Edward Gormbley, a former Assistant
Vice President at General Electric Capital Services, filed suit in
Connecticut Superior Court today seeking
$10 Million
from GE. Mr. Gormbley's complaint asserts that GE Capital retaliated
and constructively discharged him after he complained that GE Capital
fraudulently overvalued one of its largest investment assets, Momentive
Performance Materials ("Momentive").
Gormbley,
a "Top-Talent" employee of GE, filed the Complaint after the Company
cut his compensation, reduced his responsibilities and destroyed his
professional reputation after he repeatedly expressed legitimate
concerns to his superiors that GE Capital's valuation methods resulted
in a grossly inflated valuation of Momentive in 2008.
Gormbley is represented in the matter by Sanford Wittels & Heisler LLP, in Washington, D.C.
"Mr. Gormbley repeatedly was warned to keep what he knew about GE Capital's valuation of Momentive to himself," said David Sanford. "When Gormbley refused to play GE's games, GE swiftly and brutally retaliated against him."
In addition to GE Capital Services, the suit names General Electric Company, GE Equity, GE Company Chair and CEO Jeffrey Immelt, and a number of other high-ranking corporate executives as defendants.
Gormbley
was hired by GE in 2000, joining its Financial Management Program.
After working in a wide range of divisions throughout the company, he
joined GE Commercial Finance, a subdivision of GE Capital in 2006.
Throughout his rise through the ranks, he earned and maintained a spot
on the top rung of the company's forced ranking system. His strong,
positive performance also won him a coveted position on GE's corporate
audit staff.
In mid-2008, Gormbley became concerned because he recognized that GE's valuation of Momentive was inflated by some $2 billion. He shared these conclusions with his superiors. They were not appreciative.
GE's
first response to Gormbley's bad news was to ignore the message. When
Gormbley persisted in making his concerns known to an increasing circle
of individuals in the company, GE's answer was to kill the messenger.
In early October 2008, while the financial sector was in a state of turmoil, GE announced a $12 billion
stock offering, touting the company's financial soundness and pledging
to maintain its high quarterly dividend. Yet, at the same time, it was
becoming increasingly clear that GE Capital was in trouble. In fact, in
private meetings with Bush administration Treasury Department
officials, including then-Treasury Secretary Henry Paulson, Immelt expressed concerns about GE and GE Capital's finances and financial stability.
In November and December 2008,
Gormbley continued to warn GE about Momentive's declining performance
and recommended that GE Equity take a write down of Momentive's
valuation. Gormbley was explicitly and implicitly warned to stop
talking about Momentive's decline and its effects on GE. Gormbley's
superiors instructed him to change his valuation methodologies for
Momentive calculations and to stop "making things so difficult."
In
January of 2009 Gormbley's concerns about GE's over-valuation of
Momentive were confirmed. At that time, GE Equity received Momentive's
board book verifying that the value of Momentive had plummeted. With
this written corroboration of his concerns, Mr. Gormbley sent an email
to the President of GE Capital and other senior GE officials in which he
again advocated a write-down of Momentive. In response, GE chastised
Mr. Gormbley for making the situation public and discouraged him from
speaking at meetings.
But
Gormbley would not stay silent. He had witnessed and objected to GE
Capital's overstatement of Momentive's value and its concealment and
misrepresentation of faulty valuation data to internal controllers,
external auditors, and the Securities and Exchange Commission. In its February 2009
Form 10-K filing, GE chose not to include the most updated valuation
information for Momentive, thereby violating the SEC's reporting
requirements.
In
response, GE Equity's leadership initiated a campaign of retaliation
that ended Gormbley's career at the company and caused him severe
financial and emotional harm. The retaliation included removing him
from a team of energy investment professionals, prohibiting him from
pursuing new deals, passing him over as a board observer on an
investment deal in which he has served as lead underwriter, reducing
his performance rating, cutting his year-end bonus, removing him from
the Momentive account, excluding him from meetings essential to his
performance, delaying his 2009 performance review, refusing him the
opportunity to work from home or utilize flex time, and threatening to
revoke a $133,000 loan.
"GE did
everything it could possibly do to discredit me, ruin my reputation
within the company and generally make my life miserable," said
Gormbley. "When I asked Human Resources to investigate the retaliation I
was being regularly subjected to, my requests were ignored. To
preserve my professional reputation and financial security, I finally
had to resign."
The Complaint calculates damages at over $10 million.
Sanford Wittels & Heisler is a law firm with offices in Washington, D.C., New York, and San Francisco
that specializes in employment discrimination, wage and hour, consumer
and complex corporate class action litigation and has represented
thousands of individuals in some of the major class action cases in the
United States. The firm also represents individual clients in
employment, employment discrimination, sexual harassment, whistleblower,
public accommodations, commercial, medical malpractice, and personal
injury matters