A Federal Judge Declares That Current and Former Wells Fargo Executives Can be Sued for Their Fraud

by Walter Einenkel –

A federal judge has decided that Wells Fargo’s current and former executives will have to face their shareholders’ lawsuit that demands that these executives be held personally liable for the fraudulent practices at the big bank. Those practices led to at least 3,500 lower-level management employees being fired and the bank settling a modest $185 million deal with the DOJ for creating millions of fake accounts in order to generate the perception of growth needed to make billions. That was followed up by a Wells Fargo settlement with the government for $1.2 billion for deceiving the government into insuring rap home loans. U.S. District Judge Jon Tigar in San Francisco told CEO Tim Sloan and the rest of his cronies that they were still on the hook and should have to face at least some music.

“Where, as here, plaintiffs’ claims arise from a pervasive and undisputed fraud going to the core of the company’s business, it is reasonable to infer senior executives knew about, or at least recklessly turned a blind eye to, the stream of red flags,” Tigar wrote in a decision dated Wednesday.

The judge also said that in the “unlikely” event Sloan did not know about the suspect practices before 2013, when he was chief financial officer, he was “certainly aware of these issues” by December 2013 when he told the Los Angeles Times: “I‘m not aware of any overbearing sales culture.”

Wells Fargo has repeatedly tried to say it was nobody at the top’s fault that their entire business model seems to have been predicated on impossible sales expectations leading to millions and millions of imaginary accounts. After relenting to public and stockholder pressure to begin actually punishing some of the c-suite frauds in their company, and then being forced to make a show of clawing back some of the gold on those executives’ parachutes, every day seems to reveal new levels of massive fraud at the “too big to manage” bank. Wells Fargo’s issues with shareholders is simply one of the numerous issues facing the bank. Recently it was revealed that when they weren’t opening accounts for people who didn’t know or want them, they were denying loans wholesale to DACA recipients.

Wells Fargo had hoped to cut down the shareholder’s lawsuit here but failed. For the banking giant this is just one of dozens of lawsuits surrounding the companies illegal practices.

 

Reprinted with permission from Daily Kos