Rep. Maloney Uncovers Evidence of Wells Fargo Fraudulent Practices Dating Back to 2007, Urges Stumpf to Extend Review

Sep 30, 2016
Press Release

WASHINGTON, DC – Congresswoman Carolyn B. Maloney (NY-12) asked Wells Fargo Chairman and CEO John Stumpf to “formally extend Wells Fargo’s review of accounts back to — at least — 2007” in a letter today following up on his responses at yesterday’s House Financial Services Committee hearing in which he would not commit to this extension despite evidence that the abusive and illegal practices under investigation may date back to that time. The Congresswoman is Ranking Member on the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises. You can find the letter here and full text below.

In the letter to Stumpf, the Congresswoman reiterates that during the hearing, “I asked you if you would commit to extending your review of cases where your customers had been affected to include occurrences prior to 2009, if you were presented with credible evidence that such fraud had, in fact, occurred … [and] then presented to you, and entered into the record, court documents from a 2009 case in the Federal District Court of Montana, which showed that employees of your bank had been terminated for, among other things, ordering debit cards without customers’ permission.”

She also points out that Stumpf told her, and the committee, in his sworn testimony that he would “leave no stone unturned.” She therefore requested that he “formally extend Wells Fargo’s review of accounts back to – at least – 2007” in light of the evidence entered into the record.

The Congresswoman sent the aforementioned documents to Stumpf with the letter.

ADDITIONAL BACKGROUND

On Thursday, September 29, 2016 Wells Fargo Chairman and CEO John Stumpf testified before the House Financial Services Committee. During that hearing, Congresswoman Maloney questioned the Wells Fargo CEO about the suspicious timing regarding his selling of Wells Fargo stock in late 2013 and reports of employees opening fraudulent accounts dating back to 2007.

The Congresswoman entered three key documents into the record. First, she submitted Stumpf’s Form 4 filing that shows that on October 30th, 2013, he sold $13 million worth of Wells Fargo stock on the open market, the largest open-market sale of Wells Fargo stock that he made in his 9 years as CEO. She also submitted an amended complaint and a plaintiff’s reply from a 2009 Montana court case with allegations that the fraudulent behavior currently under review occurred in 2007. Based on this scandal and Stumpf’s mismanagement of Wells Fargo, Congresswoman Maloney has called for Mr. Stumpf to resign.

 

Full text of the letter is below.

Dear Mr. Stumpf:

In a hearing before the House Financial Services Committee that took place on Thursday, September 29th, concerning widespread acts of fraud perpetrated by Wells Fargo under your tenure as CEO, you indicated that your bank was reviewing all accounts going back to 2009, in order to identify any cases where your customers may been affected by your bank’s illegal actions.

I asked you if you would commit to extending your review of cases where your customers had been affected to include occurrences prior to 2009, if you were presented with credible evidence that such fraud had, in fact, occurred.

You replied:

“I told our team to leave no stone unturned — and if we find a situation where a customer is harmed that goes back prior to that, we will make it right for that customer.”

I then presented to you, and entered into the record, court documents from a 2009 case in the Federal District Court of Montana, which showed that employees of your bank had been terminated for, among other things, ordering debit cards without customers’ permission.[1] As the court documents show, your own bank referred to these actions as “gaming.” This is identical to the conduct for which Wells Fargo was fined by the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the Los Angeles City Attorney.[2]

Enclosed, you will find the evidence that I entered into the record, which clearly show that the abusive and illegal practices at Wells Fargo were going on as far back as 2007. It is important to note that the employees in the Montana case alleged that they were only doing what they had been instructed to do by their supervisors at Wells Fargo.

As you told me directly that you will “leave no stone unturned” in your search for evidence that customers were harmed by the actions of your bank, I ask that you consider this evidence a stone, and turn it over. Moreover, in light of this evidence that I am enclosing that these same illegal practices were occurring as far back as 2007, I request that you formally extend Wells Fargo’s review of accounts back to — at least — 2007.

Please advise me as quickly of the efforts you plan to undertake to “make it right” for the customers of your bank who were clearly harmed by the fraudulent actions of Wells Fargo prior to 2009.

Sincerely,

Carolyn B. Maloney

Ranking Member

Subcommittee on Capital Markets and

Government Sponsored Enterprises

 

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[1] See Finstad et al. v. Wells Fargo & Co., Case No. 09-cv-00046 (D. Mont. 2009).

[2] See Consumer Financial Protection Bureau, In the Matter of Wells Fargo Bank, N.A., Consent Order, at 3 (Sept. 8, 2016) (defining the act of “issuing any debit card without the consumer’s consent” as an “Improper Sales Practice.”).