HomeFinanceEx-Wells Fargo Executive to Admit Guilt in Fake Accounts Scandal

Ex-Wells Fargo Executive to Admit Guilt in Fake Accounts Scandal

A former high-ranking executive at Wells Fargo, Carrie L. Tolstedt, who led the bank’s retail branches during the time when the bank was caught in a scandal over sham bank accounts, has agreed to plead guilty to obstructing a bank examination. This crime carries a maximum sentence of five years in prison, but Ms. Tolstedt’s plea agreement calls for a sentence of up to 16 months. Ms. Tolstedt is the first Wells Fargo executive to face criminal charges for the bank’s actions. Prosecutors allege that Ms. Tolstedt knowingly ignored signs that bank employees were using illegal tactics to meet sales targets, and helped prepare a memo that concealed details about the extent of the bank’s internal problems when it was under scrutiny by regulators.

Joseph T. McNally, the acting U.S. attorney for the central district of California said “Obstructing an investigation compromises the mission of those seeking the truth, and we will hold accountable any individual who attempts to conceal wrongdoing,” said Joseph T. McNally, the acting U.S. attorney for the central district of California.

Ms. Tolstedt’s lawyer, Enu Mainigi, has chosen not to provide a statement on the charges against her client. Similarly, a spokesperson for Wells Fargo has declined to comment on the matter.

Bartlett Naylor, a financial policy advocate at the activist organization Public Citizen, said he was pleased a banker responsible for “one of the largest frauds in U.S. history” would be going to prison.

“But Tolstedt had bosses,” Mr. Naylor added. “Justice will not be complete until they face a similar penalty.”

A spokesperson for Mr. McNally’s office has declined to comment on whether other Wells Fargo executives are being pursued by federal prosecutors. John Stumpf, Ms. Tolstedt’s former boss and the bank’s former chief executive from 2007 to 2016, has not faced criminal charges. However, in 2020, he paid a $17.5 million fine and accepted a lifetime ban from the banking industry to settle civil charges brought by the O.C.C. Ms. Tolstedt chose to fight the O.C.C.’s charges against her, but on Wednesday, the agency announced that she will pay $17 million to settle those charges.

In addition to the settlement with the O.C.C., Ms. Tolstedt is also facing litigation from the Securities and Exchange Commission for misleading investors about the bank’s sales tactics and financial health. However, no details about the settlement’s terms have been released.

Wells Fargo has paid billions in fines for its misconduct, including opening accounts without customers’ authorization, and has struggled to reform itself. The bank has been operating under a strict asset-cap restriction imposed by the Federal Reserve since 2018, and its current CEO, Charles W. Scharf, has stated that the bank is still working to clean itself up and satisfy regulators.

“While our risk and regulatory work hasn’t always followed a straight line and we have more to do, we’ve made significant progress,” he said. “We will continue to prioritize our work here.”

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