3 former Wells Fargo execs ordered to pay over $18 million in fake sales account scandal
Three former Wells Fargo executives must pay $18.5 million for their role in the bank’s widespread fake sales accounts scandal that came to light nearly a decade ago.
Based in San Francisco, Wells Fargo has its biggest employee base in Charlotte, with about 27,000 workers here. All three former senior executives worked in Sioux Falls, South Dakota, according to the Office of the Comptroller of the Currency, which imposed the civil penalties.
Claudia Russ Anderson, the former community bank group risk officer, was ordered Tuesday to pay $10 million; David Julian, former chief auditor, was ordered to pay $7 million; and Paul McLinko, former executive audit director, was irdered to pay $1.5 million.
All three knew that the sales practice misconduct was widespread and systemic, Acting Comptroller of the Currency Michael Hsu said Tuesday in his decision.
To meet excessive sales goals, thousands of Wells Fargo’s Community Bank employees opened millions of accounts and other financial products from 2002 to 2016 that were unauthorized or fraudulent. Community Bank was Wells Fargo’s largest business line of retail branches.
“This case stems from one of the largest scandals in banking history,” Hsu said.
Failing to act at Wells Fargo
According to Hsu’s findings:
From 2013 to 2016, Anderson failed to provide information or provided false, incomplete or misleading information during the comptroller office’s 2015 examinations. Anderson also failed to challenge the bank’s incentive compensation program, failed to institute effective controls and repeatedly downplayed sales practices misconduct.
During the same time, Hsu said in a separate decision, Julian and McLinko failed to effectively audit activity that would detect and document sales practices misconduct.
McLinko also failed to maintain professional independence from the Community Bank.
More about Wells Fargo’s scandals
Since the 2016 scandal, regulators identified additional problems with how the bank handled mortgages, auto loans and consumer deposit accounts.
In 2020, the bank agreed to pay a $3 billion fine to federal prosecutors and the SEC over its practices.
That year, Anderson, Julian and McLinko were among 11 former Wells Fargo senior executives charged by the comptroller’s office. Eight others previously settled resulting in over $43 million in civil penalties. That included former CEO John Stumpf, who was ordered to pay $17.5 million.
In May 2023, Wells Fargo was settling a class-action lawsuit from shareholders for $1 billion over claims the bank misled them about how it was complying with regulators in the aftermath of its fake sales scandal.
In September 2023, Carrie Tolstedt, the only Wells Fargo leader criminally charged in the scandal, was sentenced to three years’ probation, including six months of home confinement, for her role in misleading investors.
Wells Fargo still operates under a growth cap that the Federal Reserve put on the bank in 2018 as a punishment for its behavior. That asset cap stands at $1.95 trillion.
This story was originally published January 15, 2025 at 5:49 AM with the headline "3 former Wells Fargo execs ordered to pay over $18 million in fake sales account scandal."