LOS ANGELES–The former executive at Wells Fargo who was convicted of crimes related to the massive fake accounts scandal at the bank will not serve prison time as part of her sentence.
Instead, Carrie Tolstedt will serve three years’ probation and six months of home confinement and will also have to pay a $100,000 fine and serve 120 hours of community service, a judge has ruled.
“I sincerely apologize and I know that as the leader of the community bank, the responsibility sat on my shoulders,” Tolstedt said following the sentencing. “I am unspeakably sorry.”
Two-Million Fake Accounts; 5,000 Fired
Tolstedt has largely been the public face of the scandal that became public in 2016 and which involved the opening of more than two-million fake accounts in the names of customers and others as front-line and branch employees scrambled to meet aggressive cross-sales goals. More than 5,000 Wells Fargo employees were terminated as the result of the scandal, and the bank has paid billions of dollars in fines.
Tolstedt pleaded guilty earlier in 2023 to obstructing regulators who were probing the bank’s actions. The crime carries a maximum prison term of 16 months, and the Justice Department had asked that she serve one year.
The Wall Street Journal noted that Tolstedt left the bank in 2016, but since then has had about $65 million of compensation clawed back by the bank. She agreed in March to pay $17 million and accept a ban from the banking industry to settle a separate case with the Office of the Comptroller of the Currency. She paid a $3 million settlement to the Securities and Exchange Commission in May, the Journal added.
‘Not Greater Than Necessary’
At the sentencing U.S. District Judge Josephine Staton cited federal guidelines that are set to ease prison sentences for cases like Tolstedt’s, and said she was imposing a “reasonable and not greater than necessary” sentence.
As the Wall Street Journal noted, Justice Department prosecutors had argued that a jail sentence was necessary to deter corporate executives who are tempted to deceive regulators to protect their jobs. Staton, however, said such a punishment wasn’t necessary to send that message.
“General deterrence is better served, in the court’s view, by holding more people accountable,” she said, according to the Journal. “A just punishment cannot morph into a harsh punishment.”
The Journal added that it has been exceedingly rare for bankers to get prison time for committing crimes on the job, noting that only one banker served time as a result of the financial meltdown of 2008.
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