Venture Capitalist Sues Imperial Credit

With the mortgage industry rebounding in California, entrepreneur and venture capitalist Thomas O. Gephart tried to get in on the action, paying $2.5 million a year ago for a small operation being spun off by mortgage lender Imperial Credit Industries Inc. While the housing market picked up, however, Gephart’s new loan-production business dried up. In a lawsuit filed this week, Gephart asserts that Imperial sold him an unprofitable operation, propped up only by illegal kickbacks paid to independent brokers for mortgage applications. Gephart, who said he didn’t pay kickbacks, found that the loan agents began sending applications to other lenders. The suit seeks an unspecified amount of damages. Executives at Torrance-based Imperial denied that the operation did anything illegal. They contend that Gephart had no experience in mortgage banking and no idea of what to do with the company.