WASHINGTON– The former Wells Fargo executive who largely oversaw the bank’s massive fake accounts scandal has been sentenced to more than a year in prison.
Carrie Tolstedt has become the first former or fired Wells Fargo executive sentenced to federal prison over the events that first came to light in 2016 in which more than two-million fake accounts were opened by Wells Fargo employees seeking to meet aggressive sales targets from 2011-2015, as CUToday.info has reported.
Tolstedt pleaded guilty to one count of obstruction of a bank examination, the U.S. Justice Department said. The plea agreement carries a 16-month federal prison sentence. The statutory maximum sentence for obstruction of a bank examination is five years, according to JournalNow.com.
Attorney Joseph McNally for the Central District of California submitted the government’s sentencing position of a 12-month imprisonment. McNally also recommended a year of supervision upon release and a $100,000 fine.
‘Seriousness of Conduct’
“Such a sentence reflects the seriousness of defendant’s conduct, promotes respect for the law, provides just punishment, and affords general deterrence to other executives who might find themselves tempted to skirt the truth,” McNally wrote. “At the same time, it acknowledges that defendant has accepted responsibility for her offense and does not pose a continuing danger to the public. And it does so while avoiding unwarranted sentencing disparities the guidelines were designed to avoid.”
Tolstedt served about nine years as Wells Fargo’s head of the Community Bank, which operated the bank’s consumer and small business retail banking business. She was retroactively fired with cause by Wells Fargo shortly after the scandal erupted in September 2016.
“According to the plea agreement, Tolstedt acknowledged that she knew of those fraudulent practices in 2004, including that about 5,300 retail employees had been fired over those tactics,” JournalNow reported. “Yet, internal investigations within the Community Bank ‘flagged only a small portion of the potentially problematic activity for investigation,’ according to Justice officials.”
Sought to ‘Minimize Scope’
In addition, the report noted that in May 2015, Tolstedt participated in the preparation of a memorandum that the Office of the Comptroller of the Currency would receive in connection with its examination of sales practice issues at Wells Fargo.
“To minimize the scope of the sales practices misconduct within the Community Bank, Tolstedt corruptly obstructed the OCC’s examination by failing to disclose statistics on the number of employees who were terminated or resigned pending investigation for sales practices misconduct,” the Justice Department said. “She also failed to disclose that the Community Bank proactively investigated only a very small percentage of employees who engaged in activity flagged as potential sales practices misconduct.”
More Fines Paid
As CUToday.info also reported, in February 2020, the bank agreed to pay $3 billion to settle U.S. Justice Department and Securities and Exchange Commission investigations into fraudulent sales practices by its Community Bank division.
John Stumpf, the bank’s retired former chairman and chief executive, reached a settlement with the SEC on similar allegations in which he paid a $2.5 million fine in November 2020.
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