Wells Fargo Employee Informed the Bank of Fake Customer Accounts in 2006 (vice.com)

Wells Fargo recently paid fines totaling $185 million for the creation of 2 million unauthorized accounts since 2011. But the international banking and financial institution could be committing this fraud since as early as 2005, according to a letter obtained by Vice News. From the report: A Wells Fargo bank manager tried to warn the head of the company's regional banking unit of an improperly created customer account in January 2006, five years earlier than the bank has said its board first learned of abuses at its branches. [...] A letter written in 2005 and obtained by VICE News details unethical practices that occurred at Washington state branches of the bank, suggesting the conduct began years before previously understood. Dennis Hambek, a former branch manager in West Yakima, Washington, sent a certified letter in January 2006 to Carrie Tolstedt, then Wells Fargo's head of regional banking, outlining unethical "gaming" activity at area branches. In 2007, Tolstedt was made the company's head of community banking, the division where many of the unethical practices occurred.

Comments

Well this is exciting

[Anonymous Coward]

I'm super stoked to see absolutely nobody see the inside of a prison cell over this, Wells Fargo slapped with a fine a tiny fraction of a percentage of what they took in by this scam, and then go about business as usual.

Re:Well this is exciting

[Oswald McWeany]

It's not like they did something reprehensible, like pee in the woods and get spotted, or smoke MJ recreationally.

Re:Well this is exciting

[magarity]

Wells Fargo slapped with a fine a tiny fraction of a percentage of what they took in by this scam

I don't think the bank itself as a corporate entity made any money. This was employees trying to game the company for personal bonus money and to meet performance targets.

Re:Well this is exciting

[PraiseBob]

Do you seriously believe that? ...The bank implemented a fairly complex system of both punishments and rewards to motivate employees into taking these actions, which primarily devolved into millions of employees stealing hundreds of millions of dollars from their customers.

And you think the bank just benevolently passed on ALL of the profits from this scheme to tellers, without any benefit to the corporation? The entire point of paying a sales commission or bonus is to give the employee a small cut of the profit and keep the main profit for the parent entity.

Re:Well this is exciting

[Ant2]

Give a man a gun and he can rob a bank.
Give a man a bank and he can rob the world.

Re:Well this is exciting

[BronsCon]

Overage fees on an account in my name that I did not open, for which the bank does not have a signature card on file that was signed by me or a copy of my photo identification with an actual photo of me on it? Yeah, not paying those.

Go ahead, send the account to collections where it'll take me all of 30 seconds to prove it's not mine.

No. There was no profit here.

WF is corrupt to the core

[The-Ixian]

That bank is, by far, the worst when it comes to ethical treatment of customers.

Especially those who live on the edge (paycheck to paycheck). They have downright sinister overdraft policies and practices.

I ditched WF years ago and I am happy to be rid of them.

Re:WF is corrupt to the core

[The Grim Reefer]

That bank is, by far, the worst when it comes to ethical treatment of customers.

They're all pretty bad. I was with a different back many years ago and they put a 3 day hold on all deposits of any kind. I had several accounts with them and my paycheck was wire transferred into this account automatically. Since the account my paycheck came into was the one I also wrote checks for bills against, I didn't think I needed to transfer any money into it to pay my bills one month. But then I had all of my checks bounce due to the 3 day hold. Of course they charged me $25 for each check and a bunch of other additional charges as well. After many phone calls and lots of bitching they returned all but $50. But it took a lot of my time to get them to do this. Once it was done I closed my accounts and went to Wachovia.

I ditched WF years ago and I am happy to be rid of them.

Unfortunately Wachovia was bought out by Wells Fargo and changing banks is a huge hassle. So I'll stay with them until they do something to really piss me off. Though I've been tempted to as I don't care for their behavior/lack of ethics.

Re:WF is corrupt to the core

[The-Ixian]

Unfortunately Wachovia was bought out by Wells Fargo

Yeah, that is part of the problem, WF has been buying up banks left and right for years.

I always used to bank locally, but each time, WF would swoop in and buy the bank that I was using. This happened 3 times to me. At one point there were literally 3 WF branch offices within a couple miles of each other in my home town because they bought up the competition.

I recently went to Bluebird (American Express owned company) for my bill paying and checking needs. It is all pre-paid. Overdrafts are impossible.

I save as much as possible (currently 25% of my pay) for retirement and so I live paycheck-to-paycheck and no matter how diligent I am, sometimes I overdraft. Even once a year could mean almost $100 in fees and a lot of hassle, all said and done... that is too much... it's not like it even costs the bank anywhere near that in processing or handling... they just need to pay for their big expensive buildings everywhere.

Re:WF is corrupt to the core

[Moheeheeko]

the best thing you could possibly do is find a local federal credit union. They may not have branches everywhere, but you can access all of your account from almost any credit union. I've been a member of the credit union of my hometown for years and ive never had to switch, despite not living within 100 miles of a branch.

Re:WF is corrupt to the core

[Quirkz]

Aggressive retirement planning is admirable, but not if it's causing you day-to-day troubles. At least some small amount of emergency fund is advisable. If you're prone to overdraft, I'd recommend keeping part of that emergency fund in your main account, but then pretend like it's not there. For instance, put $1k in there, but then if the balance is $1,500, pretend it's only got $500. It could save a bunch of hassle and fees. Putting off retirement for a month or two or three to build in this padding might be worthwhile.

Risk Management: Playing the odds

[ADRA]

As anyone who's watched Mr. Robot knows, Just cheating the system doesn't stop a company from doing it, even when they're aware of it happening.

If the fees minus inflation are less than the profits, why would a profit maximizing company ever decide to do the right thing? Its ludicrous. The company is simply charged a fee. The middle-managers and peons are rarely prosecuted and the executives always feign that they had no idea what was happening. There's no requisite paper trail to audit, so the only thing that could catch them is conspiracy to evade prosecution, but there'd have to be caught with a lot of 'shredding' in order to get that to stick.

The laws are 100% stacked so that profit maximization is the only goal to achieve. Being a purely law abiding corporate citizen is a losers bet.

Boss then says, "Hmm"

[fahrbot-bot]

Dennis Hambek, a former branch manager in West Yakima, Washington, sent a certified letter in January 2006 to Carrie Tolstedt, then Wells Fargo's head of regional banking, outlining unethical "gaming" activity at area branches. In 2007, Tolstedt was made the company's head of community banking, the division where many of the unethical practices occurred.

Another person failed to understand the phrase: "don't give them any ideas".

Re:broken url to article?

[parkinglot777]

You can look at the article instead. The Vice link doesn't seem to work correctly (or need to register for the feed?).

The most outrageous aspect

[MikeRT]

Is that there are at least a few examples of employees reporting to very senior leaders what happened and facing a targeted campaign of reprisal intended to ensure they could not work in that industry again (by revoking certification).

We need a white collar crime equivalent of Felony Murder while we're at it. If someone suffers financial loss as a consequence (foreseeable or not) of your criminal conduct, you are held liable as though you intended to cause it. Level of intent doesn't matter anymore once you reach legitimate felony intent.

Re:The most outrageous aspect

[scamper_22]

As someone whose worked for a few large firms, it's impossible for some senior leader not to know.

It's like the VW Diesel emissions scandal. What engineer just decides on their own to scam US emissions testing?

The order came down from somewhere.
Maybe it came directly from the top.
Maybe pressure from the top to meeting emissions standards cause a senior manager to push this scam onto their team.

About the only way it could be a rogue regular employee is if there's some really perverse incentive for them to take this risk. But those are the outlier cases.

In my view the senior executives should always be held liable. Either they instructed it directly or they didn't have enough controls in place to detect it or they applied too much pressure on lower levels.

You can also prosecute lower levels as well, but I think the exec should always be prosecuted if any of the lower levels are complicit like this.

No doubt any employee who setup fake accounts or actually turned on the VW emissions cheat knew they were doing something wrong and you can prosecute them; especially if they didn't make any kind of fuss to management.

Yes, I've done things as well that are against policy; nothing illegal, but definitely against the companies stated policies. I'm not a saint here. I just raise my concern, if my manager tells me to do it anyways; meh... I'd rather keep my good job.

This goes back to at least 2001

[Sarusa]

I know I've said it before, but customer complaints about the phantom accounts go back to at least 2001.

The big thing here is that we now have a certified letter from a high ranking Wells Fargo employee that the crooks in charge of the illegal program were notified as early as 2006.

They Knew

[Kozar_The_Malignant]

I find it difficult if not impossible to believe that Wells Fargo management didn't know this was going on. "Improperly created accounts" is one of the classic ways to steal from an employer. They're also great for laundering ill-gotten funds. Banks, insurance companies, and other financial institutions all have audit processes designed to ferret this out. So they knew, and they understood that it was their customers getting ripped off, and they were OK with that. Someone needs to go to jail, but that won't happen.

The Blame Pyramid [Re:They Knew]

[Tablizer]

I find it difficult if not impossible to believe that Wells Fargo management didn't know this was going on.

Being a worker at many Dilbertvilles, what the top managers do is set stringent goals, and order their immediate underlings to carry out the goals. Any "problems" are to be solved by the underlings, and the underlings get any of the blame. Example:

Level 3 Boss: "Hey, Level 2 Boss, these tough sales quotas are resulting in our region's staff doing underhanded things to reach them."

Level 2 Boss: "Well, tell them not to, and fire them if they keep doing it!"

Level 3 Boss: "Then we wouldn't have any employees left because these are tough quotas."

Level 2 Boss: "I have full confidence in your ability such that I know you'll find a way to solve the wayward employee problem AND reach the sales quotas."

During a trial, the Level 3 Boss can say, "I asked my subordinate to solve the problem, and they didn't. It's not my fault: they failed to do their job."

A given level rigs it so that they get the credit for the good news and the level below them gets the blame for bad news. It's happened many time that if I build a great mouse-trap, my supervisors take the credit, and if something goes wrong (my fault or not), *I* get the blame. "Mr. Tablizer pushed the wrong button and F'd it up. I reprimanded that slacker." I've generally come to accept it as standard practice and psych myself up not to take the blame personally. I'm essentially a professional scapegoat/lightning-rod: go with the flow. (Sometimes I can trade being the scapegoat for more interesting projects as compensation. Fortunately I'm not in a sales-driven section for now.)

Plus, to compete with other cheaters at the same level, the bank employees also have to cheat. Thus, it's cheat or be fired to keep up with the cheating Joneses.

The top managers probably indeed know its a pressure cooker, but the problems of the pressures are aimed at and pushed on their underlings. The Blame Pyramid is carefully crafted that way. How do you objectively measure "unrealistic pressure"? Since cheating isn't tracked, they can claim they have no way to know if its a bank-wide problem. If they discuss it as a possibility, it's not written down.