Federal prosecutors have called for a former Wells Fargo executive to spend a year in prison for her role in the massive phony accounts scandal that r
Federal prosecutors have called for a former Wells Fargo executive to spend a year in prison for her role in the massive phony accounts scandal that roiled the bank in 2016.
Between 2002 and 2016, Wells Fargo employees opened some two million deposit and credit card accounts without the customers’ approval or knowledge, in order to pump up key performance metrics, an investigation found.
Carrie L. Tolstedt, 63, agreed in March to plead guilty to obstructing a bank examination in relation to the scandal, which cost Wells Fargo $3 billion to settle federal civil and criminal probes.
In a filing in Los Angeles federal court on Friday, prosecutors called on Judge Josephine L. Staton to lock up the disgraced banker for 12 months, writing: ‘corporate wrongdoers must be sent a clear message that maintaining a lucrative position through criminal behavior is not worth the risk.’
‘The sentence must reflect the seriousness of the crime: defendant attempted to conceal from regulators one of the biggest banking scandals in modern history,’ the prosecutors wrote.
Carrie L. Tolstedt agreed in March to plead guilty to obstructing a bank examination in relation to the scandal, which cost Wells Fargo $3 billion to settle federal civil and criminal probes
In a filing in Los Angeles federal court on Friday, prosecutors called on Judge Josephine L. Staton to lock up the disgraced banker for 12 months
The government lawyers added that ‘when top corporate executives commit crimes, they should not be able to avoid prison because they are not at risk of recidivism.’
The filing noted that the United States Probation Office had recommended a three-year term of probation with no incarceral sentence — but argued a harsher the crime called for a harsher penalty.
Tolstedt’s attorneys did not immediately respond to a request for comment from DailyMail.com on Saturday.
They will likely ask for no prison time for Tolstedt, and will have an opportunity to argue their case ahead of her September 15 sentencing hearing.
The statutory maximum sentence for obstruction of a bank examination is five years in federal prison.
Tolstedt has entered into a plea agreement which calls for a prison sentence of up to 16 months in prison, which prosecutors have said is the high end of the sentencing guideline range for the obstruction offense.
Separately, Tolstedt in May agreed to pay a $3 million penalty to settle Securities and Exchange Commission civil case, without admitting or denying the allegations.
The SEC accused her of misleading investors about the success of Wells Fargo’s core business, which involved dubious sales practices used to inflate key performance metrics.
From mid-2014 through mid-2016, Tolstedt publicly described and endorsed Wells Fargo’s ‘cross-sell metric’ as a means of measuring the bank’s financial success despite the fact that it was inflated by accounts and services that were unused, unneeded, or unauthorized, according to the SEC.
Before the scandal broke, Wells Fargo was considered to have a sterling reputation among the big banks.
The bank referred to its branches as ‘stores,’ and once had a policy of trying to get each Wells Fargo customer to have eight financial products with the company.
The bank’s sales policies, pushed by top management, were aggressive and unrealistic.
Separately, Tolstedt in May agreed to pay a $3 million penalty to settle Securities and Exchange Commission civil case, without admitting or denying the allegations
Bank employees were berated for not making bloated sales quotas, which ultimately resulted in many employees gaming Wells Fargo’s sales system in order to meet these artificial sales goals.
For example a number of Wells Fargo customers, notably the elderly, were signed up for online banking when they did not have Internet access.
The documents that lay out the charges against Wells Fargo leaned heavily on the behavior of ‘Executive A,’ described as the head of Wells’ community bank business and the regional bank division from 2002 until 2017.
Tolstedt held those positions during that time period.
Since the scandal broke, Wells Fargo has reformed its compensation practices and no longer bases employee pay on selling additional accounts to customers.
The bank has also replaced its chief executive twice, most recently with former Bank of New York Mellon chief Charlie Scharf, who has signaled he plans significant changes to try to win back the trust of regulators.
Source: | This article originally belongs to Dailymail.co.uk