Better, the online mortgage lender whose chief executive officer infamously fired 900 staffers on a Zoom call, is now facing a whistle-blower lawsuit.

CEO Vishal Garg misled investors in his effort to keep them on board with his plans to take the company public, an ex-executive said in a complaint filed Tuesday in Manhattan federal court.

Sarah Pierce, Better’s former executive vice president for sales and operations, says she was fired in February after directly confronting Garg and other company brass about his misstatements.

A Better spokesperson said a lawyer for the company said the claims are “without merit” and that the company is confident in its financial and accounting practices and “will vigorously defend this lawsuit.”

Garg has been leading the struggling lender in its effort to merge with a special-purpose acquisition company, or SPAC.

After the mass firing on a video conference call in December, Garg accused some of the terminated workers of “stealing” from the company by being unproductive.

Pierce says she pushed the company to put out a statement correcting Garg’s “misinformation” on the terminated employees and personally confronted him, saying she “would not enable his false narrative.”

Garg took a short leave from his post and apologized for how he handled the firings.

Pierce also accuses Garg of misrepresenting the company’s prospects to investors and directors. He told them the company would return to profitability in the first quarter of 2022 -- “despite Pierce and other senior leaders explicitly stating that this outcome was not possible,” according to the complaint.

In the fourth quarter of 2021, Better disclosed in a regulatory filing that its fourth-quarter net losses could reach $182 million. The company fired about 3,000 employees in the U.S. and India in March as rising interest rates weighed on the volume of new loans.

The lawsuit was reported earlier by the Wall Street Journal.

The case is Pierce v. Better Holdco Inc., 22-cv-04748, U.S. District Court, Southern District of New York (Manhattan).

Source:
courtesy of BLOOMBERG

by Robert Burnson

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