February 01, 2017

Senators Call for Answers About Alleged Wells Fargo Fraud Cover-up

Scathing report alleges Wells Fargo branches were tipped off ahead of investigations, shredded, forged documents to hide massive customer fraud

WASHINGTON, D.C. - Six Democratic Banking Committee members led by Senator Bob Menendez (D-N.J.) today wrote to Wells Fargo CEO Tim Sloan demanding answers after revelations that the bank reportedly tried to cover its tracks by shredding and forging documents to conceal the widespread customer fraud.

"These latest allegations by Wells Fargo employees raise yet another red flag indicating that top management and the board of directors of Wells Fargo knew or should have known about the extensive fraud occurring throughout the bank," wrote the senators. "We are troubled by the possibility that Wells Fargo's retail bank branch managers engaged in activities that made it easier to conceal fraudulent practices that hurt both customers and employees."

According to a Wall Street Journal report, branch employees were allegedly ordered to stay afterhours to shred and doctor documents after managers were tipped off that their branches were to be visited by the bank's internal compliance officers probing allegations of Wells Fargo's fraudulent practices opening accounts in customers' names without their knowledge or consent. Customers were exposed to unauthorized fees and damaged credit scores as a result.

"We are also concerned that Wells Fargo's internal review system was allowed to operate with serious flaws for years, remains flawed, and lacks appropriate controls to prevent future harm to the bank's customers. It is also not clear precisely when senior management or the board became aware of these issues," the letter continued.

The bank was fined $185 million for a series of violations tied to its illegal opening of approximately 1.5 million deposit accounts and 565,000 credit card accounts that were not authorized by customers. Thousands of mostly low-level Wells Fargo employees were fired as a result of the fraud despite evidence that senior managers knew or should have known about the fraud.

The senators demanded answers from Mr. Sloan to series of questions. The letter was signed by U.S. Sens. Menendez, Sherrod Brown (D-Ohio), Elizabeth Warren (D-Mass.), Chris Van Hollen (D-Md.), Catherine Cortez Masto (D-Nev.) and Jack Reed (D-R.I.).

A PDF copy of the letter is available here.