· That's the 20· only thing that this includes. 21· · · Q.· ·Now, how would those lender credits be accounted 22· for on a profit & loss statement in connection with a 23· reverse mortgage loan? 24· · · A.· ·It is a -- the lending credits are an offset to 25· revenue. Page 92 ·1· · · Q.· ·So they would reduce the profits of the mortgage ·2· subsidiary? ·3· · · A.· ·Correct. ·4· · · Q.· ·In preparing this chart, did you take into ·5· account lender credits at all? ·6· · · A.· ·We did.· We looked at lender credits as well as ·7· origination fees and noted that it was almost an -- close ·8· to an offset of a net effect of zero to this calculation. ·9· · · Q.· ·So you did take into account lender credits in 10· preparing this chart?· I couldn't quite hear you when you 11· answered it the first time. 12· · · A.· ·We -- we looked at lender credits as well as 13· origination fees and -- and noted that the impact to this 14· calculation was immaterial. 15· · · Q.· ·And would there be records supporting that 16· calculation? 17· · · A.· ·I believe so, yes. 18· · · Q.· ·And how would an origination fee be accounted 19· for on a P&L associated with any given mortgage? 20· · · A.· ·As we discussed earlier today, it's a revenue -- 21· stream of revenue for every loan. 22· · · Q.· ·So the origination fee would increase the profit 23· associated with the mortgage? 24· · · A.· ·It would increase the revenue associated with 25· every mortgage loan. Page 93 ·1· · · Q.· ·And what effect would it have on the profit? ·2· · · A.· ·It would increase the profit. ·3· · · Q.· ·I guess I'm trying to understand how the -- how ·4· did you reach the conclusion they were an offset?· What ·5· was your -- explain to me the methodology that you used. ·6· · · A.· ·I looked at total -- the total amount of fees ·7· that we received during the time period of origination ·8· fees as well as lender credits and noted that the net ·9· effect was immaterial. 10· · · Q.· ·Define "immaterial" for me. 11· · · A.· ·"Immaterial" is an amount that is not -- that -- 12· from an accounting perspective, it's an amount that would 13· not change the decision on someone looking at financial 14· statements. 15· · · Q.· ·And what would be the threshold for materiality 16· at Proficio Mortgage Ventures during 2014 and 2015? 17· · · · · ·MR. CARGILL:· Objection.· Vague. 18· · · · · ·THE WITNESS:· Yeah, I don't know what you mean 19· by "material." 20· · · · · ·What specifically are you looking for? 21· · · Q.· ·(BY MR. LEECH:)· The amount.· You look at a -- 22· you look at a number and you have to decide whether it's 23· material or not material from an accounting standpoint. 24· · · · · ·How big does that amount have to be to be 25· material? Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 25 of 58 Page 94 ·1· · · · · ·MR. CARGILL:· Related to what? ·2· · · · · ·THE WITNESS:· Yeah. ·3· · · · · ·MR. LEECH:· Related to reverse mortgages. ·4· · · · · ·THE WITNESS:· Related to reverse mortgages.· In ·5· general -- ·6· · · · · ·MR. CARGILL:· Objection.· Vague. ·7· · · · · ·THE WITNESS:· Yeah. ·8· · · Q.· ·(BY MR. LEECH:)· You used the term that it was ·9· "immaterial." 10· · · A.· ·Yes, I did. 11· · · Q.· ·So what was the number? 12· · · A.· ·I couldn't tell you at the moment.· I would have 13· to go back and look at the calculation. 14· · · Q.· ·And that calculation was based on actual 15· origination fees during the time periods in question and 16· actual lender credits given during the time period in 17· question? 18· · · A.· ·Actual Proficio Mortgage Ventures' origination 19· fees and lender credits, yes. 20· · · Q.· ·On this chart, does it take into account any 21· amounts owing to the affiliate manager pursuant to the 22· Affiliate Manager Agreement or the Transition Expense 23· Agreement? 24· · · A.· ·No. 25· · · Q.· ·Why not? Page 95 ·1· · · A.· ·Because these are -- we're calculating the lost ·2· revenue associated with -- with these loans. ·3· · · Q.· ·So this is not a lost profit calculation for ·4· Proficio Mortgage? ·5· · · A.· ·No, it's a lost revenue. ·6· · · · · ·MR. CARGILL:· Objection to the extent it ·7· misstates the document.· It says "Lost Net Income." ·8· · · · · ·MR. LEECH:· He prepared the document.· Are you ·9· objecting to his testimony or the question? 10· · · · · ·MR. CARGILL:· I'm just saying what the document 11· says. 12· · · Q.· ·(BY MR. LEECH:)· Do you know -- strike that. 13· · · · · ·From this document, how would we go about 14· determining the lost profits to Proficio Mortgage 15· Ventures associated with the loans in this time period? 16· · · A.· ·How -- say that again? 17· · · Q.· ·How would we go about determining the lost 18· profits to Proficio Mortgage Ventures associated with the 19· loans set forth on this chart? 20· · · A.· ·So assuming if these loans closed with Proficio 21· as opposed to FSB, how would we calculate the profits? 22· · · Q.· ·Yes. 23· · · A.· ·Okay.· You would take these revenues, add it to 24· the revenues to the Proficio Mortgage revenues that they 25· closed in that time period, offset with the expense Page 96 ·1· associated with these loans and the other loans, to come ·2· up with a net profit. ·3· · · Q.· ·And how would we determine which of these loans ·4· should be associated with the North American Marketing ·5· P&L and with the Proficio P&L referenced in the ·6· Transition Expense Agreement? ·7· · · A.· ·These loans were not just closed before and ·8· after that transition -- to -- say that again?· I want to ·9· make sure I'm understanding. 10· · · Q.· ·Can you read that back? 11· · · · · ·THE REPORTER:· QUESTION:· "And how would we 12· determine which of these loans should be associated with 13· the North American Marketing P&L and with the Proficio 14· P&L referenced in the Transition Expense Agreement?" 15· · · · · ·THE WITNESS:· Well, these loans weren't closed 16· by Proficio. 17· · · · · ·So if they were closed, is that what you're 18· asking? 19· · · Q.· ·(BY MR. LEECH:)· Yeah. 20· · · A.· ·It would be based on the application date, as 21· stated in the agreements, or the -- in the, what was -- 22· excuse me, let's make sure I'm stating this -- the 23· Transitional Expense Agreement and/or the Affiliate 24· Manager Agreement. 25· · · Q.· ·Now, the transition period began in November of Page 97 ·1· 2014, as we've discussed, correct? ·2· · · A.· ·Yes. ·3· · · Q.· ·So it's safe to say that all of the loans that ·4· closed prior to November 3, 2014, had they closed with ·5· Proficio Mortgage Ventures, Proficio Mortgage Ventures ·6· sole profit off those loans would have been the 70 basis ·7· points we talked about plus the $135 per loan file fee; ·8· is that correct? ·9· · · A.· ·The profit, yes.· The revenue would all have 10· been Proficio's. 11· · · Q.· ·Right.· But the profits. 12· · · A.· ·Okay. 13· · · Q.· ·The profits would have been just the 70 basis 14· points plus the $135 closed loan fee? 15· · · A.· ·Per that agreement, yes. 16· · · Q.· ·And any loan that had -- and any -- strike that. 17· · · · · ·And any loan for which the borrower had made an 18· application to Proficio prior to November 3, 2014, 19· that -- Proficio's profits associated with that loan 20· would have been 70 basis points plus the $135 per loan 21· flat fee; is that correct? 22· · · A.· ·Wasn't that the same question?· Did you just not 23· ask the same question?· I thought that was the question 24· you asked beforehand. 25· · · Q.· ·Well, my question before dealt with the loans Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 26 of 58 Page 98 ·1· that closed prior to -- that closed and were funded -- ·2· · · A.· ·Oh, okay. ·3· · · Q.· ·-- prior to the beginning of the transition ·4· period. ·5· · · · · ·My question now refers to, once the transition ·6· period begins -- ·7· · · A.· ·Okay. ·8· · · Q.· ·-- if the borrower had made an application to ·9· Proficio Mortgage Ventures prior to November 3, 2014, and 10· the loan closed and funded with Proficio Mortgage 11· Ventures, the sole lost profits Proficio Mortgage 12· Ventures would receive would be the 70 basis points of 13· the loan balance and the $135 per loan fee; is that 14· correct? 15· · · A.· ·If these loans closed with us -- when I say 16· "us," Proficio Mortgage Ventures -- per these agreements, 17· that's -- yes, that's how it would have been done. 18· · · Q.· ·Okay.· And when we flip the page and we look at 19· the list of individual borrowers that have been 20· identified -- 21· · · A.· ·Correct. 22· · · Q.· ·-- by Proficio, do you know which of these 23· borrowers had -- had made applications prior to 24· November 3, 2014, with Proficio Mortgage Ventures? 25· · · A.· ·I -- I don't. Page 99 ·1· · · Q.· ·Okay.· But Proficio Mortgage Ventures has ·2· records that would reflect that, correct? ·3· · · A.· ·Yes. ·4· · · Q.· ·And then just to close the circle:· If four ·5· loans which -- strike that. ·6· · · · · ·If the borrower made an application to Proficio ·7· Mortgage Ventures after November 3, 2014, and the loan ·8· closed and funded with Proficio Mortgage Ventures, LLC, ·9· Proficio Mortgage Ventures would have been entitled to 10· 100 percent of the net profit associated with that loan; 11· is that correct? 12· · · A.· ·Yes. 13· · · Q.· ·And so let's turn quickly to the last line on 14· this chart, October of 2015. 15· · · · · ·Before we do that, approximately how long does 16· it take from the time a borrower makes an application for 17· a reverse mortgage to the time that reverse mortgage is 18· closed and funded? 19· · · A.· ·Makes -- 20· · · · · ·MR. CARGILL:· Objection to the extent it calls 21· for speculation. 22· · · · · ·THE WITNESS:· Makes an application? 23· · · Q.· ·(BY MR. LEECH:)· Yes. 24· · · A.· ·It can be six to 18 months.· It's a very long 25· process, much longer than a forward. Page 100 ·1· · · Q.· ·So looking at this chart, in order for a loan to ·2· have closed or funded by the end of May -- or strike ·3· that. ·4· · · · · ·Looking at the chart, in order for a reverse ·5· mortgage loan to have closed and funded by April of 2015, ·6· based on your experience, the application would have had ·7· to have been made prior to November 2014?· I think I said ·8· 2014 twice, didn't I?· Strike that question. ·9· · · A.· ·Please, let's start over. 10· · · Q.· ·Yeah, apologies. 11· · · · · ·Your testimony is that, based on your experience 12· in the mortgage industry, that it takes approximately six 13· to 18 months from the date of an application for a 14· reverse mortgage -- for that reverse mortgage to be 15· closed and funded, correct? 16· · · · · ·MR. CARGILL:· I'm going to object to the extent 17· it calls for speculation and it's outside of the scope of 18· what this witness was presented for. 19· · · · · ·MR. LEECH:· This witness was noticed up as a 20· deposition. 21· · · · · ·MR. CARGILL:· Okay. 22· · · · · ·THE WITNESS:· So yeah, and let me clarify my 23· last statement because I -- let's -- can we read back my 24· statement?· I want to make sure I'm stating everything 25· correctly.· Is that okay? Page 101 ·1· · · Q.· ·(BY MR. LEECH:)· Yeah, it's fine with me. ·2· · · A.· ·Because your original question was:· What was ·3· the time frame from application to funding? ·4· · · Q.· ·Yeah. ·5· · · A.· ·Okay.· And I said six to 18 months? ·6· · · Q.· ·Yeah. ·7· · · A.· ·Okay.· I think that's probably a little too long ·8· from the application period.· From application, it could ·9· be -- and this is my best guess.· Again, this is not my 10· expertise.· I'm not involved in the -- the loan process 11· on a day-to-day basis.· But I know of instances where it 12· took four months, it took six months, it took eight 13· months from application. 14· · · Q.· ·Okay.· Well, let's look at a loan -- let's turn 15· to the bottom line in this -- 16· · · A.· ·Okay. 17· · · Q.· ·-- chart here.· The date is -- the month is 18· October of 2015. 19· · · · · ·Do you see that line? 20· · · A.· ·Yes. 21· · · Q.· ·And the line represents two loans that closed 22· with Federal Savings Bank in October of 2015. 23· · · · · ·Do you see that? 24· · · A.· ·Yes. 25· · · Q.· ·Are you familiar with any loans in any -- strike Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 27 of 58 Page 102 ·1· that. ·2· · · · · ·Is Proficio Mortgage Ventures claiming that any ·3· loans were improperly taken by Federal Savings Bank in a ·4· period beyond October of 2015? ·5· · · · · ·MR. CARGILL:· Objection.· Calls for a legal ·6· conclusion and argument. ·7· · · · · ·THE WITNESS:· Do you want me to answer it? ·8· · · Q.· ·(BY MR. LEECH:)· Yeah. ·9· · · A.· ·Okay.· Are we claiming -- are we claiming -- 10· state it again, please. 11· · · Q.· ·Well, this chart stops in October of 2015. 12· · · A.· ·Yes. 13· · · Q.· ·Are you claiming that there are loans in 14· November of 2015 that were improperly closed by Federal 15· Savings Bank? 16· · · · · ·MR. CARGILL:· Objection to the extent that the 17· correspondence that counsel wanted to include in this 18· speaks for itself and explains that these damages are 19· only calculated through a certain date. 20· · · · · ·THE WITNESS:· Yes.· This -- this document was 21· through a certain point in time and represents specific 22· damages related to premium on loans. 23· · · Q.· ·(BY MR. LEECH:)· So there are additional loans 24· that Proficio Mortgage Ventures is claiming are 25· improperly closed by Federal Savings Bank? Page 103 ·1· · · · · ·MR. CARGILL:· Objection.· Calls for a legal ·2· argument or conclusion. ·3· · · · · ·MR. LEECH:· I'm entitled to know the factual ·4· basis of Proficio's claimed damages in this case.· And ·5· the factual basis that I've seen is the number of loans ·6· that Proficio claims were improperly closed by Federal ·7· Savings Bank.· I think I'm entitled to know what the ·8· number of loans you're claiming were taken is.· And I ·9· think in a designated 30(b)(6) damages deposition, I 10· think I should be able to get this information.· I mean, 11· it's been asked for in interrogatories, it's being asked 12· for in 30(b)(6). 13· · · · · ·Where am I going to get this? 14· · · · · ·MR. CARGILL:· And you're asking the witness what 15· Proficio's legal claims are. 16· · · · · ·MR. LEECH:· I'm asking the factual basis of 17· Proficio's claimed damages in this case:· Are they 18· claiming loans beyond October of 2015? 19· · · · · ·MR. CARGILL:· There may be another way to ask 20· it, but I'm objecting to the way you're asking it. 21· · · · · ·MR. LEECH:· Well, the witness can answer. 22· · · · · ·THE WITNESS:· Are there other loans that 23· Proficio is claiming outside of this calculation? 24· · · Q.· ·(BY MR. LEECH:)· Correct. 25· · · A.· ·I know of other loans that could be included in Page 104 ·1· damage calculations. ·2· · · Q.· ·How many other loans? ·3· · · A.· ·I don't -- I'd have to look at the list. I ·4· don't recall.· I remember there were additional loans ·5· that we felt could possibly be included in the damages. ·6· · · Q.· ·And when were those loans closed? ·7· · · A.· ·I don't know.· I don't recall.· I don't remember ·8· the list specifically. ·9· · · Q.· ·And you don't remember the number of loans? 10· · · A.· ·No, not -- not ... 11· · · Q.· ·All right.· So going to the bottom line of this 12· chart, let's take a loan, a hypothetical loan, that 13· closed in October of 2015 at the Federal Savings Bank. 14· · · A.· ·Okay. 15· · · Q.· ·Let's say that loan had an application date 16· after November 3, 2014. 17· · · A.· ·Okay. 18· · · Q.· ·So it would have been -- so had it closed at 19· Proficio Mortgage Ventures, it would have been allocated 20· to the Proficio P&L per that Transition Expense 21· Agreement. 22· · · A.· ·Okay. 23· · · Q.· ·How would we get from the lost net income on 24· this chart to the net profits for Proficio Mortgage 25· Ventures on that loan? Page 105 ·1· · · A.· ·So in October of 2015, if we closed an ·2· additional two -- let's say -- can we just use the two ·3· loans? ·4· · · Q.· ·Sure.· And with the understanding this is a ·5· hypothetical. ·6· · · A.· ·Hypothetical. ·7· · · · · ·To close an additional two loans, you're going ·8· to have to pay these cost-to-fund costs that we -- that's ·9· in the document.· There would be premiums associated, and 10· we'll, just for hypothetical, use the $53,000.· The cost 11· to fund those loans is an additional $2100, leaving 12· revenues or net income of 51,768.· The -- and that would 13· really hit the bottom line. 14· · · Q.· ·So that would be the net profit for those loans? 15· · · A.· ·Yes, it would, umm-hmm. 16· · · Q.· ·If it was on the Proficio P&L? 17· · · A.· ·Correct. 18· · · Q.· ·Now, the expense -- the per-loan expenses -- 19· strike that. 20· · · · · ·When you prepared this chart -- 21· · · A.· ·Umm-hmm. 22· · · Q.· ·-- did you make any changes to the methodology 23· in which you determined the cost to fund a loan between 24· whether the loan -- strike the question. 25· · · · · ·When you prepared this chart, did you use Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 28 of 58 Page 106 ·1· different methodologies to determine the cost to fund a ·2· loan that was going on the NAM P&L versus the cost to ·3· fund a loan that was going on the Proficio P&L? ·4· · · A.· ·No. ·5· · · Q.· ·But the expenses associated with a loan on the ·6· NAM P&L versus a loan on the Proficio P&L would have been ·7· different, correct? ·8· · · A.· ·The only expenses that would be different would ·9· be the -- any amount owed to NAM. 10· · · Q.· ·But what about lead generation costs? 11· · · A.· ·Those would be the same. 12· · · · · ·MR. CARGILL:· Objection.· Lack of foundation. 13· · · Q.· ·(BY MR. LEECH:)· So I'm trying to understand: 14· Once Proficio terminated the Affiliate Manager Agreement 15· and took over the duties that North American Marketing 16· was providing to Proficio Mortgage Ventures, I'm 17· presuming there was some expense associated with those 18· duties; is that fair to say? 19· · · A.· ·That the duties performed now by Proficio 20· Mortgage Ventures, there was costs associated with that, 21· that they were doing that was previously done by NAM?· Is 22· that what you're saying? 23· · · Q.· ·Yeah. 24· · · A.· ·Yes. 25· · · Q.· ·And one of those costs would have been, for Page 107 ·1· example, lead generation? ·2· · · A.· ·Correct. ·3· · · Q.· ·And so did you take into account any lead ·4· generation costs in determining what the cost to fund ·5· these loans would be? ·6· · · A.· ·No.· Those lead costs that Proficio Mortgage now ·7· had to pay were paid previously by NAM.· So those costs ·8· pretty much offset themselves.· The -- the -- we had ·9· marketing costs on both sides, but NAM paid those 10· marketing costs as part of their service under the 11· affiliate agreement.· And now Proficio is now paying 12· those costs. 13· · · Q.· ·Right.· And this doesn't take into account 14· payments made to North American Marketing? 15· · · A.· ·No. 16· · · Q.· ·So does it take into account North American 17· Marketing's costs associated with any given loan? 18· · · A.· ·No. 19· · · Q.· ·And I guess my question is:· Once the Affiliate 20· Manager Agreement terminated, wouldn't North American 21· Marketing's costs associated with a given loan have now 22· become Proficio's costs associated with a given loan? 23· Isn't that -- 24· · · A.· ·Yes. 25· · · Q.· ·-- true? Page 108 ·1· · · A.· ·Umm-hmm. ·2· · · Q.· ·Okay.· So now instead of paying NAM for lead ·3· generations, it's going to whatever sources Proficio's ·4· using for lead generations, correct? ·5· · · A.· ·Yes. ·6· · · Q.· ·And these are new costs that it didn't have -- ·7· that Proficio did not have to pay prior to the ·8· termination of the affiliate manager agreement? ·9· · · A.· ·The new costs in the sense they have a new 10· allocation. 11· · · Q.· ·Right. 12· · · A.· ·They're no longer considered affiliate manager 13· costs, they're considered marketing costs. 14· · · Q.· ·Okay.· So there wouldn't have been any marketing 15· costs associated with the cost to fund a loan prior to 16· the termination of the affiliate manager agreement? 17· · · A.· ·Yeah, for the most part, yes. 18· · · Q.· ·But after the termination of the affiliate 19· manager agreement, there would have been marketing costs 20· associated with -- 21· · · A.· ·Correct. 22· · · Q.· ·-- funding a loan? 23· · · A.· ·But there wouldn't be affiliate manager costs. 24· · · Q.· ·Understood. 25· · · · · ·Did you take into account the marketing costs Page 109 ·1· associated with closing a reverse mortgage after the ·2· termination of the Affiliate Manager Agreement when you ·3· prepared this chart? ·4· · · A.· ·Did I take into account the marketing costs ·5· after the Affiliate Manager Agreement?· No. ·6· · · Q.· ·Would those costs need to be taken into account ·7· to determine the net profit of Proficio in connection ·8· with any given reverse mortgage loan? ·9· · · A.· ·In any given, or these specific? 10· · · Q.· ·In these specific ones. 11· · · A.· ·In these specific, in my opinion, no. 12· · · Q.· ·Why not? 13· · · A.· ·Because the claim is that their marketing was 14· taken from Proficio that was already paid for by Proficio 15· through the NAM agreement.· So the marketing cost was 16· already paid for. 17· · · Q.· ·But then to properly account for the 18· transaction, we'd still have to account for the revenues 19· minus the expenses, correct? 20· · · A.· ·But we already have.· Proficio already has 21· through their payments to marketing to NAM. 22· · · · · ·This is the lost revenues related to -- and the 23· income because those costs were already accounted for. 24· This is the revenue and the additional costs associated 25· with these loans that would be entitled to Proficio Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 29 of 58 Page 110 ·1· Mortgage Ventures from the damage claim. ·2· · · Q.· ·Okay.· And maybe I'm just not seeing it.· And ·3· maybe you could help me. ·4· · · A.· ·Okay. ·5· · · Q.· ·Where on this chart is that marketing cost ·6· accounted for? ·7· · · A.· ·It's not accounted for. ·8· · · Q.· ·I understand you get paid for it.· I understand ·9· that Proficio's paid for it. 10· · · A.· ·Okay. 11· · · Q.· ·But I'm trying to figure out how it's accounted 12· for here -- 13· · · A.· ·Are we doing a P&L -- 14· · · Q.· ·-- to get to a -- 15· · · A.· ·-- or are we doing a damage calculation? 16· There's two different things here.· We're talking 17· damages, and we're talking P&L -- 18· · · Q.· ·Okay. 19· · · A.· ·-- right? 20· · · Q.· ·What are the differences between damages and 21· P&L, in your mind? 22· · · A.· ·In my mind? 23· · · Q.· ·Sure. 24· · · · · ·MR. CARGILL:· Objection to the extent it calls 25· for a legal conclusion. Page 111 ·1· · · · · ·But go ahead. ·2· · · · · ·THE WITNESS:· Thank you. ·3· · · · · ·From my understanding, it's -- it's what ·4· Proficio Mortgage did not receive as from these loans ·5· that -- taken, stolen, lost, whatever you want to call ·6· it. ·7· · · Q.· ·(BY MR. LEECH:)· That's the damages? ·8· · · A.· ·Yes. ·9· · · Q.· ·And would that be the same as revenues? 10· · · A.· ·Well, kind of.· So it's the incremental revenues 11· and the incremental costs associated with the loans. 12· We've talked about fixed costs and variable costs before. 13· There were variable costs and -- related to -- I think is 14· what you're getting at.· The marketing is kind of a 15· variable cost. 16· · · Q.· ·Umm-hmm. 17· · · A.· ·But those marketing costs were already 18· calculated into the P&Ls with Proficio Mortgage, whether 19· it's the NAM P&L or the Proficio Mortgage P&L.· Those 20· costs were already accounted for. 21· · · · · ·This is a calculation of damages with the 22· revenues and the additional costs that would have been 23· needed to fund these loans and the income -- and income 24· it would provide. 25· · · · · ·The revenue, as we've discussed, for the premium Page 112 ·1· is in the premium -- or the "Calc. Premium" column.· We ·2· have the additional expenses to fund those loans and the ·3· net revenue and income because you would not have ·4· additional marketing costs to close these loans.· Those ·5· marketing costs were already accounted for in the P&Ls. ·6· · · Q.· ·Okay.· And then -- ·7· · · A.· ·If -- sorry. ·8· · · Q.· ·Go ahead. ·9· · · A.· ·No, I think I'm done. 10· · · Q.· ·Are you sure? 11· · · A.· ·I think so. 12· · · Q.· ·Okay.· And so what is the difference between 13· Proficio's P&L and its damages claim associated with 14· these individual loans? 15· · · · · ·MR. CARGILL:· Same objection. 16· · · · · ·THE WITNESS:· From my point of view? 17· · · Q.· ·(BY MR. LEECH:)· Yeah.· You used the phrase 18· "damages and P&Ls are two different things."· I'm trying 19· to understand what you meant by that. 20· · · A.· ·The damages to Proficio, is, you know, the -- 21· what's the best way to explain this? 22· · · · · ·Any organization, whether it's a bank, a 23· mortgage company, a law firm, have fixed costs.· And they 24· have -- they have marketing -- they have variable costs. 25· · · · · ·From my point of view, the damages here are Page 113 ·1· the -- is the -- it's the revenue and the variable costs ·2· it would have taken to close those loans at Proficio ·3· Bank.· The P&L would include all costs associated with ·4· the operations of the organization. ·5· · · Q.· ·So the marketing cost is not a variable cost in ·6· your mind? ·7· · · A.· ·Not in this calculation, no.· We're calculating ·8· damages. ·9· · · Q.· ·I thought you mentioned earlier that marketing 10· costs were, to an extent, a variable cost? 11· · · A.· ·No.· I said that you were implying that they 12· were making that statement.· I asked you if that's what 13· you were saying. 14· · · Q.· ·Okay.· Do you consider marketing costs to be a 15· variable cost in the reverse mortgage industry? 16· · · A.· ·It's -- that's a difficult answer.· You can look 17· at it two ways.· It kind of is, but kind of isn't. 18· · · Q.· ·Okay.· How would it -- how isn't it a variable 19· cost? 20· · · A.· ·A marketing cost, when you pay for that 21· marketing cost, you don't know if you're going to get one 22· loan or ten loans from those marketing costs. 23· · · · · ·So if I get zero, is it a variable cost to any 24· loan?· No.· It's a fixed cost.· But to produce more 25· loans, sometimes you have to increase marketing.· So in Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 30 of 58 Page 114 ·1· that sense, it can look and it can act as a variable cost ·2· as well. ·3· · · · · ·MR. LEECH:· Okay.· Do you want to take a break ·4· for lunch, Counsel?· I'm mostly done, but it's not -- ·5· it's going to be long enough that I don't think it makes ·6· sense to try to power through it. ·7· · · · · ·MR. CARGILL:· That's fine with me. ·8· · · (A break was taken from 12:38 p.m. to 1:36 p.m.) ·9· · · Q.· ·(BY MR. LEECH:)· Let's go back on the record. 10· · · · · ·Turning your attention back to Exhibit 7. 11· · · A.· ·Okay. 12· · · Q.· ·Why did you believe it was appropriate to 13· perform a damage calculation without taking into account 14· payments to be made to North American Marketing pursuant 15· to the Affiliate Manager Agreement? 16· · · · · ·MR. CARGILL:· Hold on.· Objection to the extent 17· it requires you to divulge conversations with Proficio's 18· attorneys or instructions from Proficio's attorneys. 19· · · Q.· ·(BY MR. LEECH:)· Okay.· Other than conversations 20· with Proficio's attorneys or instructions from Proficio's 21· attorneys, why did you think it was appropriate to 22· perform a damage calculation without taking into account 23· payments made to North American Marketing pursuant to the 24· North American Marketing agreement? 25· · · A.· ·I don't know if I can answer that because of Page 115 ·1· what he's -- because of client -- attorney-client ·2· privileges.· I was instructed to calculate something, so. ·3· · · Q.· ·Okay.· There was no reason outside of the ·4· privileged communications referenced by counsel? ·5· · · A.· ·Yes. ·6· · · Q.· ·Okay.· Flipping to the last page of Exhibit 7. ·7· · · A.· ·Okay. ·8· · · Q.· ·You see the four columns:· "First Name," "Last ·9· Name," "Loan Amount," and "Close Date." 10· · · · · ·I want you to go down the "Last Name" column and 11· stop when you reach the name "Valiquette," 12· V-A-L-I-Q-U-E-T-T-E. 13· · · A.· ·Oh, okay.· Yes. 14· · · Q.· ·Do you see that? 15· · · A.· ·Umm-hmm. 16· · · Q.· ·What's the first name on that line? 17· · · A.· ·Susan. 18· · · Q.· ·Okay.· Can you go -- can you go up that column 19· and see if you see an earlier instance of the name 20· "Valiquette"? 21· · · A.· ·I see a "William." 22· · · Q.· ·Okay.· So a "William Valiquette" and a "Susan 23· Valiquette." 24· · · · · ·What's the loan amount for William Valiquette? 25· · · A.· ·$400,320. Page 116 ·1· · · Q.· ·And going down to Susan Valiquette, what is the ·2· loan amount for Susan Valiquette? ·3· · · A.· ·Same amount, 400,320. ·4· · · Q.· ·And what's the loan close date for William ·5· Valiquette? ·6· · · A.· ·William is 6/11/2015. ·7· · · Q.· ·And the loan date for Susan Valiquette? ·8· · · A.· ·6/29/15. ·9· · · Q.· ·Do you know if those are the same loans? 10· · · A.· ·I -- I don't know. 11· · · Q.· ·Would it be common to -- in a reverse mortgage 12· business, would it be common for both the husband and 13· wife to be on a reverse mortgage? 14· · · · · ·MR. CARGILL:· Objection.· Calls for speculation. 15· · · · · ·THE WITNESS:· Is it common that they're both on 16· the same loan, is that what you asked? 17· · · Q.· ·(BY MR. LEECH:)· Yes. 18· · · A.· ·Yeah, it could be.· I mean, I've seen instances, 19· yes, when there's a husband and wife on the same loan. 20· · · Q.· ·Sure.· If these refer to the same loan, would 21· the mortgage originator be entitled to two premiums or 22· just to one? 23· · · A.· ·Just to one. 24· · · Q.· ·Okay.· So looking again on Exhibit 7, going back 25· to the chart. Page 117 ·1· · · A.· ·Umm-hmm. ·2· · · Q.· ·Looking at the "Cost to Fund Loan." ·3· · · · · ·Are there any variable expenses that we haven't ·4· discussed in this deposition that are associated with ·5· closing a reverse mortgage loan? ·6· · · · · ·MR. CARGILL:· Objection to the extent it's been ·7· asked and answered. ·8· · · · · ·THE WITNESS:· No, not that I can recall, no. ·9· · · Q.· ·(BY MR. LEECH:)· And for purposes of this 10· damage calculation, you treated the marketing costs 11· associated with these loans as a fixed cost. 12· · · · · ·Is that fair to say? 13· · · A.· ·I treated it as a cost that shouldn't be 14· included in this. 15· · · Q.· ·And your rationale was because it was previously 16· paid? 17· · · A.· ·Yes. 18· · · Q.· ·Okay.· Are there any variable costs associated 19· with closing a reverse mortgage loan that are not 20· reflected on this chart? 21· · · A.· ·That we haven't discussed? 22· · · Q.· ·That we have or haven't discussed. 23· · · A.· ·I think I've already answered it.· It didn't 24· include fees related to lender credits, and we also said 25· that it also didn't include the fee income for Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 31 of 58 Page 118 ·1· origination fees. ·2· · · Q.· ·Okay.· And it doesn't include the fees from ·3· North American Marketing? ·4· · · A.· ·It does not include those fees, no. ·5· · · Q.· ·Would there be fees associated with postage or ·6· notary costs associated with closing a reverse mortgage? ·7· · · A.· ·Postage, yes.· Probably -- notary, I'm trying to ·8· think if -- I don't -- possibly notary fees, yes. ·9· · · Q.· ·Would those fees be borne by the borrower, or 10· would those fees be borne by Proficio? 11· · · A.· ·Generally by the borrower. 12· · · Q.· ·How about postage?· Would postage fees be borne 13· by the borrower? 14· · · A.· ·Postage with a closed loan can be borne by the 15· borrower. 16· · · Q.· ·So other than lost revenues or income associated 17· with specific reverse mortgage loans allegedly taken by 18· The Federal Savings Bank, what other elements of damage 19· is Proficio claiming in this case? 20· · · A.· ·I -- I -- 21· · · · · ·MR. CARGILL:· Objection.· Calls for a legal 22· argument or conclusion. 23· · · · · ·THE WITNESS:· Um, sorry.· I -- I think in this 24· document that you handed to me, it kind of summarizes 25· those documents on page 2 in the first paragraph. Page 119 ·1· · · Q.· ·(BY MR. LEECH:)· Okay.· Let's look at that. ·2· Let's look at that first paragraph on page 2. ·3· · · · · ·MR. CARGILL:· And for the record, this is ·4· referring to a confidential settlement communication that ·5· is not admissible, or that we are taking the position ·6· that it is not admissible. ·7· · · · · ·MR. LEECH:· And we would have to disagree ·8· insofar as it's referenced by an interrogatory answer ·9· setting forth Proficio's damage claim. 10· · · Q.· ·(BY MR. LEECH:)· So I think we've talked about 11· the loans closed by Federal Savings Bank.· There's a 12· reference here to "the negative impact of the 13· Defendant's conduct upon PMV's HECM department." 14· · · · · ·Are you familiar with the impact on PMV's HECM 15· department from The Federal Savings Bank? 16· · · · · ·MR. CARGILL:· Objection to the extent that is an 17· area of expert testimony. 18· · · · · ·Go ahead. 19· · · · · ·THE WITNESS:· Yeah, I -- I couldn't really 20· answer that. 21· · · Q.· ·(BY MR. LEECH:)· Okay.· So you don't know? 22· · · A.· ·No.· I mean, I couldn't answer to the negative 23· impact.· But, yeah. 24· · · Q.· ·Are you familiar with the amount Proficio 25· Mortgage Ventures has spent in attorneys' fees in this Page 120 ·1· matter? ·2· · · A.· ·Approximately, yes. ·3· · · Q.· ·Approximately how much? ·4· · · · · ·MR. CARGILL:· Objection.· Don't answer. ·5· · · · · ·THE WITNESS:· Okay. ·6· · · · · ·MR. CARGILL:· It's privileged. ·7· · · · · ·MR. LEECH:· You're telling me the amount of fees ·8· are privileged? ·9· · · · · ·MR. CARGILL:· Yes. 10· · · · · ·MR. LEECH:· So you're not asserting fees in this 11· case? 12· · · · · ·MR. CARGILL:· We are. 13· · · · · ·MR. LEECH:· So you're going to assert the 14· privilege as a sword and a shield.· You get to claim the 15· attorneys' fees, but I don't get to know what they are? 16· · · · · ·MR. CARGILL:· The amount of attorneys' fees is a 17· privileged item.· The amount of attorneys' fees that they 18· incurred, the amount, is a privileged item. 19· · · · · ·MR. LEECH:· I'm not asking for the details 20· associated with the fees.· I'm just asking for the plain 21· and simple amount that you're claiming as damages. 22· · · · · ·MR. CARGILL:· Right.· And I don't think this 23· witness is required to provide that. 24· · · · · ·MR. LEECH:· Why not? 25· · · · · ·MR. CARGILL:· Because it's privileged. Page 121 ·1· · · · · ·MR. LEECH:· I -- I'm at a loss as to how you can ·2· claim an item of damages that you won't let me have ·3· discovery on.· Because if I'm not allowed to explore what ·4· the damages are in the course of discovery, particularly ·5· in a 30(b)(6) damages witness deposition, I don't see how ·6· you can claim it. ·7· · · · · ·And I'm going to object for the record, then, to ·8· the inclusion of attorneys' fees as an item of damages at ·9· all in this case if I'm not allowed discovery on it. 10· · · · · ·MR. CARGILL:· Okay.· Without waiving any 11· privileges or objections and with objecting to its 12· admissibility at this time, I'll instruct the witness to 13· answer to the extent he can. 14· · · · · ·MR. LEECH:· And if you just want to stipulate 15· that attorneys' fees are off the table in this case, we 16· don't even have to go down this road.· I mean, I'm only 17· asking because it's claimed as an element of damages. 18· Normally I wouldn't ask, but if it's claimed as damages, 19· I have to do discovery. 20· · · · · ·And I -- I'll state simply for the record that I 21· think by claiming attorneys' fees in this action, 22· Proficio Mortgage Ventures has an at-issue waiver of its 23· attorneys' fees in connection with this case.· So to the 24· extent there is any privilege -- and I don't think all 25· amounts are covered by privilege, for that matter -- but Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 32 of 58 Page 122 ·1· to the extent there is a privilege, I think there's been ·2· an at-issue waiver of it. ·3· · · · · ·MR. CARGILL:· Okay.· Well, I don't think we have ·4· to argue the issue with the court reporter taking it all ·5· down.· We can bring this up with the Court if we need to. ·6· · · · · ·I think there's a -- there is a time in ·7· litigation when that information would have to be ·8· divulged; I disagree that it's right now with this ·9· witness. 10· · · · · ·But, as I said, to the extent you know, without 11· waiving anything else, go ahead and answer. 12· · · Q.· ·(BY MR. LEECH:)· Okay.· Go ahead and answer. 13· · · A.· ·Okay. 14· · · Q.· ·The question pending was:· Approximately how 15· much -- well, the question was:· How much in attorneys' 16· fees has Proficio Mortgage Ventures incurred to date in 17· connection with this case? 18· · · A.· ·Approximately 400,000. 19· · · Q.· ·I'll show you what we'll mark as the next 20· exhibit. 21· · · · ·(Exhibit-8 was marked for identification.) 22· · · · · ·MR. CARGILL:· I'm going to object to the use of 23· the document, any questioning on the document or 24· including the document as an exhibit to this deposition 25· on the basis of attorney-client privilege. Page 123 ·1· · · · · ·MR. LEECH:· I'll disagree with the ·2· characterization the document is privileged.· The ·3· document was produced in discovery, so I don't see any ·4· scenario in which the elements of the privilege can be ·5· sustained. ·6· · · · · ·MR. CARGILL:· Okay.· Take it up with the Court, ·7· if you want. ·8· · · Q.· ·(BY MR. LEECH:)· Go ahead and review this ·9· document. 10· · · A.· ·Okay. 11· · · Q.· ·Let me know when you've finished reviewing it. 12· · · A.· ·Okay. 13· · · Q.· ·Are you familiar with this document? 14· · · A.· ·Yeah. 15· · · Q.· ·Have you seen this document before today? 16· · · A.· ·Yes. 17· · · Q.· ·What is this document? 18· · · A.· ·As it states, "Expense and Procedure Allocation 19· Agreement." 20· · · Q.· ·"Expenses and Proceeds"? 21· · · A.· ·"And Proceeds" -- sorry, yes.· Thank you -- 22· "Allocation Agreement." 23· · · Q.· ·Okay.· Now, directing your attention to 24· paragraph 3 of this agreement.· The first sentence of 25· that section reads, "All Expenses incurred in connection Page 124 ·1· with the Action shall be paid by Proficio, provided that ·2· NAMI will reimburse Proficio for one half of such ·3· Expenses." ·4· · · · · ·Do you see that sentence? ·5· · · A.· ·Yes. ·6· · · Q.· ·And looking at the definitions above higher on ·7· the page, it seems that "NAMI" is North American ·8· Marketing, Inc.; is that correct? ·9· · · A.· ·Yes. 10· · · Q.· ·Has North American Marketing, Inc., reimbursed 11· Proficio for any of the expenses incurred in connection 12· with this litigation? 13· · · · · ·MR. CARGILL:· Objection.· Instruction is not to 14· answer.· It's attorney-client privileged. 15· · · · · ·MR. LEECH:· So the payment of a non-attorney to 16· a financial institution is attorney-client privilege? 17· · · · · ·MR. CARGILL:· Yes.· The arrangements between 18· Proficio and North American Marketing with regard to the 19· handling of this litigation is privileged.· This falls 20· under that category. 21· · · · · ·MR. LEECH:· Even the amounts of payments is 22· privileged, in your mind? 23· · · · · ·MR. CARGILL:· At this point, yes. 24· · · · · ·MR. LEECH:· At what point do you intend to waive 25· it?· Or at what point is it going to cease to be Page 125 ·1· privileged?· Because this is my problem:· We can't ·2· selectively assert the privilege.· I take the dep, and ·3· when the dep's over, I've got no chance to ask some ·4· questions about it.· And all of a sudden, Oh, it's not ·5· privileged, and here's the amount.· I mean, that's not ·6· reasonable. ·7· · · · · ·MR. CARGILL:· I don't need to make the argument ·8· on the record right now. ·9· · · · · ·MR. LEECH:· Well, that's fine.· But just 10· understand that, to the extent you're going to use the 11· attorney-client privilege to bar me from inquiring into 12· the details of the attorney fee arrangements in this case 13· that you are claiming as damages, I am going to object 14· and -- and move to have them completely stricken from 15· this case. 16· · · Q.· ·(BY MR. LEECH:)· So has North American Marketing 17· reimbursed Proficio for any of its legal expenses 18· incurred in connection with this case? 19· · · · · ·MR. CARGILL:· Same instructions. 20· · · Q.· ·(BY MR. LEECH:)· Are you refusing to answer the 21· questions? 22· · · · · ·THE WITNESS:· My instruction's not to? 23· · · · · ·MR. CARGILL:· Yes. 24· · · · · ·THE WITNESS:· Yes. 25· · · Q.· ·(BY MR. LEECH:)· Okay.· I'll certify the Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 33 of 58 Page 126 ·1· question. ·2· · · · · ·You referenced earlier that Proficio incurred ·3· approximately 400,000 in attorneys' fees. ·4· · · · · ·Is that number a net number of North American ·5· Marketing's reimbursements, or is that a gross number? ·6· · · · · ·MR. CARGILL:· Objection.· Asked and answered. ·7· · · · · ·And I'll instruct you not to answer. ·8· · · · · ·THE WITNESS:· Okay. ·9· · · Q.· ·(BY MR. LEECH:)· Are you abiding by your 10· counsel's instruction? 11· · · A.· ·I am. 12· · · · · ·MR. LEECH:· Certify that question. 13· · · Q.· ·(BY MR. LEECH:)· Going down further into this 14· paragraph, there's a line where it says, "NAMI's 15· aggregate reimbursements under this agreement will not 16· exceed $50,000." 17· · · A.· ·I see that. 18· · · Q.· ·Okay.· Do you know if North American Marketing, 19· Inc., has reached that $50,000 cap in its reimbursements 20· to Proficio Mortgage Ventures? 21· · · · · ·MR. CARGILL:· Same instructions. 22· · · Q.· ·(BY MR. LEECH:)· You're refusing to answer the 23· question? 24· · · A.· ·Yes. 25· · · · · ·MR. LEECH:· Certify it. Page 127 ·1· · · · · ·MR. CARGILL:· Counsel, I -- I'm not going to let ·2· the witness answer any questions about this document. ·3· · · · · ·MR. LEECH:· I understand. ·4· · · · · ·MR. CARGILL:· We're asserting -- we're objecting ·5· to it, asserting the privilege -- ·6· · · · · ·MR. LEECH:· And the proper procedure for ·7· challenging a privilege is to ask the question, he ·8· refuses to answer, and then I move to compel. ·9· · · · · ·MR. CARGILL:· Okay. 10· · · Q.· ·(BY MR. LEECH:)· And then the next sentence 11· after the reference to the NAMI reimbursement cap reads, 12· "Once aggregate Expenses exceed two times the NAMI 13· Reimbursement, all expenses will be paid by Proficio" -- 14· and that's defined as the "post cap payments" -- and 15· then, "subject to reimbursement upon the receipt of 16· Proceeds discussed in Section 4 below." 17· · · · · ·Do you know if any post-cap payments have been 18· made by Proficio Mortgage Ventures? 19· · · · · ·MR. CARGILL:· Same instructions. 20· · · Q.· ·(BY MR. LEECH:)· Do you refuse to answer the 21· question? 22· · · A.· ·Yes. 23· · · · · ·MR. LEECH:· Certify it. 24· · · Q.· ·(BY MR. LEECH:)· Then directing your attention 25· to Section 4.· Can you review that section?· Let me know Page 128 ·1· when you've finished. ·2· · · · · · · · ·(Pause in the proceedings.) ·3· · · · · ·MR. CARGILL:· You don't have to because you're ·4· going to be instructed not to answer anyway. ·5· · · · · ·THE WITNESS:· Thank you.· Yes, I'm done. ·6· · · Q.· ·(BY MR. LEECH:)· Okay.· Is it your understanding ·7· that, pursuant to the terms of this agreement, in the ·8· event there are any proceeds of this litigation, a total ·9· of one-half of the -- of all of the litigation expenses 10· will have been paid by North American Marketing? 11· · · · · ·MR. CARGILL:· Same instructions. 12· · · Q.· ·(BY MR. LEECH:)· Do you refuse to answer the 13· question? 14· · · A.· ·Yes. 15· · · · · ·MR. LEECH:· Certify it. 16· · · Q.· ·(BY MR. LEECH:)· And lastly, is this a true and 17· correct copy of the Expenses and Proceeds Allocation 18· Agreement between Proficio Mortgage Ventures -- strike 19· that. 20· · · · · ·Is this a true and accurate copy of the Expenses 21· and Proceeds Allocation Agreement between North American 22· Marketing, Inc., and Proficio Bank? 23· · · · · ·MR. CARGILL:· To the extent you know, you can 24· answer. 25· · · · · ·THE WITNESS:· I believe so. Page 129 ·1· · · Q.· ·(BY MR. LEECH:)· Okay. ·2· · · · · ·MR. CARGILL:· For the court reporter, I'll be ·3· asking that this be kept separate from the remainder of ·4· the transcript and the other exhibits and mark as it ·5· already is marked, "Attorneys Eyes Only." ·6· · · Q.· ·(BY MR. LEECH:)· And turning back to Exhibit 7, ·7· page 2, first paragraph, little Romanette (iv) in that ·8· paragraph, that -- that particular portion of the ·9· sentence reads, "The amounts by which TFSB and/or the 10· former employees were unjustly enriched." 11· · · · · ·Do you know the amount of -- do you know the 12· amounts that are referenced in that paragraph? 13· · · · · ·MR. CARGILL:· Seriously?· Objection.· Calls for 14· a legal argument or conclusion. 15· · · · · ·THE WITNESS:· Are we on Exhibit 7? 16· · · Q.· ·(BY MR. LEECH:)· Exhibit 7, paragraph 2, little 17· Roman numeral (iv). 18· · · A.· ·I -- I couldn't answer to that.· It's not -- 19· · · Q.· ·Okay.· So you don't know. 20· · · · · ·Other than the types of damages we've discussed 21· and the attorneys' fees that you've been instructed not 22· to answer on, are there any elements of damages that 23· Proficio Mortgage Ventures is claiming in this case? 24· · · · · ·MR. CARGILL:· Objection.· Calls for a legal 25· argument and conclusion. Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 34 of 58 Page 130 ·1· · · · · ·THE WITNESS:· Are there additional damages that ·2· we're claiming?· I couldn't answer to -- to that from -- ·3· from a legal standpoint.· I don't know what we -- you ·4· know, what you can and what you can't. ·5· · · Q.· ·(BY MR. LEECH:)· Are there any other damages ·6· that Proficio believes it's incurred in connection with ·7· The Federal Savings Bank's conduct other than what we've ·8· discussed here today? ·9· · · · · ·MR. CARGILL:· Same objections. 10· · · · · ·THE WITNESS:· And in addition to what's included 11· in the paragraph that we've discussed in Exhibit 7, 12· page 2, first paragraph, I -- I don't know if there's 13· more that could or could not be included.· I don't know. 14· · · Q.· ·(BY MR. LEECH:)· Did Proficio Mortgage 15· Ventures -- strike that. 16· · · · · ·Is Proficio Mortgage Ventures, LLC, still in 17· business today? 18· · · A.· ·Is it still a -- 19· · · · · ·MR. CARGILL:· Object to the form. 20· · · · · ·THE WITNESS:· Yeah.· Can you clarify?· When you 21· say "in business" ... 22· · · Q.· ·(BY MR. LEECH:)· Does it still originate 23· mortgages either forward or reverse? 24· · · A.· ·No. 25· · · Q.· ·Does it engage in any activity other than Page 131 ·1· litigation that is or could produce revenues for Proficio ·2· Mortgage Ventures, LLC? ·3· · · · · ·MR. CARGILL:· Object to the form and relevance. ·4· · · · · ·THE WITNESS:· To the best of my knowledge, no. ·5· · · Q.· ·(BY MR. LEECH:)· When did Proficio Mortgage ·6· Ventures stop originating reverse mortgages? ·7· · · · · ·MR. CARGILL:· Object to the form. ·8· · · · · ·Go ahead. ·9· · · · · ·THE WITNESS:· June 10, 2016, I believe was the 10· date. 11· · · Q.· ·(BY MR. LEECH:)· June 10, 2016? 12· · · A.· ·Sixteen. 13· · · Q.· ·Okay.· And were you involved in the decision for 14· Proficio Mortgage Ventures to cease originating reverse 15· mortgages? 16· · · A.· ·Yes. 17· · · · · ·MR. CARGILL:· Objection.· Vague. 18· · · Q.· ·(BY MR. LEECH:)· What were the bases for the 19· decision to -- well, strike that. 20· · · · · ·Who made the decision at Proficio to stop 21· originating reverse mortgages? 22· · · A.· ·Executive management and the board of directors. 23· · · Q.· ·And this would be the board of Proficio Bank as 24· opposed to Proficio Mortgage Ventures?· Or which board? 25· · · A.· ·Proficio Bank, Proficio Mortgage -- yeah, Page 132 ·1· Proficio Bank. ·2· · · Q.· ·And what were the bases for that decision? ·3· · · A.· ·Basis was due to lack of profits from Proficio ·4· Mortgage, yeah. ·5· · · Q.· ·And when did Proficio Mortgage Ventures cease to ·6· be profitable in its reverse mortgage operation? ·7· · · A.· ·Early '16, early 2016. ·8· · · Q.· ·If I recall correctly, the Proficio Mortgage ·9· Ventures accounted for approximately half of the profits 10· for Proficio Bank in 2015; is that correct? 11· · · A.· ·I think so.· Well, yes.· Profits or -- yeah. 12· No. 13· · · · · ·You said profits in '15? 14· · · Q.· ·I said profits in '15. 15· · · A.· ·And I think that's what I said, yeah.· Yes.· Or 16· were we talking -- I thought we were talking revenues at 17· the time.· I don't know if we were talking profits -- or 18· were we doing both?· I can't -- 19· · · Q.· ·We were doing both. 20· · · A.· ·Okay.· And I -- can we -- I don't know.· We 21· can't go back there, but ... 22· · · · · ·MR. CARGILL:· If you don't understand, ask him 23· to clarify. 24· · · · · ·THE WITNESS:· Can you clarify? 25· · · Q.· ·(BY MR. LEECH:)· Sure.· I think we talked Page 133 ·1· earlier -- ·2· · · A.· ·Okay.· What was -- just restate your question. ·3· · · Q.· ·All right.· I think you already answered -- ·4· · · A.· ·Yeah. ·5· · · Q.· ·-- but I'll do it again -- ·6· · · A.· ·That's fine. ·7· · · Q.· ·-- just so we're clear. ·8· · · A.· ·Yeah. ·9· · · Q.· ·As I think we discussed earlier, in 2015, 10· Proficio Mortgage Ventures accounted for 50 percent of 11· the profits approximately for Proficio Bank; is that 12· correct? 13· · · A.· ·I think so, yes. 14· · · Q.· ·And I also believe that -- my understanding from 15· your testimony is that that was almost exclusively from 16· mortgage origination, those profits; is that correct? 17· · · A.· ·Yes. 18· · · Q.· ·So what changed in 2016 that caused the reverse 19· mortgage division to cease to be profitable? 20· · · A.· ·And let me kind of back up.· And I've -- I'm not 21· going to say mis-answered, but I -- I think we were 22· discussing -- and I may have misunderstood -- the profits 23· for the mortgage company as a whole -- 24· · · Q.· ·Umm-hmm. 25· · · A.· ·-- forward and reverse. Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 35 of 58 Page 134 ·1· · · · · ·The PMV was not profitable in '15. ·2· · · Q.· ·Okay. ·3· · · A.· ·Okay.· The reverse mortgage division was, the ·4· forward mortgage division wasn't.· We shut it down, and ·5· there was trailing cost with that. ·6· · · Q.· ·Okay. ·7· · · A.· ·What happened in -- to answer your question what ·8· happened in '15 versus '16 and specific to the -- the ·9· operating group at the time, reverse mortgage, we shut 10· down some branches that weren't profitable.· And there 11· were some changes in the industry as well that seemed to 12· have some challenges.· Production dropped significantly. 13· It's -- it's kind of the overall, you know, reason why. 14· · · Q.· ·Okay.· And are you familiar with why production 15· dropped significantly in 2016 as opposed to 2015? 16· · · A.· ·A lot of it was due to a group in '15 that was 17· no longer with us in '16. 18· · · Q.· ·And what group was that? 19· · · A.· ·A group -- "branch" is a better term for it. 20· · · Q.· ·Okay. 21· · · A.· ·The branch in Columbia, Missouri. 22· · · Q.· ·Did lack of capital play any role in the 23· decision to shut down the reverse mortgage operation of 24· Proficio Mortgage Ventures? 25· · · A.· ·Lack of capital where? Page 135 ·1· · · Q.· ·In either Proficio Bank or Proficio Mortgage ·2· Ventures. ·3· · · A.· ·When -- yes. ·4· · · Q.· ·What role did that play? ·5· · · A.· ·The banks are required to keep a certain level ·6· of capital, and we couldn't take additional losses which ·7· would impact that capital if we wanted to -- we didn't ·8· want to lose any more capital.· And that's what happens ·9· when you have sustained losses in a division. 10· · · Q.· ·Is that called "Tier 1 capital"? 11· · · A.· ·That's one of the capital ratios. 12· · · Q.· ·Okay.· Are there other capital ratios? 13· · · A.· ·Yes. 14· · · Q.· ·And was there any specific capital ratio that 15· you were looking at in connection with the losses 16· associated with Proficio Mortgage Ventures, or was it all 17· of the capital ratios? 18· · · A.· ·We looked at all of them, yes. 19· · · Q.· ·Is that capital, is that like a -- is that like 20· a reserve that has to be capped that can't be used for 21· operational activities, just something that you have to 22· have available to you?· Or how does the capital ratio 23· work? 24· · · A.· ·How does the capital ratio requirement work? 25· · · Q.· ·Sure.· I'm not in the banking business, as you Page 136 ·1· can probably tell, so. ·2· · · A.· ·Yeah, it's not -- it's not an amount you can't ·3· use.· But a bank -- it's a ratio, like a lot of ratios in ·4· business are used, to measure performance, you know, ·5· sustainability, et cetera.· And Tier 1 capital ratio, as ·6· you mentioned, is -- is one of those that the regulators ·7· use and have levels that -- for a requirement of banks. ·8· · · ·(Court reporter interrupted for clarification.) ·9· · · A.· ·It's a requirement for banks. 10· · · Q.· ·And how are those ratios calculated? 11· · · A.· ·So Tier -- Tier 1 is calculated as -- so capital 12· as a percentage of average assets.· So capital is your 13· enumerator and average assets is the denominator. 14· · · Q.· ·And how would losses of Proficio Mortgage 15· Ventures affect that ratio? 16· · · A.· ·Losses decrease capital which decreases the 17· enumerator which decreases the ratio. 18· · · Q.· ·Okay.· And is that true for the other ratios 19· that we're talking about? 20· · · A.· ·Other ratios, yes.· It -- it would -- in a 21· similar way, yes. 22· · · Q.· ·And capital, would that refer to cash on hand, 23· cash equivalence?· What -- what do you mean by "capital"? 24· · · A.· ·No.· Capital is -- so retained earnings, 25· additional paid-in capital, common stock.· It does not Page 137 ·1· refer to cash. ·2· · · Q.· ·Okay.· Would it refer in general to equity -- ·3· · · A.· ·Yes. ·4· · · Q.· ·-- in an accounting term? ·5· · · A.· ·Exactly. ·6· · · Q.· ·Okay.· And just so -- I'm sure you know what ·7· this term is, and I think I know what it is.· But just so ·8· we're all clear -- ·9· · · A.· ·Okay. 10· · · Q.· ·-- and we're on the same page:· "Equity" refers 11· to total assets minus total liabilities; is that correct? 12· · · A.· ·Correct. 13· · · Q.· ·Okay.· Proficio Mortgage Ventures -- strike 14· that. 15· · · · · ·Proficio Bank is a state-chartered bank, 16· correct? 17· · · A.· ·Yes. 18· · · Q.· ·And Proficio Mortgage Ventures, was that company 19· licensed by individual states to originate mortgages? 20· · · A.· ·The answer to that is yes and no.· So -- and 21· I'm -- I'm not an expert in -- in how the whole licensing 22· works.· It's more of our compliance department. 23· · · · · ·But from my -- my best understanding is because 24· Proficio Mortgage Ventures is a wholly-owned subsidiary 25· of Proficio Bank, a state-chartered bank, there is Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 36 of 58 Page 138 ·1· specific guidelines to what states require individual ·2· licensing and more of like an umbrella-type license for ·3· other states. ·4· · · · · ·Does that make sense? ·5· · · Q.· ·Kind of. ·6· · · · · ·In 2014, were there states in which Proficio ·7· Mortgage Ventures, LLC, was not able to originate reverse ·8· mortgages? ·9· · · A.· ·Yes. 10· · · Q.· ·Do you know what those states are? 11· · · A.· ·Hawaii -- Hawaii, I believe is one, I think, 12· because we just didn't have a license out there.· That's 13· all I can recall off the top of my head. 14· · · Q.· ·How about Massachusetts? 15· · · A.· ·Um, yeah.· I think Massachusetts was the only 16· other one that wasn't -- we didn't have a license in. 17· · · Q.· ·What about Oregon? 18· · · A.· ·I'm pretty sure we did.· There was only one or 19· two that we weren't licensed and weren't able to do 20· mortgages in. 21· · · Q.· ·And how about Washington D.C.? 22· · · A.· ·That's not a state. 23· · · Q.· ·That's a fair -- fair point. 24· · · · · ·MR. CARGILL:· Good answer. 25· · · · · ·MR. LEECH:· That is a very good answer. Page 139 ·1· · · · · ·THE WITNESS:· I did go -- I know my U.S. history ·2· a little bit. ·3· · · Q.· ·(BY MR. LEECH:)· So was Proficio Mortgage ·4· Ventures licensed to originate reverse mortgages in the ·5· District of Columbia? ·6· · · A.· ·I believe so. ·7· · · Q.· ·So looking back at the loans that Proficio ·8· claims Federal Savings Bank improperly took, if any of ·9· those -- if any of the properties securing those loans 10· was located in a state in which Proficio was not licensed 11· to originate a reverse mortgage, Proficio could never 12· have closed with that borrower; is that correct? 13· · · A.· ·Yes. 14· · · Q.· ·And it would not be proper to claim revenues or 15· profits from that mortgage as damages in this case; would 16· that be correct? 17· · · · · ·MR. CARGILL:· Objection to the extent it calls 18· for a legal conclusion. 19· · · · · ·THE WITNESS:· I don't understand the legal 20· side -- ramifications of that, but I would say probably 21· not be able to include that. 22· · · Q.· ·(BY MR. LEECH:)· Okay. 23· · · · · ·I'll show you what we'll mark as our next 24· exhibit. 25· · · · ·(Exhibit-9 was marked for identification.) Page 140 ·1· · · · · ·MR. CARGILL:· Nine? ·2· · · · · ·MR. LEECH:· I believe we're on nine, yes. ·3· · · · · ·MR. CARGILL:· It is. ·4· · · Q.· ·(BY MR. LEECH:)· Go ahead and briefly review ·5· this, and let me know when you're finished. ·6· · · A.· ·Okay.· Okay. ·7· · · Q.· ·Do you recognize this document? ·8· · · A.· ·Yep.· Yes. ·9· · · Q.· ·What is this document? 10· · · A.· ·It's the Asset Purchase Agreement between 11· Proficio Mortgage and North American Marketing. 12· · · Q.· ·Did you participate in this asset purchase 13· transaction in any way? 14· · · A.· ·In -- in some way, yes. 15· · · Q.· ·And what role did you play in this asset 16· purchase transaction? 17· · · A.· ·I think reviewing assets, reviewing the -- 18· the -- just kind of reviewing the financials of -- of and 19· assets of both sides. 20· · · Q.· ·Okay.· Directing your attention to page 3, 21· Section 2.1. 22· · · A.· ·Umm-hmm. 23· · · Q.· ·This summarizes the assets to be transferred. 24· · · · · ·Are you familiar with the assets that were 25· transferred as part of this transaction? Page 141 ·1· · · A.· ·In general, yes. ·2· · · Q.· ·In general, what were those assets? ·3· · · · · ·MR. CARGILL:· Objection to the extent the ·4· document speaks for itself. ·5· · · · · ·THE WITNESS:· Yeah.· For the most part, there ·6· were some fixed assets, tables, chairs, desks, stuff like ·7· that, that we were purchasing from them. ·8· · · Q.· ·(BY MR. LEECH:)· And were there also customer ·9· leads included in this transaction? 10· · · A.· ·I believe so. 11· · · Q.· ·I'm looking at Section 2.1(c).· There's a 12· reference to the Sugar CRM System. 13· · · · · ·Do you know what that system refers to? 14· · · A.· ·"CRM" is Customer Relationship Manager. 15· · · · · ·MR. CARGILL:· Objection to the extent the 16· document says, "As herein defined," with regard to the 17· Sugar CRM System. 18· · · Q.· ·(BY MR. LEECH:)· And do you understand generally 19· what sort of information, data, and intellectual property 20· was transferred as part of this transaction that related 21· to the Sugar CRM System? 22· · · A.· ·Specifics, not a lot, no. 23· · · Q.· ·What's the best of your understanding? 24· · · A.· ·It was a database of -- of customers or -- 25· what's the best way to describe this?· Contacts, I guess Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 37 of 58 Page 142 ·1· is the best way to describe it.· A database of contacts. ·2· · · Q.· ·Would these be potential customers, or were ·3· these individuals who had already either begun or ·4· completed the loan process at Proficio Mortgage Ventures? ·5· · · A.· ·I believe -- ·6· · · · · ·MR. CARGILL:· Objection to the extent it calls ·7· for speculation. ·8· · · · · ·THE WITNESS:· Yeah, I don't deal with it much. ·9· But from my understanding, it would include all of the 10· above. 11· · · Q.· ·(BY MR. LEECH:)· So both customers and -- 12· · · A.· ·Potential -- 13· · · Q.· ·-- leads? 14· · · A.· ·Yes. 15· · · Q.· ·Well -- 16· · · A.· ·Okay.· I'll let you finish.· Go ahead. 17· · · Q.· ·I'm sorry.· My question refers to actual 18· existing customers. 19· · · · · ·Was actual existing customer information part of 20· this purchase from the Sugar -- of the Sugar CRM System 21· referenced in this agreement? 22· · · · · ·MR. CARGILL:· Objection to the -- if counsel is 23· using "actual existing customers" as a legal term, then 24· I'll object to the extent it calls for a legal 25· understanding or conclusion. Page 143 ·1· · · · · ·Go ahead to the extent you can. ·2· · · · · ·THE WITNESS:· The purchased information wasn't ·3· the customer information that was Proficio's that we had ·4· already closed and worked on. ·5· · · Q.· ·(BY MR. LEECH:)· Okay. ·6· · · A.· ·This would have been in addition to -- ·7· · · Q.· ·Okay. ·8· · · A.· ·-- that information we had already had, is my ·9· understanding of the CRM information. 10· · · Q.· ·So the CRM information was -- consisted of 11· individuals who had not yet applied for a loan at 12· Proficio, or just individuals who had not closed a loan 13· at Proficio? 14· · · · · ·MR. CARGILL:· Again, I'll object to the extent 15· the document speaks for itself. 16· · · · · ·THE WITNESS:· I can't answer that.· I don't 17· know. 18· · · Q.· ·(BY MR. LEECH:)· You don't know. 19· · · · · ·Okay.· Going down to Section 2.3. 20· · · A.· ·Okay. 21· · · Q.· ·That refers to an assignment to purchaser of all 22· customers leads described in Schedule 2.3. 23· · · A.· ·Okay. 24· · · Q.· ·And if you want, you can flip through to Section 25· 2.3, which is near the back. Page 144 ·1· · · A.· ·Okay. ·2· · · Q.· ·Do you see Schedule 2.3? ·3· · · A.· ·Yes. ·4· · · Q.· ·It refers to all leads in the North American ·5· Marketing leads database as of the close of business on ·6· October 3, 2014; is that correct? ·7· · · A.· ·Yes. ·8· · · Q.· ·"The leads" -- strike that. ·9· · · · · ·Is the North American Marketing leads database 10· something that is different from the Sugar CRM System, or 11· is it the same? 12· · · A.· ·Without knowing what that -- I don't know. 13· · · Q.· ·What would you need to know that? 14· · · · · ·MR. CARGILL:· Objection.· Calls for speculation. 15· · · · · ·THE WITNESS:· I would need to know both 16· databases. 17· · · Q.· ·(BY MR. LEECH:)· Okay.· But when you were 18· reviewing the assets that -- in connection with this 19· transaction, you didn't review the databases? 20· · · A.· ·That wasn't part of what I was doing, no. 21· · · Q.· ·Okay.· What assets did you review in connection 22· with this transaction? 23· · · A.· ·More of the hard, physical assets. 24· · · Q.· ·Okay.· Now, leads were something that North 25· American Marketing was providing to Proficio Mortgage Page 145 ·1· Ventures as part of the Affiliate Manager Agreement; ·2· isn't that correct? ·3· · · A.· ·Yes. ·4· · · Q.· ·When did North -- when did Proficio Mortgage ·5· Ventures -- strike that. ·6· · · · · ·So are the leads being purchased here in ·7· connection with this transaction different from the leads ·8· that were previously provided to Proficio Mortgage ·9· Ventures? 10· · · A.· ·That is my understanding, yes. 11· · · Q.· ·Okay.· So when did the lead go from being a 12· North American Marketing lead to being a Proficio 13· Mortgage Ventures lead? 14· · · · · ·MR. CARGILL:· Objection to the extent it calls 15· for a legal conclusion. 16· · · Q.· ·(BY MR. LEECH:)· And you can reference any of 17· these documents if you think it would be helpful. 18· · · A.· ·Well, when did a North American Marketing lead 19· become a Proficio marketing lead? 20· · · Q.· ·Yes. 21· · · A.· ·When they delivered them as part of their 22· service of the Affiliate Manager Agreement. 23· · · Q.· ·Okay.· How did they deliver that information to 24· Proficio Mortgage Ventures? 25· · · A.· ·Specifically, I'm -- I'm not sure.· Probably Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 38 of 58 Page 146 ·1· through -- yeah, I don't know.· I'm speculating, but ·2· through a list of leads of some sort. ·3· · · Q.· ·Okay.· And it's your understanding that when you ·4· prepared the chart in Exhibit 7, that all of the 91 loans ·5· referenced in connection with that chart were loans that ·6· originated from leads provided by North American ·7· Marketing? ·8· · · · · ·MR. CARGILL:· Object to the form. ·9· · · · · ·THE WITNESS:· Can you be specific? 10· · · Q.· ·(BY MR. LEECH:)· Well, sure.· Let's go back to 11· Exhibit 7. 12· · · A.· ·Yeah. 13· · · Q.· ·There we go.· Page 3 of Exhibit 7 is the chart 14· that we've discussed that shows 91 loans -- 15· · · A.· ·Yeah. 16· · · Q.· ·-- and all of the calculations that we've gone 17· over. 18· · · · · ·And then the following two pages are a list of 19· names of borrowers, loan amounts, and close dates. 20· · · · · ·Is it your understanding that all of those 21· borrower names on the last two pages of Exhibit 7 came 22· from North American Marketing leads? 23· · · · · ·MR. CARGILL:· Objection.· Lack of foundation. 24· The witness testified earlier as to who put that list 25· together and said it was not him. Page 147 ·1· · · · · ·Go ahead and answer to the extent you can. ·2· · · · · ·MR. LEECH:· Yeah. ·3· · · · · ·THE WITNESS:· Okay.· That list of 91 loans -- I ·4· can't speak if it was from NAM who provided the lead ·5· information or not, but it was from information that ·6· Proficio had at that time. ·7· · · Q.· ·(BY MR. LEECH:)· Had at what time? ·8· · · A.· ·The time -- well, prior to the individuals in ·9· question of taking this information, so before Naranjo 10· and his group left. 11· · · Q.· ·Okay.· So would any of these 91 names have been 12· in the lead list that were purchased as part of the Asset 13· Purchase Agreement? 14· · · A.· ·I don't know that.· I -- I don't know that.· But 15· as I testified, I -- it was not leads that Proficio 16· already had -- 17· · · Q.· ·Okay. 18· · · A.· ·-- from my understanding.· So I would say no. 19· · · Q.· ·Did the FDIC or a Utah Bank regulator ever 20· conduct a review of the operations of Proficio Mortgage 21· Ventures? 22· · · · · ·MR. CARGILL:· I'm going to guess that's a yes or 23· no.· You can go ahead and answer that. 24· · · · · ·THE WITNESS:· Yes. 25· · · Q.· ·(BY MR. LEECH:)· In 2016, did Proficio Bank and Page 148 ·1· the FDIC enter into a consent order in connection with ·2· the operations of Proficio Mortgage Ventures? ·3· · · · · ·MR. CARGILL:· I -- I'll remind the witness that ·4· he is not allowed to discuss certain things involving the ·5· FDIC.· There are some things that are a matter of public ·6· record.· So considering those things, if he can answer ·7· the question, go ahead, but not to disclose anything that ·8· he should not be discussing. ·9· · · · · ·So go ahead. 10· · · · · ·THE WITNESS:· Can you restate your question? 11· · · · · ·MR. LEECH:· Read it back. 12· · · · · ·THE WITNESS:· Can you read it back?· I just want 13· to make sure. 14· · · · · ·MR. LEECH:· Sure. 15· · · · · ·THE REPORTER:· QUESTION:· "In 2016, did Proficio 16· Bank and the FDIC enter into a consent order in 17· connection with the operations of Proficio Mortgage 18· Ventures?" 19· · · · · ·THE WITNESS:· Proficio Mortgage -- or Proficio 20· Bank and the FDIC did not enter into a consent order in 21· 2016. 22· · · Q.· ·(BY MR. LEECH:)· How about Proficio Mortgage 23· Ventures, LLC, and the FDIC?· Did those entities enter 24· into a consent order in 2016? 25· · · A.· ·No. Page 149 ·1· · · Q.· ·Are you familiar with any obligation by either ·2· Proficio Bank or Proficio Mortgage Ventures, LLC, to pay ·3· $250,000 to the FDIC? ·4· · · · · ·THE WITNESS:· Is that public record?· And I ·5· don't know if that's -- yeah. ·6· · · · · ·MR. CARGILL:· I'll instruct the witness not to ·7· answer unless a foundation can be laid that that is a ·8· matter of public record. ·9· · · · · ·MR. LEECH:· I don't know if that's a proper 10· instruction or objection. 11· · · · · ·My recollection is that it was published at the 12· end of May 2016 by the FDIC, that there was -- that that 13· action was taken. 14· · · · · ·MR. CARGILL:· Well, I -- I think you've asked if 15· there's a consent order, and he's answered. 16· · · Q.· ·(BY MR. LEECH:)· Do you know how that $250,000 17· penalty was calculated? 18· · · A.· ·I can't -- 19· · · · · ·MR. CARGILL:· I'm going to object that there's a 20· lack of foundation that there has been any penalty.· And 21· so I think in order for the witness to answer that 22· question, he is going to have to disclose certain things 23· involving the FDIC that he is legally precluded from 24· disclosing.· So that's why -- that's the basis for me 25· instructing him not to answer.· It's for the witness's Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 39 of 58 Page 150 ·1· own protection. ·2· · · · · ·MR. LEECH:· Okay.· Can we go off the record ·3· briefly? ·4· · · · · ·MR. CARGILL:· Sure. ·5· · · · · ·(A discussion was held off the record.) ·6· · · Q.· ·(BY MR. LEECH:)· Are you familiar with any ·7· consent orders that are public record between the FDIC ·8· relating to Proficio Bank or Proficio Mortgage Ventures ·9· that were entered into in 2016? 10· · · A.· ·Yes. 11· · · Q.· ·And was one of those consent orders a consent 12· order that called for either Proficio Bank or Proficio 13· Mortgage Ventures to pay $250,000 to the FDIC? 14· · · A.· ·Yes. 15· · · Q.· ·And just to clarify, there was only -- are you 16· aware of any more than one consent order? 17· · · A.· ·I am only aware of one. 18· · · Q.· ·Do you know -- 19· · · A.· ·And can I clarify, too? 20· · · Q.· ·Sure. 21· · · A.· ·"Consent order," I'm not sure if that's the 22· actual term, but something similar to or -- 23· · · Q.· ·An FDIC action of some kind. 24· · · A.· ·Thank you.· Yes, I will say yes to that. 25· · · Q.· ·Sorry.· I'm not trying to -- Page 151 ·1· · · A.· ·No -- ·2· · · Q.· ·-- give you a pop legal quiz here. ·3· · · A.· ·No, you're okay. ·4· · · Q.· ·Do you know how that $250,000 penalty was ·5· calculated? ·6· · · A.· ·I don't. ·7· · · · · ·MR. CARGILL:· Okay.· And -- and the witness is ·8· also -- for the witness's own protection, he cannot ·9· answer that. 10· · · Q.· ·(BY MR. LEECH:)· So you wouldn't know whether it 11· had any relationship to the profits earned by Proficio 12· Mortgage Ventures in connection with its association with 13· North American Marketing? 14· · · A.· ·I can't answer that. 15· · · Q.· ·Okay.· Did the FDIC play any role in 16· Proficio's -- in Proficio Bank's decision to shut down 17· the reverse mortgage division of Proficio Mortgage 18· Ventures, LLC? 19· · · · · ·MR. CARGILL:· I'll instruct the witness for his 20· own protection, and pursuant to legal requirements he 21· cannot answer that. 22· · · · · ·MR. LEECH:· I don't think I have anything 23· further. 24· · · · · ·MR. CARGILL:· All right.· Give me a minute. 25· Let's go off the record. Page 152 ·1· · · (A break was taken from 2:42 p.m. to 2:43 p.m.) ·2· · · · · · · · · · · · EXAMINATION ·3· BY MR. CARGILL: ·4· · · Q.· ·Throughout this deposition, there's been a lot ·5· of talk about damages, the use of the term "damages." ·6· · · · · ·Is your understanding of damages as it relates ·7· to this case based upon advice and instructions of ·8· Proficio's attorneys? ·9· · · A.· ·Yes. 10· · · Q.· ·When you computed and calculated the damages 11· that you've testified to in this case, was that based 12· upon the instructions of Proficio's attorneys? 13· · · A.· ·Yes. 14· · · Q.· ·I have nothing further. 15· · · · · ·MR. LEECH:· Okay.· I have nothing. 16· · · · · ·MR. CARGILL:· He'll reserve -- we'll reserve the 17· right to read and sign. 18· · · · · (The deposition concluded at 2:44 p.m.) 19 20 21 22 23 24 25 Page 153 ·1· Case:· Proficio Mortgage Ventures, LLC v · · · · · ·The Federal Savings Bank ·2· Case No.:· 2:15-CV-510-RFB-(VCF) · · Reporter:· Michelle Mallonee ·3 · · · · · · · · · · · ·WITNESS CERTIFICATE ·4 · · State of Utah· · · · · · ) ·5· · · · · · · · · · · ·ss. · · County of Salt Lake· · · ) ·6· · · · ·I, DAVID PITTMAN, HEREBY DECLARE:· That I am the · · witness referred to in the foregoing testimony; that I ·7· have read the transcript and know the contents thereof; · · that with these corrections I have noted this transcript ·8· truly and accurately reflects my testimony. ·9· PAGE/LINE· · · · · · CHANGE/CORRECTION· · · · · REASON 10· ____ ____· ·________________________________· __________ 11· ____ ____· ·________________________________· __________ 12· ____ ____· ·________________________________· __________ 13· ____ ____· ·________________________________· __________ 14· ____ ____· ·________________________________· __________ 15· ____ ____· ·________________________________· __________ 16· ____ ____· ·________________________________· __________ 17· · ______· · No corrections were made. 18 19 · · · · · · · · · · · · · · · · · ·__________________________ 20· · · · · · · · · · · · · · · · · · · DAVID PITTMAN 21· SUBSCRIBED and SWORN to at _____________________________, · · _____________________, this _______ day of _____________, 22· 2016. 23 · · · · · · · · · · · · · · · · · ·__________________________ 24· · · · · · · · · · · · · · · · · · ·Notary Public 25 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 40 of 58 Page 154 ·1· · · · · · · · · · · · ·CERTIFICATE ·2 ·3· · · · ·This is to certify that the foregoing deposition ·4· was taken before me, MICHELLE MALLONEE, a Registered ·5· Professional Reporter in and for the state of Utah; ·6· · · · ·That said witness was duly sworn to testify the ·7· truth, the whole truth, and nothing but the truth; ·8· · · · ·That the deposition was reported by me in ·9· stenotype and thereafter caused by me to be transcribed 10· into typewriting, and that a full, true, and correct 11· transcription of said testimony so taken and transcribed 12· is set forth in the foregoing pages; 13· · · · · That review of this deposition was requested and, 14· therefore, pursuant to Rule 30(e) of the Utah Rules of 15· Civil Procedure the witness shall have 28 days in which 16· to review and make changes to the transcript. 17· · · · · I further certify that I am not of kin or 18· otherwise associated with any of the parties to said 19· cause of action, and that I am not interested in the 20· event thereof. 21 22 23· · · · · · · · · · · · · · · ·____________________________ 24· · · · · · · · · · · · · · · · ·Michelle Mallonee, RPR 25 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 41 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 42 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 43 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 44 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 45 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 46 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 47 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 48 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 49 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 50 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 51 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 52 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 53 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 54 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 55 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 56 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 57 of 58 Case 2:15-cv-00510-RFB-VCF Document 89-4 Filed 01/27/17 Page 58 of 58 Exhibit E Case 2:15-cv-00510-RFB-VCF Document 89-5 Filed 01/27/17 Page 1 of 7 PTOfÍCIO AñŒate Manager Agreement .. MORTGAGESM a subsidiarvoi Pfern:IoBank THIS AGREEMENT is entered into between: Proficio Mottgage Ventures, LLC, located at 110 Hillerest Street Orlando, FL 32801, hereinafter referred to as"PMV", and North American Marketing, Inc., located at 2225 Village Walk Drive #200, Henderson, Nevada 89052, heminaiterreferred to as the "Affiliate Manager". WHEREAS PMV is engaged in the business of direct-tonsumer residential mortgage lending and wishes to improve itsability to identify and attract qualified customers; WHEREAS the Affiliate Manager has signißcant expertise with respect to direct-to-consumer residential mortgage lendingand has developed concepts, methods, and processes for attracting qualified customers and managing multiple retailInartgage origination branches; THEREFORE, the both parties enter into this Agmement as follows: 1. Duties afgliateManager. The AffiliateManager will provide the fouowing services to PMV: (a) Management Consulting Services. 11:e Affiliate Manager will provide management consulting services to a groupof retail mortgage production branches owned and operated by PMV (collectively be referred to as the "Group.")These management consulting services will, at a minimum, include: (Q Recruiting Services. The Affiliate Manager will assist PMV in the identification of potential retailmortgage origination ofBces and individual mortgage loan originators. (ii) Lead Generation & Marketing Services. The Affiliate Manager will assist the Group in identifyingprospective customers with a high likelihood of being able to benefit fmm home mortgage products offeredby PMV. Additionally, the Affiliate Manager will assist PMV with the development of sales systems andprocesses for converting leads into qualified customers. (lig Saler Tralning The Affiliate Manager will provide sales and leadership training to employees of thebranches assigned to the Group. (iv) Budgeting and Expense Management. The AfBliate Manager will provide recommendations for appropriatebudgeting decisions for each branch assigned to the Group and will endeavor to identify opportunities toreduce expenses and increase branch pmfitability. (v) Operational WorAflow Management. 111e AfEliate Manager will provide recommendations for improvingprocesses, procedures workflows in PMV's mortgage fulfillment centers. 2. Duties ofPMK With respect to all branches assigned to the Group, PMV will perform the following duties: (a) Employment of Originators and Enmches. PMV agrees to hire and employ loan originators and brauchesrecruited by the Affiliate Manager subject to PMV's standard employment qualifications and requirements. Allsuch loan originators and branches recruited by the Affiliate Manager will be assigned to the Group. (b) Operation of Branches. PMV win operate branches assigned to the Group in accordance with its standardpolicies, procedures, and practices and will make available to such branches all loan products, systems, marketingmaterials, and benefits that are typically available to other branches operated by PMV. 3. Afiliate Manager Campensation. As compensation for the services defined herein, the Affiliate Manager will receive,on a monthly basis, an amount equal to 100% of the monthly Group Profit, which will be calculated by subtracting allGroup expenses from Group revenues, in accordance with GAAP and the following sections: (a) Group Revenue. The Group will be credited with the following types ofmvenue: (i) Branch ProfitabHity. For each Branch assigned to the Gmup, a monthly Branch Pmfit will be calculated bythe Affiliate Manager under the supervision of PMV, as described in Append¿r A (Branch Compensation).Upon the conclusion of this calculation, any Branch Profits (less any portion of such Branch Profits that are Proficio Mortgage Ventures. LLC Page 1 of 6 initlais >1/11/2012 EXHIBIT ( WE i i MAN DATE: PROFICIODOOO935 ALPINE CO RT R RTING Case 2:15-cv-00510-RFB-VCF Document 89-5 Filed 01/27/17 Page 2 of 7 PfOfÎCÎO MiliateManager Agreement n EE295 contractually payable to another party, such as a nonoriginating branch manager) will be credited to theGroup (ii) Group Margin. For each loan deemed to have met the terms of Section 3(aXiv), subsections (a)-(d), aGroup Margin will be credited to the Group, as defined in Schedule I (Group Margin Schedule). Groupmargins may very by Branch; in such case, a sepamte Schedule I will be provided for each branch assignedto the Group. a. Revißions to Group Margin. Due to changing market conditions, it is anticipated that Group Marginsmay be periodically revised by PMV, subject to the requirements of the Modification ofCompenration Plan section contained herein. When such revisions occur, an updated Schedule Iwill be provided and such revisions will be effective for rate locks taken on or after the effective datecontained therein. Accordingly, the actual Group Margin credited as revenue will be the GroupMargin in effect on the date on which the loan's interest rate was locked with PMV. In the event of subsequent locks or relocks, the rate lock date will be considered to be the date of the base rate sheetused to determine the loan's pricing. (iii) Timing ofRevenues. Non-loan-level revenues, including those associated with branch profitability, will becredited to the Group on a monthly basis, in accordance with PMV's standard P&L calculation practices.Loan-level revenues, including fulfillment fees and Group Margin, shall be credited to the Group at auchtime that PMV detennines, at its sole and absolute discretion, that the associated loan has fully satisfied allof the foCowing conditions: a. the loan was originated by a branch assigned to the Group; b. the loan complies with all Federal, state, and local reguladons; e, the loan complies with PMV's published policies, procedures, and underwriting guidelines; 4 in the case of loans closed by PMV using PMV's funds, the loan has closed and funded; e. in the case of brokered loans closed by a wholesale lender or loans closed by PMV using anotherlender's funds (table-funded), the loan has funded, the loan revenues have been received by PMVfrom the lender, and the loan has been verified to be fully compliant with PMV's Brokered LoanPolicy. (b) Group &pemes. The Group shall be assessed expenses according to the following: (Q Branch Losses. Any monthly branch losses, after the application of any available branch reserve funds,attributable to branches assigned to the Group will be debited to the Group. The use of branch reserve fundsto offset branch losses shall typically not be permitted if the branch reserve is not fully funded. (ig Group Operational Erpenser. All direct expenses associated with Group operations will be debited to theGroup. These expenses include, but are not limited to, the following: a. Salaries and wages payable to Group employees. b. Third-party payroll fees and associated employee expenses, such as payroll taxes, PMV's share ofemployee benefits (health, retirement, etc.), FICA payments, etc., for all Group employees. c. Advertising, marketing, and recmiting costs, including pro-rated costs of any PMV-sponsored advertising in which the Group may choose to participate, d. All loan-level vendor or third-party service provider costs associated with loans underwritten byfulfillment centers assigned to the Group and not otherwise allocated to a branch. e. Group operating expenses, inoltiding, but not limited to, occupancy expenscs, lease payments,utilities and telecommunications expenses, office supplies and taxes. f. Recruiting, entertainment, and travel expenses. g. Legal and other expenses required to dispute any claims against Group or Group employees, or such expenses required to initiate a dispute on behalf of Group against another entity other than PMV. h. Costs related to compliance audits and reviews. i. Payments to fund mandatory Group reserve accounts, j. Any other costs incurred by PMV that are related to Group activity. Pioficio Mortgage Ventures, LI.C Page 2 of 6 InRials PROFIClOOOOO936 Case 2:15-cv-00510-RFB-VCF Document 89-5 Filed 01/27/17 Page 3 of 7 Affiliate Manager Agreement (iig PMV Managerment Fees. The following fees related to services provided by PMV will be debited to theGroup: Employee Boarding One-time $100 per employee etual cost estimated at $35 Preeessing-payroll p g per employee per month expenses if/when a payroll is Loan Fulfillment/ Quality Con 135 per closed loan PMV Management 70 bps on closed loan production (Iv) Loan Deficiencies. In the event that PMV incurs any loss, actual or estimated, as a result of any errors,mistakes, omissions, oversights, or misjudgments made knowingly or unknowingly in the origination, processing, underwriting, closing, or funding of a loan meeting the terms of Section 3(a)(iv), the fullamount of such loss (less any amount concurrently debited to a branch) will be debited to the Group. Por the purposes of this section, losses will be considered to include the cost of any regulatory penalties, investor suspense, late delivety, roll, or other similar fees, mark to market losses incurred if a loan cannot be sold to the originally targeted investor or is re-priced by an investor due to a deficiency, and any actual costs associated with curing loan deficiencies, as required by a regulator, investor, guarantor/insurer or other similar entity. (v) Timing of Expenses. Loan-level expenses tied directly to the closing and funding of loans shall be debited to the Group at the time that such loans meet the terms of Section 3(a)(iv). All other expenses shall bedebited to the Group as received or incurred by PMV. 4. Earning of Compensation. When the calculation of the Group Profit less any required reserves results in a positivenumber, the Affiliate Manager may elect to be paid all, or a part of, such Group Profit as compensation in any paymentperiod, in accordance with PMV's customary payment ces. PMV will pay earned compensation that is requestedinywritrng to be paid to the Affiliate Manager by th of allowing PMV's receipt of the request for i Retained Group Profft. In the event that the Affiliate ager does not elect to be paid all available Group Profks inany payroll period, such undistributed Group Profits will be held by PMV as a Retained Group Profit. Retained GroupProfits may be used in a future period to offset group losses or may otherwise be paid to the Affiliate Manager ascompensation in a future period. 6. Reserve.r. In order to ensure that sufficient funds are available to pay Group expenses and loan losses in months where there is insufficient revenue, the Affiliate Manager will be required to maintain a reserve account with PMV. Thisreserve may be used by PMV, at PMV's solo discretion, to pay any PMV expenses when such expense cannot becovered by current Group revenue. (a) Amount of Reserve. The required reserve amount will be equal to two months of the Group's total recuaringoperating expenses. PMV will calculate the Group's recurring operating expenses, using data from the prior threecalendar months as well as estimates of any increasing expenses, on a monthly basis and adjust the required reserve amount accordingly. (b) Funding of Reserve. The following amounts will be debited to the Group as an expense and credited to thereserve account: . If the reserve balance, as ofthe most recent calculation, is icss than the required amount, an amount equal to any potential Group Profit, such that any potential Group Profit is directed solely to the replenishmentof the reserve until the next calculation is performed and the reserve balance is confirmed to meet or Pacio Mortgage voeres. uc Page a er o iniaalsvilizatz PROFIClOOOOO937 Case 2:15-cv-00510-RFB-VCF Document 89-5 Filed 01/27/17 Page 4 of 7 Affiliate Manager Agreement exceed the reserve requirement. In this manner, the Group Profit may not exceed SO in periods when thereserve requirement is not met. (c) Disbursement of Reserve. If, at the conclusion of each reserve calculation, the Group's reserve balance exceedsthe required balance, any excess amount not attributable to ofTsetting branch reserves will be released from thereserve and credited to the Group as revenue. (d) Insuficiency ofReserve. If the reserve balance remains less than the required amount for more than 30 days or, ifat any time, PMV determinos that Group revenues will be insufficient to fund the reserve to this level within areasonable time, PMV may, with 60 days advance nodce, choose to terminate this Agreement for cause. (e) Branch Reserve Shortages. As defmed inAppendirA (Branch Compensation), each branch assigned to the Groupwill be required to raaiutain a separate and additional reserve. It in any period, the actual balance of any branchreserve is less than that branch's required reserve amount, the amount of the reserve shortfall (the amount of therequired balance less the actual balance) will be added to the Group's reserve requirement, as defmed herein, untilsuch time that the branch reserve has been replenished to its required balance. In this manner, any branch reserveshortages will be offset to PMV by a corresponding increase in the required Group reserve amount (f) Reserve Retainer Period. Upon tennination of this Agreement, PMV will release funds from reserves, and creditsuch funds to the Group as revenue, according to the following schedule (unless such funds are required to offsetany banch reserve shortages): • On the 61* day after termination, 50% of the reserve balance will be credited to the Group. • On the 120*day after termination, any remaining reserve balance will be credited io the Group, 7. Access to Accounting Information. During the term of this Agreement, and for twelve months after its termination,PMV agrees to provide the Affiliate Manager with detailed invoices or expense statements relating to any expensesassessed to the Group in order to document that such expenses were duly incmted by PMV as a result of the Group'sactivities. Additionally, PMV agrees to piovide the Affiliate Manager with reasonable access to PMV's accountingsystems, or otherwise agrees to provide all data and information relating to this Agreement in a reasonable and timelymanner, so that the Affiliate Manager can reconcile and document all revenue and expense items allocated to theGroup. In the event of any disputes, the Affiliate Manager, or its designated thinl-party accountant, will be permittedto work directly with PMV's Accounting department in order to resolve such disputes. 8. Termination. This Agreement may be terminated by either party by giving 90 days' advance written notice to the otherparty. Notwhhstanding the previous sentence, either party shall have the right to immediately terminate thisAgreement if the other party has been found to have íntentionally and knowingly violated any televant laws,regulations, PMV-promulgated policies, or any terms of this Agreement. 9. Modayication of Compensation Plan. Unless otherwise stated herein, PMV may, at its sole and absolute discretion,change this compensation plan, and the manner and schedule of payment, by giving 90 days' prior written notice to theAffiliate Manager. In all cases, any revisions to the Affiliate Manager's compensation shall be made on a prospectivebasis and shall not affect any compensation already earned. The Añiliate Manager recognizes and agrees that writtennotice provided in electronic format and delivered via electronic mail shall be considered a suñicient form ofnotification. 10. Revisions to Compensation. Due to the time constrafats associated with PMV's payment cycles, both parties agreethat, from time to time, errors may be made in the calculation of the Group's revenues or expenses, and by extensionthe Affiliate Manager's compensation. Accordingly, revisions may be made to the Group Profit and the AffiliateManager's compensation according to the following sections: (a) Calculation Errors. If an error has been made in any calculation, such calculations may be conected by PMVwithin 180 days of the date ofposting, If the Affiliate Manager believes a calculation error has been made, writtennotice, along with any supporting documentation, must be delivered to PMV's accounting department within thistimeframe. (b) Payment of Revised Compensation. In the event that any revisions result in greater Group Profits, PMV shalladjust the Group Profit, and the Affiliate Manager's share of such profit will be considered camed. In the event ,that the Group Profit must be reduced, such adjustment will be debited to the Group and payable in accordancewith the Advanced Payment or Overpayment of Compensation section, Prolicia Mortgage Ventures, LLC Page 4 of 6 InWala1/11/2012 PROFICIOOOOO938 Case 2:15-cv-00510-RFB-VCF Document 89-5 Filed 01/27/17 Page 5 of 7 gp§ik PTOf!CIO AŒHate Manager Agreement I n i MPÆME 11. Receipt ofRevenue. The Affiliate Manager agrees that all Group revenues shall be payable to, and shall be received for the benefit of, PMV. Any revenues received directly by the Ainliate Manager or any Group employees from third parties shall be immediately forwarded to PMV's corporate ofEce. The Affiliate Manager acknowledges and understands that the failure to forward any such revenues to PMV shall be considemd embezzlement or theft and criminal charges may result. 12. Advanced Payment or Overpayment ofComparation.If the Affiliate Manager was paid uneamed compensation due to a calculation error by the AffiliateManager or PMV, or if the Affiliate Manager was paid advanced compensation byPMV, the Affiliate Manager will have been overpaid and any such amount will be immediately due PMV. Ifrepayment is not made on demand, PMV reserves the right to deduct such sums from the Affiliate Manager's future compensation until the amount due PMV has been repaid. 13. Payment of Campearation Upon Terminatlen. Upon termination of this Agreement, the Group shall continue to eam revenue and be assessed customary expenses for a period of six months aûer the termination date, in order for trailing revenues and expenses to be properly allocated to the Group. During this period, the Afuliate Manager shall continue to eam compensation in accordance with this Agreement. At the conclusion of this period, a final reconciliation of theGroup revenues and expenses shall be performed by PMV and any remaining Group Profit and/or reserve balance shall be paid to the Affiliate Manager. 14. Lintitation of Compensation. Except as expressly provided herein, the Affiliate Manager shall not be entitled to anyfmther compensation, expressed or implied, including, but not limited to, salaries, draws, expense accounts, benefits,fringe benefits, commissions, or bonuses, 15. Payment Schedule. All compensation and other amounts payable to the Affiliate Manager shall accrue and be paidaccording to PMV*s customary payment practices. 16. Indenmification. The Affiliate Manager, jointly and severally with its principals, agmes to indemnify and hold harmless PMV against any and all losses incurred by PMV in the comse of operating the Group and its associated branches. This indemnification will be enforceable only after all Gmup reserve funds have been exhausted. 17. Limitation ofAuthority. The Affiliate Manager shall have no right to bind PMV in any contract or agreement, or to represent that it bas the right to do so. All contracts or agmements Lo which PMV is a party, including employment and vendor agreements, must be expressly authorized and executed by PMV. 18. ErelusMty. This Agreement provides no exclusivity of any type to the Affiliate Manager or to any branches assigned to the Group. PMV may operate other branches in the same states, markets, or areas as branches assigned to the Group, and may also engage other affiliate managers to operate in a similar fashion. 19. Confidentiality. Both parties agree that any information exchanged during this Agreement will be considered to beconfidential and must be treated as such, both during the term of this Agreement and for a period of five years aller itsterminadon. Additionally, the Affiliate Manager expressly agrees to safeguard and protect any non-public borrower orcustomer information obtained during the term of this Agreement and agrees to maintain the confidentiality of suchinformation in accordance with any and all applicable laws, including (without lfmitation) the Gramm-Leach-BlileyAct, 15 U.S.C. 6801, as amended, and all regulations issued pursuant thereto, and similar state laws and regulations,without limitation or expiration. 20, Limitation of Liability. The Affiliate Manager is not liable for the activities or pmduction of any other affiliate ofPMV. 21. Severability. Any illegality, invalidity, or unenforceability of any provision herein, in any jurisdiction, shall not invalidate or render iRegal or unenforceable in such jurisdiction the remaining provisions hemof, and shaH not invalidate or renderillegal or unenforceable such provision in any other jurisdicdon. In the event ihat the scope or dumtion of any provision hereof shaH be found to be unenforceable in any jurisdiction, then such provision shall be interpæted to provide for the broadest scope or longest duration which would be enforceable in such jurisdiction. 22. Assignment This Agreement may not be assigned by, by either party, to another entity without the written consent of the other party to this Agreement. 23. No Waivers. Waivers of; or failures to enforce, any provision ofthis Agreement, by either party, shall not be deemed to be a permanent waiver of any such provision or pavent the non-breaching party from enforcing the same and everyother provision of this Agreement at any time. Pmficio Mortgage Verttures, LLC Page 5 of G inillais /1/11/2012 PROFIClOOOOO939 Case 2:15-cv-00510-RFB-VCF Document 89-5 Filed 01/27/17 Page 6 of 7 PI"GIICIO Affiliate Manager Agreement m. MORTGAGEWE n whsitiary of Proficin enrA IN WITNESS WHEREOF, the undersigned have set their respective hands as ofthe date and year set forth below. BY: AFFILIATE MANAGER Scorr¯ -oco V Þ / 2el2u rized Signature T D te BY: PROFICIOMORTGAGEVENTURES, LLC Auth'orized Co a Signitpre Name and Title Date * Proficio Mortgage Ventures, LLC Page 6 of6 InRials1h t/2012 PROFIC\OOOOOS40 Case 2:15-cv-00510-RFB-VCF Document 89-5 Filed 01/27/17 Page 7 of 7
