Cavner throws counterpunch in bank battle

Cavner left U.S. Bancorp Sept. 2 to start a brokerage division at The Signature Bank. U.S. Bancorp filed a lawsuit six days later, alleging that Cavner and four other former U.S. Bancorp employees illegally used confidential client lists – photocopied on rented copiers by interns and staff at off-site locations ¬– to solicit business away from U.S. Bancorp, with The Signature Bank’s knowledge.

U.S. Bancorp says that Cavner left U.S. Bancorp for rewards from The Signature Bank – a signing bonus, possible stock options and a board seat.

Cavner, however, has filed a counterclaim that says she left U.S. Bancorp because senior managers harassed her for blowing the whistle on an “inappropriate relationship” between Short and Gaustad.

Short is the president of U.S. Bancorp’s Insurance and Investments Division based in Ohio, and Gaustad is a marketing representative for U.S. Bancorp’s Insurance and Investments Division based in Minnesota.

“U.S. (Bancorp) has admitted in the court case that I was complaining of these issues and they did nothing to respond to my great concerns,” Cavner said. “Part of this is a huge bank displaying sour grapes with total disregard for clients in our community.”

Jay Dade, a Shughart, Thomson & Kilroy PC attorney representing U.S. Bancorp, said, “We categorically deny the allegations that she raised in her counterclaim.”

Cavner declined to elaborate on the nature of the relationship between Short and Gaustad or to describe why that relationship bothered her to begin with. The counterclaim also doesn’t describe the nature of the relationship between Short and Gaustad, saying only that the “relationship became a major distraction with the organization and was casting an unprofessional pall over U.S. Bank’s reputation in the industry.”

The counterclaim says Cavner and Carol Jacobsmeyer, U.S. Bank’s director of compliance, began reporting the relationship in fall 2004.

Cavner was unhappy when Short and Gaustad were not reprimanded after more than one complaint and when Jacobsmeyer was made to file reports through a different channel.

Cavner, according to the counterclaim, also left U.S. Bancorp because her office was not clean, was too small and was also in disrepair. It claims Cavner asked U.S. Bancorp to correct those problems and that it refused.

The counterclaim also asserts that U.S. Bancorp changed Cavner’s production targets mid-year.

“U.S. Bank officials have stated to others in the securities industry that it intends to use this lawsuit to make Ms. Cavner’s life miserable,” the counterclaim states.

It also says U.S. Bancorp owes Cavner $50,000 in compensation.

$51,000 misrepresentations

That money would nearly cover Cavner’s $51,000 fine for court misrepresentations, assessed by federal Judge Richard Dorr on Feb. 16.

Two months earlier, Dorr found that Cavner had misrepresented herself in court filings and through her attorney during a U.S. Bancorp motion for a temporary restraining order Sept. 13.

Dorr’s Feb. 16 written order said that U.S. Bancorp’s temporary restraining order would have been granted and not denied in September if Cavner hadn’t made false representations.

The order states that Cavner engaged in secret photocopying of U.S. Bancorp client information and that she withheld that knowledge from her attorney, Charles German of Kansas City firm Rouse Hendricks German May PC. Cavner stood silent in court while German unknowingly argued with false information, according to Dorr’s order.

“The court finds these misrepresentations to be particularly significant and aggravating because they were utilized by Cavner to gain an advantage in court that she would not have otherwise received,” Dorr wrote.

“The advantage gained by Cavner was significant,” Dorr added.

U.S. Bancorp attorney Dade said his client had nothing to add to the judge’s opinion, other than to say “U.S. (Bancorp) continues to stand by the truthfulness of its own representations to the court.”

Cavner said the misrepresentations she made in court didn’t prove U.S. Bancorp’s allegations.

“I made a mistake early in this process,” she said. “However, at the end of the day I can hold my head high because I have not solicited any U.S. (Bancorp) clients.”

Dorr ordered Cavner to reimburse U.S. Bancorp $26,000 for legal expenses directly incurred by her misrepresentations.

He also ordered her to pay $25,000 to the court clerk as a penalty for her actions.

Dorr wrote that $25,000 was “the appropriate amount of sanctions to deter defendant Cavner or others similarly situated from making misrepresentations in court to avoid temporary restraining orders.”

The federal lawsuit continues in discovery phase; no future court dates have been set.

A National Association of Securities Dealers arbitration hearing is set for the week of April 24 in Kansas City.

The NASD must conduct arbitration in the case because U.S. Bancorp is a NASD member and three defendants, including Cavner, signed agreements with U.S. Bancorp that contained NASD arbitration provisions.

The lawsuit and NASD arbitration are separate proceedings.[[In-content Ad]]