Disgraced former Wells Fargo CEO Carrie L. Tolstedt has avoided prison time after pleading guilty for her role in the massive counterfeit accounts scandal that roiled the bank in 2016.
Between 2002 and 2016, Wells Fargo employees opened about two million deposit and credit card accounts without customer consent or knowledge to boost key performance metrics, research shows.
During a hearing on Friday in Los Angeles, Tolstedt, 63, was sentenced by U.S. District Judge Josephine Staton to three years of probation, including six months of home confinement.
In addition, she will pay a $100,000 criminal fine and serve 120 hours of community service, in addition to the $20 million in civil fines imposed by federal regulators.
Well, Fargo previously clawed back about $67 million of Tolstedt’s $125 million retirement package, leaving her with a $58 million golden parachute without civil and criminal penalties.
Disgraced former Wells Fargo executive Carrie L. Tolstedt has avoided prison after pleading guilty for her role in the massive counterfeit billing scandal
Between 2002 and 2016, Wells Fargo employees opened about two million deposit and credit card accounts without customer consent or knowledge, an investigation shows.
Tolstedt pleaded guilty in March to obstructing a bank investigation related to the counterfeit accounts scandal, which cost Wells Fargo $3 billion to settle federal civil and criminal investigations.
Prosecutors had called for her to serve a year in prison, writing in a motion: “Corporate offenders must be sent a clear message that maintaining a lucrative position through criminal behavior is not worth the risk.”
The probation sentence handed down Friday reflected the sentence sought by Tolstedt’s lawyers, who did not immediately respond to a request for comment from DailyMail.com on Saturday.
The maximum legal penalty for obstructing a bank investigation is five years in prison, but Tolstedt’s plea deal called for a prison sentence of no more than 16 months.
In a separate settlement with the Office of the Comptroller of the Monet, Tolstedt agreed to a lifetime ban from the banking industry and a $17 million civil penalty.
Tolstedt also agreed in May to pay a $3 million fine to settle a civil case brought by the Securities and Exchange Commission, without admitting or denying the allegations.
The SEC accused her of misleading investors about the success of Wells Fargo’s core business, which involved questionable sales practices used to inflate key performance measures.
From mid-2014 to mid-2016, Tolstedt publicly described and endorsed Wells Fargo’s “cross-sell metric” as a way to measure the bank’s financial success, despite the fact that it was bloated by accounts and services that were unused, unnecessarily or were unauthorized. , the SEC said.
Fargo previously recovered about $67 million of Tolstedt’s $125 million retirement package, leaving her with $58 million before civil and criminal penalties.
The scandal also brought down former Wells Fargo CEO John Stumpf (above during a 2016 Senate hearing), whom Tolstedt once called the “best banker in America.”
Before the scandal broke, Wells Fargo was considered to have an excellent reputation among the major banks.
The bank referred to its branches as “stores” and once had a policy of letting each Wells Fargo customer purchase eight financial products from the company.
The bank’s sales policy, under pressure from top management, was aggressive and unrealistic, according to regulators.
Bank employees were scolded for not meeting high sales quotas, which ultimately led to many employees gaming Wells Fargo’s sales system to meet these artificial sales targets.
For example, a number of Wells Fargo customers, particularly older adults, have signed up for online banking even though they did not have internet access.
The documents outlining the charges against Wells Fargo relied heavily on the conduct of “Executive A,” described as the head of Wells’ community banking operations and regional banking division from 2002 to 2017.
Tolstedt held those positions during that period.
The scandal also brought down former Wells Fargo CEO John Stumpf, who once called Tolstedt the “best banker in America.”
Stumpf paid a $17.5 million civil penalty in 2020 and accepted a lifetime ban from the banking industry.
As a result of the scandal, Wells Fargo remains under a Federal Reserve asset cap that limits the bank’s growth, although the bank is still the fourth-largest U.S. bank.
Since the scandal broke, Wells Fargo has reformed its compensation practices and no longer bases employee compensation on selling additional accounts to customers.
The bank has also replaced its CEO twice, most recently by former Bank of New York Mellon chief Charlie Scharf, who has signaled he is planning major changes to try to regain regulators’ trust.