Vishal Garg, the Better.com CEO who infamously fired hundreds of his workers over a Zoom meeting, has found himself under fire after a former executive alleged he misled investors in a stalled merger deal.

In a federal lawsuit filed on Tuesday, former Better.com executive Sarah Pierce alleges that Garg misrepresented Better.com's business and prospects to maintain investors' confidence ahead of a planned merger with a special-purpose acquisition company, known as a SPAC. The deal has yet to be implemented despite being agreed upon in May 2021.

Pierce, who served as Better.com’s Vice President for Sales and Operations, said that Garg was afraid that investors would withdraw from the merger if they knew the troubled state of the company's financials. According to the financial filings cited by the Wall Street Journal, Better.com bled $304 million last year, but Pierce said Garg assured investors that the mortgage market it operates in would rebound by the first quarter of 2022.

Pointing out that these predictions were not accurate led to her being forced off the company, alleges Pierce, who accuses Better.com of retaliating against her for pointing this out.

In her complaint, Pierce alleges that her treatment constituted unlawful retaliation, defamation and intentional infliction of emotional distress under federal law.

CNN Business reported that a lawyer for Better.com dismissed the claims as being "without merit". Softbank, which has backed Better.com financially, also has not yet commented on the case.

The lawsuit also touches on Varg’s controversial firing of 900 Better.com employees over Zoom last December.

In the suit, Pierce alleges that Garg ignored advice from other executives regarding the layoff, including a warning that it would violate a California labor law that requires employees get 60 days' notice before any mass firing. Better.com is based in New York City, but it has local offices in Oakland and Irving in California.

Varg has a history of making hotheaded comments that have rubbed investors the wrong way.

Ahead of the mass firing last year, Garg reportedly disparaged venture capitalist Howard Newman as "sewage" on the "rocket ship" after he expressed concern about the decision to opt for a SPAC deal over a traditional IPO route.

In another instance, Garg’s former business partner Raza Khan said his once-friend threatened to "staple him against a [expletive] wall and burn him alive" during a dispute for which Garg later apologized.

The dispute in question was over an accusation by Khan that Garg’s business associates stole technology used for Better.com’s software, a charge Garg denied.

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