A software start-up has hired one of President Donald Trump’s attorneys to bring a $100 million lawsuit against the Yodlee division of Chicago-based financial giant Envestnet.
Fort Lauderdale, Fla.-based FinancialApps accused Envestnet Yodlee of stealing its proprietary technology in a suit filed last week in the U.S. District Court for the District of Delaware.
FinancialApps has retained Marc Kasowitz, of New York-based Kasowitz, Benson & Torres, as lead counsel in the suit. Kasowitz represented the president when he faced sexual misconduct charges during the 2016 presidential campaign, and in the early months of the Trump presidency as investigations into Russian election interference unfolded. Kasowitz resigned as Trump’s attorney in July 2017.
“As a matter of policy, neither Envestnet, Inc. nor Yodlee, Inc. comments on pending litigation,” said an Envestnet spokesperson via email on Friday. “However, we hold ourselves to the highest ethical standards with regard to business dealings with customers, partners, and employees, and we will respond appropriately through the proper legal channels.”
At the core of the suit is Credit Exchange, a lending application that could approximate a user’s credit rating using Yodlee data and FinancialApps’ “Risk Insight” data analysis capabilities. The companies entered a licensing agreement in 2015 before Yodlee had been acquired by Envestnet.
Rather than roll out the application together, FinancialApps claims that Yodlee illicitly built and launched an application on its own using the smaller firm’s trade secrets.
According to court documents, FinancialApps CEO Bob Sullivan had meetings with Envestnet executives earlier this year regarding the use of his firm’s algorithms in Yodlee’s applications. The suit alleges that the Envestnet executives acknowledged that their company’s lack of ownership over FinancialApps technology was problematic and made attempts to buy the proprietary technology.
In the meantime, Yodlee had started bringing large clients, including Freddie Mac, onto its platform. As recently as June 2019, Yodlee executives were still claiming that they were committed to the Risk Insight platform and growing its revenue, according to the lawsuit.
Yet FinancialApps executives already had a sense that something was wrong. Credit bureau Equifax, a direct competitor with FinancialApps, announced in October 2018 a deal to use its data and capabilities on Yodlee’s platform. Though FinancialApps and Risk Insight were not mentioned in the release, the company claims that the Equifax partnership must rely “heavily, if not entirely” on its proprietary technology.
Then, in March and April of this year, FinancialApps allegedly discoved that Yodlee was using Bank of America credentials to use another piece of proprietary technology called YProxy without authorization.