Online bonus from the March 1, 2006, issue

Full text of letters from the Bank of Nova Scotia, including the termination letter and portions of the disciplinary report

The March 1, 2006, issue of Canadian Employment Law Today featured an article on Amy Mastrogiuseppe, a bank branch manager in Richmond Hill, Ont., who was fired. Below is the text of her suspension letter, the results of an investigation into alleged wrongdoing by her and the termination letter.

To view the original article, see Play nice or pay the punitive price.



The suspension letter

Mastrogiuseppe was suspended with pay. The letter of suspension, written by David Ing, manager of employee relations, reads:

I am writing further to our meeting of Thursday June 12, 2003 during which time you were advised of your suspension pending the outcome of an investigation into suspected Irregular Practices involving yourself.


During our meeting you were reminded of your responsibilities under the Bank's
Guidelines for Business Conduct and advised that you were not to contact any persons internally or externally from the Bank regarding this matter. I wish to reiterate the importance of honoring this request.



The investigation report

The suspension was followed by an investigation and a 10-page report, prepared by David Ing, dated July 7, 2003.

Below are Ing's conclusion on each of the issues investigated, and his final summary and recommendation.

“The conclusions give a fair representation of the issues dealt with in the analysis portion of the report,” said the court.

Knowledge of dealing with Mortgage Brokers

Conclusion — Ms. Mastrogiuseppe knew or ought to have known not to deal with brokers. In addition to the specific communication issued in July 2002 and the group touch base discussion, if absent, Ms. Mastrogiuseppe would have been responsible for getting up to date information. Her comments about "not denying that she heard about it" further indicate that she would have been aware. The fact that branch staff did not know about the directive indicates that the message was never relayed. Given Ms. Mastrogiuseppe's years of service and experience, she knew or ought to have known that brokers are not to deal with branches as they are to deal with Scotia Express.

Broker referred deals with Cashback

(a) Maureen McReynolds Mortgage

Conclusion — Given Ms. Mastrogiuseppe's years of service and experience, her explanation of the events does not seem reasonable. It seems that she was trying to place the responsibility on the customer to ask the questions and her specific comments seem to support this. It is the Sales Officers [sic] responsibility to ensure that the customer understands what they are signing and to not rely on what a broker or third party may or may not have said. Based on the foregoing, her comments pertaining to cashback are also doubtful. In addition, the draft was not made payable as per the signed Direction of funds. It was changed to Bijan Ghafari.

(b) King-Hai & Fong Chu Wu mortgage

Conclusion
— Given Ms. Mastrogiuseppe's years of service and experience, her explanation is not reasonable. It is evident that she is trying to place the blame on a lack of communication between herself, the Wu's daughter and the Wu's. Ms. Mastrogiuseppe acknowledged that the Letter of Direction reflected an amount payable to LD Corp. This fact clearly indicates that a broker fee was being paid, which she knew or ought to have known. Ms. Mastrogiuseppe knew or ought to have known that this was against the Bank's policies. With regards to her comments that she thought the Wu's owned their own business indicates that she did also not follow the Bank's policies relating to income verification and perform the standard due diligence on the application. In addition, given that the Wu mortgage funded on June 3rd, it seems suspicious that Ms. Mastrogiuseppe placed a call to the branch regarding the file on June 12th after she was suspended. She would have had no specific reason to do so.

(c) Rickford & Lesley Rossan mortgage

Conclusion
— Given Ms. Mastrogiuseppe's years of service and experience, her explanation is not reasonable. It is standard practice that all changes on documentation be initialed by the customer. In addition, her knowledge that a fee was payable to Bita Ghafari should have caused concern. Ms. Mastrogiuseppe knew or ought to have known to use Lesley Rossan's current name of Smith as it was not legally changed at the time of application. Using Lesley Smith would have revealed her previous credit history.

Call to the Branch June 12, 2003

Conclusion — Ms Mastrogiuseppe deliberately disregarded the investigator's instruction not to contact anyone at the branch or discuss this matter with other parties and contacted the branch.

Dealing with Family Members

(a) Danny Pereira mortgage

Conclusion
— Given Ms. Mastrogiuseppe's years of service and experience, she knew or ought to have known that dealing with family members is against policy as it can potentially place her in a conflict of interest. In addition, in December 2000, Ms. Mastrogiuseppe was placed on the Bank's Performance Improvement Program at the Final Conduct level for discounting her daughters mortgage rate. This clearly informed her to the fact that dealing with family members is against Bank policy. In addition and with regards to advising GE Capital, Ms. Mastrogiuseppe knew or ought to have known that full disclosure to GE Capital is a condition of their underwriting and insuring of a Bank mortgage. With respect to the verification of assets, in order to be valid, a photocopy of a bank account balance must contain the account holders [sic] name and his or her financial institution. Based on he foregoing, her statements are unacceptable.

(b) Jose Garcia & Maria B. Pereira mortgage

Conclusion — Given Ms. Mastrogiuseppe's years of service and experience, she knew or ought to have known that all liabilities need to be disclosed regardless of whether the applicant is responsible for the payments. In addition, she knew or ought to have known that there needs to be proof of the status of the customer's disability payments. With regards to the utilitization of 100% of the rental income, again Ms. Mastrogiuseppe would have known that 100% cannot be used. It has been confirmed that Danny Pereira would have qualified on his own. Also, in light of the previous disciplinary action, Ms. Mastrogiuseppe's actions and explanation are unreasonable.

(c) Mortgage Early Renewal

Conclusion
— It appears that Ms. Mastrogiuseppe was aware of a system problem, took advantage and renewed her mortgage without penalty. Based on this and her comments, it appears that she is attempting to place blame on the system and not herself. The renewals for both December 2002 and June 2003 were both keyed on her terminal. With regards to the December 2002 renewal, it appears that after realizing that a penalty was generated, Ms. Mastrogiuseppe involved another staff member by having them reverse the transaction. Ms Mastrogiuseppe then submitted a hand written renewal document which did not include any penalty amount. Given her years of service and experience, Ms. Mastrogiuseppe knew or ought to have known that the foregoing was against the Bank's policy.

Assessing Credit Bureau Reports for Real Estate Agents

Conclusion — Given her years of service and experience, Ms. Mastrogiuseppe knew or ought to have known that providing credit bureau reports without specific customer authorization would have been a breach of customer privacy and the Scotiabank/Equifax agreement. This would be regardless of the extent of the relationship between the Bank and the Real Estate agent. Her comments with regards to only providing this service to "full service customers who bring business" are not validated as branch staff have indicated that Sonia Grimann has not brought deals into the branch for a long time. In addition, Ms. Grimann has total holdings with the Bank of approximately $17,000.00 including an RRSP, Value account, USD account and unused Visa. This is not a full service customer. However, even if Ms. Grimann were a full service customer, this would [not] have justified providing her with unauthorized credit bureau reports, which Ms. Mastrogiuseppe knew or ought to have known.

Personal relationship with Bijan Ghafari (broker)

Conclusion — Although there is no direct evidence to suggest a personal relationship, based on staff observations and Ms. Mastrogiuseppe's responses to the questions, it is believed that there are personal relations between the two. Therefore, this presents a further conflict of interest.

Summary and Recommendation

Ms. Mastrogiuseppe has breached a number of Bank policies including the Bank's Guidelines for Business Conduct by her action and/or inactions, including but not limited to, the following:

• Dealing with mortgage brokers

• Being an active participant with a third party in misleading Bank customers with regards to cashback and assisting in the preparation of said documentation. This third party also referred the deals.

• Failing to perform due diligence on application information.

• Placing the Bank at potential risk to third parties.

• Early renewal of her own mortgage, waiving the penalty and involving a subordinate in that regard.

• Misleading the facts regarding accessing stand-alone credit bureaus.

• Placing the Bank at risk with respect to breaching the privacy rights of both
customers and non customers by accessing their credit bureaus without their specific consent.

• Approving loans for family members in a non arms length transaction.

• Breaching customer privacy by accessing profiles when there was no specific reason to do so and the customer had not provided authorization to the Bank.

• Failing to follow a directive given by Employee Relations and S & I and contacting the branch shortly after being suspended.

• Requiring subordinate staff to violate Bank policy.

In addition, Ms. Mastrogiuseppe was issued a Final Warning as part of the Bank's Performance Improvement Program in December 2000 for dealing with family members.

Given Ms. Mastrogiuseppe's experience, tenure and senior position with the Bank, her responses justifying her conduct are not reasonable and we have reason to question her honesty and integrity. Therefore, we recommend termination of her employment for just cause.



The termination letter

The bank accepted David Ing's recommendation and dismissed Mastrogiuseppe. The letter of dismissal reads:

Dear Ms. Mastrogiuseppe,

Further to our letter of June 12, 2003 in which you were advised of your immediate suspension -- with pay -- pending the outcome of our investigation into suspected irregular practices, we advise that we have now completed our investigation into these matters and are terminating your employment with the Bank, for cause, effective today's date.

We further advise that any benefits coverage under the Bank's programs will cease effective July 10, 2003. Any Group Life Insurance may be converted, without evidence of health, to an individual policy up to age of 65; the total maximum amount, which can be converted is $200,000. Any Spousal Group Life Insurance may also be converted to an individual policy (maximum $50,000) provided the spouse is under age 70. These conversions are completed by a licensed insurance representative and must be completed within 31 days of July 10, 2003.

With regard to reduced rate staff loans, VISA, etc., presently outstanding with the Bank, you are requested to arrange an appointment with your branch to establish new repayment terms and conditions. In the interim, the interest rate on all staff loans will be at the prevailing customer rates effective July 11, 2003. You are further requested to return any staff VISA cards in your possession to your domicile branch. You may of course, apply for the customer VISA card subject to the usual credit criteria.

All deposit accounts will be subject to standard customer service charges effective July 11, 2003. Medical and dental claims for expenses incurred up and including July 10, 2003, will be reimbursed in accordance with the terms and conditions of the Plans provided they are submitted within 60 days from this date.

If you are a member of the Bank's Pension Plan, we advise that the Pension Department will write to you directly regarding your entitlements. Also, if you are a member of the Employee Share Ownership Program (ESOP), you must withdraw your assets from the Plan within 90 days from July 10, 2003.

You are further required to return any Bank property, including any Bank keys to your branch.

Your Record of Earnings and any monies owing will be forwarded in due course.

We know this will be a difficult time for you and your family, therefore we have arranged for you to have access to the Bank's Employee Assistance Program (EAP) for up to 90 days of today's date EAP an be reached, confidentially, by calling 1-800-268-5211.

While we regret being put in the position of having to take these serious measures, we wish you well in your future endeavors.

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