State Bank Group carries on with lawsuit against Sauk Valley Bank

State Bank Group has filed a third revised complaint accusing Sauk Valley Bank and two employees of misusing trade information to divert customers to their Harvard business.

The lawsuit accuses two high-ranking employees, Verne Sisson, who was State Bank’s vice president of commercial and agricultural lending, and Brenda A. Gratz, who was a senior mortgage lender and its vice president of retail lending and of “misappropriating trade secrets” by using a State Bank memorandum referencing 143 loans to divert customers to Sauk Valley Bank.

It also said that when the employees left, they took customers and business with them, and conspired to do so while still working for State Bank.

Four State Bank employees who left its Harvard branch were hired by Sauk Valley Bank to run its new branch, also in Harvard, according to the complaint.

“Of course we lost some customers because of it,” State Bank’s attorney Herbert Franks said. “The gentleman has been the sole contact with these customers and that’s why they left.”

Sauk Valley Bank’s attorney, Timothy Zollinger, has denied the claims laid out in the lawsuit.

State Bank filed its first suit against Sauk Valley Bank and employees Gratz and Sisson in December. The suit claimed the Sterling-based bank conspired to and lured four State Bank employees – along with customers and businesses worth about $4 million – to a new branch it set up down the road from State Bank in Harvard.

McHenry County Judge Joel Meyer dismissed the lawsuit in April on the basis that State Bank didn't present sufficient evidence to support its claims. Meyer gave Franks 28 days to file an amended complaint, which subsequently was dismissed in July, records show.

The judge again allowed Franks to file a second amended complaint, and this time, the defendants haven’t asked for a dismissal.

Instead, they requested a more detailed account of the allegations, Sauk Valley Bank president and CEO Dirk Meminger said.

“Why don’t we just move this forward to some extent and request substantiation or something other than just continuing to make the same allegations over and over,” Meminger said.

It’s not uncommon for lawsuits to be dismissed and re-filed later with adaptations, and State Bank doesn’t view the dismissals as anything to be concerned about, said Jack Franks, chairman of the State Bank Group.

“It happens in almost every case,” he said. “And now we’ll start the process of discovery, but certainly I think some of their questions are outrageous and we’ll be objecting to them.”

In a Sept. 11 request, Sauk Valley Bank asked State Bank to elaborate on some of the accusations. They want to know what, where and when specifically the allegations occurred, and for State Bank to reveal some of the unnamed customers listed in the lawsuit.

Jack Franks isn’t keen on disclosing former customers’ identities.

“What’s outrageous is they’re basically asking for our client list,” Jack Franks said. “That’s crazy.”

It’s not “honest competition” that State Bank takes an issue with, rather the misappropriation of information, Jack Franks said.

“This is not a proper way to do business,” he said.

The original suit garnered local attention when a direct-mail flyer, designed to look like a news article, circulated throughout the area.

The anonymous flyer reported that Sauk Valley Bank was being sued for “breach of fiduciary duties and conspiracy.”

Flyers again have been making the rounds in McHenry County, Meminger said. The anonymous flyers include the case number associated with the lawsuit and state: “Sauk Valley Bank is being sued for: conspiracy to breach fiduciary duties, misappropriation of trade secrets, tortious interference.”

The case is scheduled for a status update Nov. 28.