More than three years after she left Wells Fargo, and since has been targeted as the executive most responsible for the sales practices which led the bank to record enforcement actions, Carrie Tolstedt reportedly is being eyed for criminal prosecution by the Department of Justice.
Reuters, citing two unnamed sources, said prosecutors are investigating Tolstedt for her role in the practices. It is the first time the investigation has been publicly reported. The sources told Reuters that prosecutors had been probing Tolstedt as one among a short list of people with a view to bringing criminal charges, and one sources told the news service that the list has narrowed to focus on Tolstedt.
Tolstedt was the head of Community Bank for Wells Fargo throughout the period federal investigators looked into, dating back from 2007 through 2016 – although the sales practices of creating fraudulent accounts for customers to meet bank goals stretched back as early as 1998.
In its report, Reuters said it was unable to determine whether the criminal investigation would lead to any charges against Tolstedt. But the investigation is the first public pronouncement of criminal charges into any Wells Fargo executive since the first enforcement action was announced in September 2016 by the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency (OCC) and the city of Los Angeles.
From the time the enforcement action was announced, Tolstedt was fingered as the executive responsible for pushing the sales practices across the Community Banking division. The internal investigation from the Wells board of directors found her most responsible for the problems, the OCC leveled its harshest penalties – a $25 million fine and civil charges – to her, and not former CEO John Stumpf or any other top executives or board members.
And in February, as the bank settled with the Justice Department for $3 billion and avoided criminal charges, the only executive referenced for misbehavior in the complaint by the Justice Department was “Executive A” – Tolstedt.
Tolstedt has not spoken publicly since leaving Wells Fargo. She has not appeared before Congress the way that Stumpf and his successor, Tim Sloan, have. The only reaction she has given is through her attorney, Enu Mainigi.
In response to the February settlement that singled Tolstedt out, Mainigi told Dodd Frank Update: “Ms. Tolstedt acted appropriately and in good faith at all times, and the effort to scapegoat her is both unfair and unfounded.”
Tolstedt reportedly is appealing her fine and civil penalties from the OCC. At the time of the announcement, Mainigi said, “A full and fair examination of the facts will vindicate Carrie.”
In a statement to the Justice Department in February totaling 16 pages, Wells Fargo admitted to a number of facts surrounding the fraudulent sales practices. Many of the details have been known since the Wells Fargo board’s independent investigation was released in 2017.
Throughout the statement, there are references to senior management, to regional bank executives, and to regional presidents. Yet Stumpf and Sloan are never mentioned – by name or by anonymous reference – and board members are referenced only in receiving misinformation.
The only individual identified is the senior executive vice president in charge of the Community Bank – referred to throughout the statement as Executive A, also known as Tolstedt.
Tolstedt has had $67 million in salary clawed back by Wells Fargo, and is facing a $25 million civil penalty from the Office of the Comptroller of the Currency. She retired with $124.6 million in stock.
The statement admitted to faults within the Community Bank – but did not cite fault with senior leadership such as Stumpf or with the board of directors. However, Stumpf met regularly with Tolstedt, who reported directly to him until 2015, and a Wells Fargo employee wrote directly to the CEO in 2007 with his concerns over the fraudulent sales practices. That was highlighted by the findings in the independent board investigation.