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Wells Fargo Fires 5,300 For Engaging In Massive Fraud, Creating Over 2 Million Fake Accounts

Goldhedge

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#1
Wells Fargo Fires 5,300 For Engaging In Massive Fraud, Creating Over 2 Million Fake Accounts

For years we have wondered why Wells Fargo, America's largest mortgage lender, is also Warren Buffett's favorite bank. Now we know why.

On Thursday, Wells Fargo was fined $185 million, (including a $100 million penalty from the Consumer Financial Protection Bureau, the largest penalty the agency has ever issued) for engaging in pervasive fraud over the years which included opening credit cards secretly without a customer’s consent, creating fake email accounts to sign up customers for online banking services, and forcing customers to accumulate late fees on accounts they never even knew they had. Regulators said such illegal sales practices had been going on since at least 2011.

In all, Wells opened 1.5 million bank accounts and "applied" for 565,000 credit cards that were not authorized by their customers.

Wells Fargo told to CNN that it had fired 5,300 employees related to the shady behavior over the last few years. The firings represent about 1% of its workforce and took place over several years. The fired workers went to far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said.

How Wells perpetrated fraud is that its employees moved funds from customers' existing accounts into newly-created accounts without their knowledge or consent, regulators say. The CFPB described this practice as "widespread" and led to customers being charged for insufficient funds or overdraft fees, because the money was not in their original accounts. Additionally, Wells Fargo employees also submitted applications for 565,443 credit card accounts without their knowledge or consent, the CFPB said the analysis found. Many customers who had unauthorized credit cards opened in their names were hit by annual fees, interest charges and other fees.

According to the NYT, regulators said the bank’s employees had been motivated to open the unauthorized accounts by compensation policies that rewarded them for drumming up new business. Many current and former Wells employees told regulators they had felt extreme pressure to expand the number of new accounts at the bank.

And, since it is US government policy never to send a banker to prison, they thought that engaging in criminal behavior was not such a bad idea.

Federal banking regulators said the practices reflected serious flaws in the internal culture and oversight at Wells Fargo, one of the nation’s largest banks.

"Today's action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences," said CFPB Director Richard Cordray. He added that “unchecked incentives can lead to serious consumer harm, and that is what happened here."

"Consumers must be able to trust their banks. They should never be taken advantage of," said Mike Feuer, the Los Angeles City Attorney who joined the settlement.

On its behalf Wells fargo issued a statement saying it “is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” the bank said in a statement adding that "at Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action."

As the NYT puts it, "this is an ugly moment for Wells Fargo, one of the few large American banks that have managed to produce consistent profit increases since the financial crisis." Now we know one of the reasons why.

As CNN redundantly adds, "the scope of the scandal is shocking."

And since nobody will go to prison, in a few months we will read another such "shocking scandal" perpetrated by another bailed-out bank.


http://www.zerohedge.com/news/2016-...e-fraud-creating-over-2-million-fake-accounts
 
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#2
BoA was doing something similar thing to an account I thought was closed.

The customer service woman spoke to me with all kinds of contempt, as if she doesn't do the bidding for a legalized counterfeiting operation.
 

Cigarlover

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#3
This reinforces my trust in the banking system... Not. Just one more reason why I dont see them going cashless anytime soon.
 

nickndfl

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#7
One fix that should be applied is for everybody to have licenses to work in their field. Mortgage brokers need one, even nail techs. Police officers should have them. There should be a state records bureau. Lose your license and lose your ability to work. Then there is also the continuing education requirement too.

Licensing would fix many of the problems.
 

EricTheCat

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#10
Double post, I know, but does anyone know would it affect the credit of a customer if they made one of the fake accounts under the customer's name?
 

Treasure Searcher

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#11
Double post, I know, but does anyone know would it affect the credit of a customer if they made one of the fake accounts under the customer's name?
Another reason to monitor your credit reports. If anyone (banks included) opened accounts for you unauthorized, they should be criminally charged with identity theft. If they ruined your credit report by opening bank and/or credit card account(s) and this downgraded your FICO score, they should be civilly liable. Taking someone's personal and financial information and using it without their permission is WRONG.
 

Uglytruth

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#12
Just think if it lowered your credit score and you were applying for a mortgage & it bumped it up an interest rate step or two..........
 

D-FENZ

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#13
One fix that should be applied is for everybody to have licenses to work in their field. Mortgage brokers need one, even nail techs. Police officers should have them. There should be a state records bureau. Lose your license and lose your ability to work. Then there is also the continuing education requirement too.

Licensing would fix many of the problems.
With few exceptions, licensing seldom fixes anything. What it would do is add at least one more layer of government bureaucracy requiring more sneaky workarounds for those criminally inclined and make it more difficult for the honest ones. Theft is already illegal. There is no code that would protect everyone and stop those with larcenous intent.

It seems to me that the most appropriate penalty has already been carried out. 5300 people got fired and the bank was fined 185 million. And they have to make whole the ones who were damaged. Civil lawsuits are sure to follow. It's kind of a big deal and should make them think twice about doing something like that again.

And this- If you are going to hand somebody your money, do your homework first.
 

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#17
Banksters
 

gringott

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#18
How is this not criminal activity?
Each and every one of those employees who did this should be arrested, booked and charged appropriately.
If any of us did something like this, we certainly would be.
 

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#19
Outrage grows as Wells Fargo executives are spared the chopping block after 5,300 employees were fired for creating millions of fake accounts
  • Staff pushed customers into taking extra products or created extra accounts without their knowledge to hit sales targets, probe found
  • Some were fined overdraft fees after money was moved without consent
  • Wells Fargo says it has fired 5,300 staff in recent years over the scandal
  • But CEO John Stumpf was paid $19.3million in 2015 and has been given several 'Banker of the Year' awards from industry organizations
  • Executive David Carroll was paid $9.05million for overseeing 'growth'
  • Consumer watchdog fined the bank a record $185million on Thursday
  • Wells Fargo has also been ordered to repay $5million to customers
  • Up to 2million deposit accounts were created without customers knowing


Read more: http://www.dailymail.co.uk/news/article-3782282/Outrage-grows-Wells-Fargo-executives-spared-chopping-block-5-300-employees-fired-creating-millions-fake-accounts.html#ixzz4JqkpjXXG
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Mr Paradise

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#20
2 million fraudulent bank accounts. Now I understand how some democratic stronghold voting districts had a 120% turnout in the 2012 election. Nothing the government or big business's report can be taken at face value anymore.

Twitter - "We have 100 million user" ...probably more like 25.
Facebook - "We have a billion members" ...me thinks not.
Unemployment - "Drops to 4.9%" ....alrighty then.

2016 - "Hillary wins a close race" ...yeah sure.

It's all lies .......


9/11 the pinnacle of lie days is tomorrow and the sheep still think a 747 flew into the pentagon
 
Last edited:

searcher

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#21
How is this not criminal activity?
Each and every one of those employees who did this should be arrested, booked and charged appropriately.
If any of us did something like this, we certainly would be.
In my opinion (fwiw) every one involved in this should be charged with fraud, theft by deception and identity theft..........at the very least.

Hard to believe they simply walked away.
 

Aurumag

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#23
In my opinion (fwiw) every one involved in this should be charged with fraud, theft by deception and identity theft..........at the very least.

Hard to believe they simply walked away.
They paid the fines.

If WF starts allowing their employees to do jail time, there would likely be alot of squaking that the minions were just following the lead of their execs.

Big bailouts to keep mouths shut.

All the banks do it.
 

<SLV>

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#24
Who gets to keep the fine money? Do you think it will go to reimburse the victims?
 

Uglytruth

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#25
2 million fraudulent bank accounts. Now I understand how some democratic stronghold voting districts had a 120% turnout in the 2012 election. Nothing the government or big business's report can be taken at face value anymore.
alinsky says that's not true.
 

searcher

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#27
After Public Outcry Over $125 Million Tolstedt Bonus, Wells Fargo Will End Sales Goals For Retail Bankers


by Tyler Durden
Sep 13, 2016 8:09 AM

As a result of the righteous outrage following news that Wells Fargo rewarded Carrie Tolstedt, the head of the group that was recently exposed as creating some 2 million fake credit card and bank accounts so it could churn late fees, and was in charge of what the bank's employees called "sandbagging", was leaving the bank with a $125 million package, this morning a panicked Wells Fargo, Warren Buffett's favorite bank and the largest U.S. bank by market capitalization, said that it would eliminate all product sales goals in retail banking, starting next year.

Wells Fargo said it had fired 5,300 employees involved in the sales practices described by the settlement; what Wells did not say is provide any explanation over the hushed departure of Tolstdet and her $125 million golden parachute.

The move comes days after the Consumer Financial Protection Bureau (CFPB) and two other regulators fined the bank $185 million over abusive sales practices. As Reuters reminds us, the bank paid another $5 million to customers for creating more than two million fake accounts for products like credit and debit cards to meet aggressive sales targets.

In an amusing statement, Chief Executive John Stumpf said that "customers should know that Wells Fargo retail bankers are always focused on their best interests." Well, except when the bank is caught not only engaging in massive fraud against its customers, but also rewarding the person directly responsible for it with a $125 million pay day.

On Monday, five lawmakers wrote a letter to U.S. Senate Banking Committee Chairman Richard Shelby calling for an investigation.

That may not be the end of it. As the FT reported overnight, the country's biggest mortgage lender was also facing calls to claw back bonuses paid to senior executives, including the outgoing head of its community banking division, as the fallout over its sham account scandal intensifies. Two top institutional shareholders in the world’s most valuable bank by market capitalisation have demanded answers over payments to Carrie Tolstedt, who headed the division where the episode took place.

One large investor told the Financial Times that Wells should reclaim bonuses from the Wells executive, who has received at least $45m in total pay since 2011.

“There’s no point having a clawback if it doesn’t claw in circumstances like this,” the shareholder said. “What has happened at Wells is an affront to the integrity of the institution.”

Another investor said: “If this person presided over this, why no accountability? We have share-based pay so that it can be clawed back when people have been earning bonuses under false pretences, and if fraudulently opening client accounts isn’t false pretences, then I don’t know what is.”

Cited by the FT, Bernie Sanders, the US senator who ran unsuccessfully for president this year, also weighed in, calling the pay for Ms Tolstedt a “disgrace”.

Moody’s on Monday described the regulators’ disclosures as “highly disturbing” in what has been an "embarrassing episode" . The rating agency said the developments were a “credit negative” for the bank.

We expect that after some congressional hearings and several carefully phrased press releases, some or all of Toldstedt bonus will be clawed back, at which point CEO Stumpf will once again repeat that customers should know that Wells Fargo retail bankers are always focused on their best interests." Sadly, just like in the case of Goldman and every other bank, customers are merely the muppets to be abused and since nobody ever goes to prison, the abuse is certain to continue indefinitely until something finally changes.

http://www.zerohedge.com/news/2016-...lstedt-bonus-wells-fargo-will-end-sales-goals
 

searcher

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#28
'You should resign and be criminally investigated': Elizabeth Warren blasts Wells Fargo CEO's 'gutless leadership' in wake of bogus account scandal
  • Wells Fargo's John Stumpf spoke on Capitol Hill about its recent scandal
  • Employees had opened 2m fake accounts to meet high sales targets
  • He said they'd fired 3,500 staff who had done that and changed their rules
  • But Warren savaged him, saying he was throwing staff under the bus
  • He and other execs should pay back money they were paid, panel said
  • Former exec Carrie Tolstedt received a $125m retirement package
  • She was in charge of community banking for Wells Fargo


Read more: http://www.dailymail.co.uk/news/article-3798810/Wells-Fargo-chief-grilled-bogus-accounts-scandal.html#ixzz4KpddQxmx
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searcher

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#31
Wells Fargo bosses 'ignored a petition signed by thousands of workers asking them to get rid of unrealistic sales goals' two years before lawsuit over sham accounts
  • 5,000 signed petition in 2014 complaining about company expectations
  • They said it was impossible to meet sales goals without committing fraud
  • Bank fired thousands who set up fake accounts in customers' names
  • It was told to pay $185million to regulators over the fraudulent activity
  • Employees who say they were demoted for not meeting targets are suing
  • Say they were punished for not committing banking fraud to hit targets


Read more: http://www.dailymail.co.uk/news/article-3818517/Wells-Fargo-bosses-ignored-petition-signed-thousands-workers-asking-rid-unrealistic-sales-goals-two-years-lawsuit-sham-accounts.html#ixzz4Ly2IHF6l
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ErrosionOfAccord

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#32
The best of Stumpf grilling. Granted the grilling was done by a bunch of market insiders but it is still fun to hear. Listened while I was at work so there was nothing better to do.
 

searcher

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#34
Wells Fargo CEO John Stumpf will receive ZERO severance pay after he retires effective immediately in wake of scandal over bank's sales practices
  • Stumpf has resigned, effective immediately, and will relinquish his title as chairman
  • COO Tim Sloan will succeed Stumpf, who has led since 2007, as CEO
  • Wells Fargo was found to have opened millions of bank accounts without customers' permission
  • Stumpf faced congressional hearings and was denied $41m of pay as punishment for the scandal


Read more: http://www.dailymail.co.uk/news/article-3835233/Wells-Fargo-CEO-John-Stumpf-resigns-effective-immediately.html#ixzz4Mz7Okzfs
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Usury

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#35
That's ok...soon enough .gov will finally run the banks because nobody else will be willing to take the job. Then going to the bank will be like waiting in line at the food stamp office to get an Obamacare plan and no more free accounts. But HEY...at least everyone can go to sleep feeling good that everything is "fair" and "equal" and nobody has to work harder to be promoted or anything.

Example: If bankers weren't standing in between FHA and borrowers, NOBODY would EVER get a loan because the vast majority of FHA employees just don't seem to give a shit....they have no incentive to do so. Every time I'm in a Wells branch they're bending over backwards to help me with whatever I need and find a solution. I've had many unusual account situations with dad passing, and mom being incompetent--Wells was there when the credit unions didn't even know the account types I inquired about existed. And NO I don't work for Wells.

I'm sorry, but if an employee committed fraud then it's the criminal employee's fault--PERIOD. Saying otherwise disparages those employees with the demeanor and worth ethic to meet the goals. If somebody can't cut it, then they need to find another job instead of blaming their employer--NOBODY is making them work there. This is just yet another example of some low-lifes looking for something for nothing. Right on queue a bunch of former employees are being lined up by class action lawyers to sue Pappa Moneybags. Ironic that they screwed the shareholders once and now are being encouraged to do so again by .gov who already took a turn on the shareholders themselves. Quite the little gangbang our .gov has going on all of us with pensions and retirement savings which are invested in Wells, huh? While they screw us, they are whispering into our ear how they're making the bad man pay.

I don't know about you, but I'm tired of my ass bleeding. It's sort of like an abuser keeps convincing their victim that it's their own fault they got smacked. After all they should've known not to smile at that moment.

Of course sometimes victims have enough.

Sometimes they look for someone stronger with a proven track record to be their hero (I.e. Trump).

And sometimes they can't take it anymore and all hell breaks loose.
 

searcher

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#36
Wells Fargo CEO to walk away with $134MILLION in wake of bogus accounts scandal
  • Wells Fargo's John Stumpf resigned on Wednesday after year of scandal
  • Employees had opened 2m fraudulent accounts to meet high sales targets
  • He said they'd fired 5,300 staff behind the fakes and changed their rules
  • Financial experts have predicted he will still walk away with huge packet
  • Directors had previously made a point of announcing he would forfeit pay


Read more: http://www.dailymail.co.uk/news/article-3838522/Wells-Fargo-CEO-walk-away-134MILLION-wake-bogus-accounts-scandal.html#ixzz4N4lpRjig
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searcher

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#37
Disgraced former Wells Fargo CEO offloaded more than $60 million worth of stock in the weeks leading up to the bank being charged with fraud
  • Wells Fargo's ex-CEO sold $61 million in stock before the San Francisco bank was hit with fraud charges for creating millions of fake accounts
  • John Stumpf offloaded $61 million in the month before charges were filed
  • Stumpf reportedly sold 'incentive stock options' at a $26 million profit
  • The disgraced former chairman stood down from the bank on Wednesday


Read more: http://www.dailymail.co.uk/news/article-3839032/Former-Wells-Fargo-CEO-sold-60-million-worth-stock-bank-charged-fraud.html#ixzz4N6o2empL
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andial

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#38
This Stumpf Feck is a never Trump neo-scum republican like Romney or Ryan.
 

Usury

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#40
Oh the agony of sitting in a chair in an air-conditioned room, while smiling and asking someone to buy something!!!!!

I'm sure all the guys cleaning out sewers and working in coal mines and enslaved in African diamond mines fall to their knees DAILY and thank the Lord that they don't have to do such awful work.