Although Wells Fargo has faced years of scandals and turmoil, no current or former high-ranking executives have faced jail time, until now.
Carrie L. Tolstedt, Wells Fargo’s former head of retail banking, agreed to plead guilty to a criminal charge of obstructing a bank examination, according to the Justice Department.
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Tolstedt, once a top executive at the bank, has entered into a plea agreement which calls for a sentence of up to 16 months, the agency said.
Tolstedt was in charge of Wells Fargo’s banking branches when it opened millions of fake bank accounts in customer’s names, resulting in a scandal that broke in 2016 and led to the ousting two successive chief executives. She had consistently denied any wrongdoing, but now is the first high-ranking Wells Fargo executive to face criminal charges for the scandal.
Prosecutors have argued that Tolstedt enabled bank employees to use illegal tactics in order to hit Wells Fargo’s (WFC) aggressive sales targets. Allegedly, some staffers started using their own contact information on forms to prevent customers from discovering the fake accounts.
In 2015, as the Office of the Comptroller of the Currency began to examine the bank’s sales tactics, Tolstedt allegedly helped prepare a memo in which, prosecutors say, she concealed details about the scope and scale of Wells Fargo’s actions.
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“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.
Both Enu Mainigi, Tolstedt’s lawyer, and a Wells Fargo spokeswoman have declined comment.
McNally’s office has not indicated whether federal prosecutors plan to pursue cases against other Wells Fargo executives. Tolstedt’s former boss, John Stumpf, the bank’s chief executive from 2007 to 2016, has not faced criminal charges. 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 Office of the Comptroller of the Currency.
Tolstedt originally decided to fight the O.C.C.’s charges, but has now agreed to pay $17 million to settle those charges — less than the $25 million penalty the regulator had previously sought.
Wells Fargo ended up paying billions in fines for opening accounts without customers’ authorization, which led to some customer’s houses being seized. Last year, the bank incurred a $1.7 billion fine imposed by the Consumer Financial Protection Bureau for errors in recording home and auto loan payments, and since 2018 it has operated under a draconian asset-cap restriction imposed by the Federal Reserve.
In 2020, the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) issued a $3 billion dollar fine against Wells Fargo.
