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Former Wells Fargo executive avoids prison in fake accounts scandal

Former Wells Fargo executive avoids prison in fake accounts scandal

A former top Wells Fargo executive avoided prison for her role in the bank’s fake accounts scandal after a federal judge sentenced her Friday to six months of home confinement and three years of probation. She was also ordered to pay a $100,000 fine and perform 120 hours of community service.

The former executive, Carrie L. Tolstedt, who was head of retail banking at Wells Fargo, was the only high-ranking executive at the bank criminally charged for her misdeeds. This year she pleaded guilty to a criminal charge of obstructing a bank inspection.

Prosecutors had asked for a 12-month prison sentence, saying in a legal filing that jailing Tolstedt, 63, would be a “general deterrent to other executives who might be tempted to avoid the truth.”

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Ms. Tolstedt’s lawyers had pushed for probation, citing similar sentences in other cases and invoking Ms. Tolstedt’s “lifelong charitable works.” Both the prosecution and defense also cited Ms. Tolstedt’s health problems, details of which had been redacted from public versions of court records, as a factor favoring leniency.

Tolstedt ran Wells Fargo’s retail branches during the years when the bank opened what could have been millions of fraudulent bank accounts, a scandal that came to light in 2016 and toppled two successive CEOs.

Although quite a few customers were directly harmed by the bank’s actions (its price fell most heavily on employees, who faced intense pressure to break the law or risk being fired), the revelation focused regulators’ attention on Wells and led to the discovery of additional crimes. The bank has paid billions of dollars in fines, including a $3.7 billion fine imposed last year for acts that include improperly repossessing some borrowers’ cars and homes and charging overdraft fees even when customers had enough money to pay. cover your purchases.

Ms. Tolstedt had consistently denied any wrongdoing in the fake accounts issue. She had retired from the bank shortly before her actions became public and then she was retroactively fired for cause.

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Ms. Tolstedt “fully accepts responsibility for her crime and acknowledges that it was wrong,” her lawyers wrote in a pre-sentencing document. In March, she agreed to pay $17 million to resolve civil charges brought against her by the Office of the Comptroller of the Currency.

Ms. Tolstedt was sentenced by Judge Josephine Staton in Los Angeles. A spokesman for the U.S. Attorney for the Central District of California declined to comment on the sentencing. Ms. Tolstedt’s lawyer also declined to comment.

Wells Fargo is still haunted by the fallout from its string of scandals. Since 2018, it has operated under a draconian asset limit restriction imposed by the Federal Reserve that sharply limits its growth. That restriction “is a statement of the reality that we still have more work to do,” Charles Scharf, chief executive of the San Francisco-based bank, told analysts in a phone call in July. He added: “It is critical that we continue on our path to completing that work.”



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