Wednesday,
January 19, 2005
Voice of East/West Poised
to Move On
By Kathleen McLaughlin
Staff Writer
East/West Mortgage founder John F.
Gallagher says he has given up on a quest to regain control
of the company from Commerce Bank & Trust and now looks
forward to a settlement for the remaining value of his contract
as a top executive.
"After 17 years,
it's time to do something different," Gallagher said
last week.
Gallagher, a Manchester-by-the-Sea resident who was the
voice in ubiquitous radio ads, sold the company four years
ago to Commerce but stayed on to oversee marketing, advertising,
business development, strategic planning and loan products.
He and Susan Gilmore, his wife and former treasurer at East/West
Mortgage, sued Commerce in November 2004 for $45 million
after the bank fired Gallagher.
Commerce is under
scrutiny by the Massachusetts Division of Banks and the
Federal Deposit Insurance Corp. after dozens of consumers
complained about East/West's fees and practices. A May 2004
cease-and-desist order required the bank to hire qualified
management, including a compliance officer to ensure state
and federal rules are being followed.
Gallagher says he
was a "scapegoat" for the bank, which is making
regular reports to regulators and whose top executive, Brian
Thompson, is also overseeing East/West.
Thompson could not be reached for comment on Gallagher's
claims.
Gallagher said last
week that he expected to reach a settlement for something
less than the $28 million due for the remainder of his 10-year
contract.
Gallagher's lawyer,
Joanne D'Alcomo with Jager Smith in Boston, said she couldn't
comment on any negotiations in the Gallagher and Gilmore
cases. She said there has been no action on either case
since it was filed in mid-November.
Gallagher said at
the time that the only way he would drop the suit would
be it he got the company back. He said he and a group of
investors had been negotiating with Commerce to buy it back
before he was fired.
Gilmore was fired in January 2004. The couple claims it
was because she discovered that the bank was overcharging
the East/West division for services.
Gallagher owns residential
and commercial real estate on the North Shore, including
East/West's new headquarters on Route 1 in Peabody. Gallagher
said he spent $6 million on the new headquarters, which
are on the southbound side of Route 1. He said he will make
more than $500,000 a year in rent from East/West.
Gallagher said he's
also developing vacation houses in the Caribbean and ski
country.
"I consider my 17 years financially rewarding, and
the bank's made a lot of money off it," he said.
Gallagher and Commerce
also find themselves together in a suit brought last week
by a former East/West employee, Ed Williams of Beverly.
Williams was publisher of ISoldMyHouse.com, the real estate
listings Web site that was used to generate mortgage leads
for East/West.
Williams claims Gallagher
promised him equity in the company and is suing for more
than $2 million. Williams said this week he expects a cut
of any settlement Gallagher might get from Commerce. As
of yesterday, Williams' lawyer, Ian Crawford of Todd &
Weld in Boston, had not filed a motion to garner any part
of a settlement.
http://www.eagletribune.com/news/stories/20050119/BU_004.htm
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