Wells Fargo employee fraud: Why has no one been charged?

Posted at 5:26 PM, Sep 29, 2016
and last updated 2016-09-29 18:47:39-04

Opening a credit card or bank account using someone else's information is a crime, but thousands of Wells Fargo employees who did just that have not been criminally charged.

While the company was hit with a $190 million fine, the I-TEAM also learned the majority of the money will not go to the customers defrauded by Wells Fargo.

"Certainly the whole foundation of the banking industry is based on trust," Wisconsin Bankers Association President and CEO Rose Oswald Poels said. "What is alleged to have happened at Wells Fargo is very unfortunate and does give the industry a black eye."

5,300 employees were fired for opening 1.5 million fake bank accounts and more than 500,000 credit cards in order to meet performance goals. Meanwhile, customers who never approved those accounts were being charged maintenance fees.

"It is legal to have salary and benefits paid and established through a performance context," Oswald Poels explained. "The question of course is does that lead to unethical or illegal behavior?"

TODAY'S TMJ4 asked Marquette University Associate Law Professor Ed Fallone to weigh in on the scandal.

"If upper management knows that illegal conduct is happening, then they are potentially criminally responsible," he said.

Fallone adds that investigating white collar crime is not easy. In order for the U.S. Attorney's Office to criminally charge a Wells Fargo executive, Fallone says prosecutors will need credible whistleblowers.

"The inclination is to start with lower level employees, establish whether they have any personal criminal liability and then maybe cut a deal to get their testimony to then go and try and gather evidence against the higher ups (executives)," Fallone said.

Wells Fargo has already admitted guilt by agreeing to pay $190 million in fines, but the I-TEAM learned $185 million will go straight to the federal government.

Only $5 million will be divided among customers who were wrongfully charged maintenance fees.

Wells Fargo would not tell us exactly how many of its customers were taken advantage of, but we do know the fine is nothing compared to the $5.6 billion in revenue it took in during the 2nd quarter of this year.

"The real concern is if we constantly accept these monetary settlements, we are not creating deterrents," Fallone said. "We are not creating the fear of going to jail that will prevent these sorts of economic, organizational crimes from happening in the future."

Wells Fargo says it has notified all of its customers who were incorrectly charged fees.

The average refund is $25, according to a Wells Fargo spokesperson.