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The Real Deal Los Angeles

CBRE files bombshell lawsuit against Richard Rizika, charging massive theft of files

Before leaving last week, Rizika allegedly stole 500K password-protected documents
By Natalie Hoberman | March 01, 2018 02:17PM

From left: Mitchell Hernandez, CBRE Exec Bob Sulentic and Richard Rizika (Credit: Wikimedia Commons)

CBRE filed a lawsuit in federal court alleging that Richard Rizika, a former vice chairman, stole proprietary information and trade secrets from the brokerage before leaving to launch his own competing firm.

After three decades at CBRE, Rizika, a top producer, left the firm on Feb. 23. His core group at the South Bay Retail Services team, Mitchell Hernandez and Alexander Saks, exited on the same day.

Hernandez and Saks then joined Rizika in his new brokerage, Beta Retail. As of Thursday, 11 other CBRE brokers and employees had resigned to join his firm.

According to the lawsuit filed in U.S. District Court, CBRE claims Rizika and Hernandez had been plotting their departure for months. The two led a team to illegally download half a million documents from the company’s password-protected online database, starting as early as June, the suit alleges. Those documents include rent rolls, stacking plans, contracts, marketing plans and financial information.

“This is a straightforward case of egregious business conduct in which Richard Rizika and Mitchell Hernandez orchestrated a concerted effort for their team to systematically steal approximately a half-million files of CBRE’s data,” Robert McGrath, a CBRE spokesperson, said. “The entire business model for Rizika’s new company — Beta Retail Agency — is an exact replica of the existing systems.”

Rizika and Hernandez did not immediately return requests for comment.

Rizika allegedly used his CBRE corporate email accounts to inquire about Placer Labs, a computer software company in which he later invested. Placer formed a relationship with Rizika’s Beta Retail in January — while he was still at CBRE — and the two began using CBRE’s computers, employees and software to perform research, according to the lawsuit. Placer and Beta Retail are also named as defendants in the suit.

Hernandez, the suit alleges, also signed a contract with real estate software company VTS prior to resignation. In early February, he had VTS transfer CBRE listings to Beta Retail’s portal, blocking CBRE’s access to the listings.

Among those who have left CBRE to join Beta Retail are: Jennifer Meade, Jake Radeski, Daniel Santiago, Matthew Lux, Madison Williams and Matt Dean. Rizika recruited most of them at his home, according to the suit, where he gave presentations about Beta and even offered insurance through an insurance broker present in the next room.

In addition to Rizika, Hernandez, Beta Retail and Placer Labs, CBRE also listed 10 unnamed defendants, presumably the former company employees and brokers who joined the new firm. CBRE filed six counts against the defendants, including misappropriation of trade secrets, breach of contract, intentional interference with business relationships, violation of the computer fraud and abuse act and unfair competition. The firm is seeking compensatory and punitive damages, as well as a temporary restraining order requesting Rizika to stop using CBRE files and return them. It also requested a third-party forensic investigation.

On Tuesday, Rizika tried to diminish the damage from the stolen documents, the suit claims. Anonymously, one of Rizika’s partners left an unmarked folder with three magazine hard drives and a note addressed to Lewis Horne, the president of CBRE’s Southern California and Hawaii divisions, according to the court filing.

“Anything we downloaded has been moved to a drive and returned to you and we agree not to use any CBRE proprietary information,” the note read.