Sep 23, 2016 Posted by AGA Editor

How Does Nobody Go to Jail in Wells Fargo Fraud Case?

Wells Fargo has agreed to pay a $190 million settlement to the federal government after it admitted that thousands of employees opened fraudulent and unauthorized accounts for customers.

So the big question is how does no one go to jail for this?

Wells Fargo is paying this massive $190 million fine and has fired 5,300 employees.

So what was taking place? In two words: massive fraud.

1.5 million checking accounts and over half a million credit cards of fake accounts were set up using real customers’ names in order for more than 5,000 employees to hit lofty sales goals. In addition to the fact that they were overcharged overdraft and maintenance fees, some customers also dealt with significant hits to their credit scores as a result of not staying current on accounts they didn’t even know they had.

Since 2011, Wells Fargo says $2.6 million has been refunded to customers, who received an average of $25. Out of the $190 million fine, only $5 million will go to victims. The remaining $185 million will go to the federal government.

Wells Fargo has also said that firings included managers, and that it was making investments “in enhanced team-member training and monitoring and controls.”

So how is it that while employees lose their jobs, nobody goes to jail?

I want you to look at this definition: identity theft is “the fraudulent acquisition and use of a person’s private identifying information, usually for financial gain.”

So the question: is that what took place? Using a person or customer’s identifying information in order to set up an account they did not request or want in order to hit sales goals or financial gain?

That is exactly what was happening here, and that is the exact definition of identity theft.

Under federal law, let alone additional state laws, identity theft carries a penalty of up to 15 years in prison as well as substantial fines.

In Wells Fargo’s case no one is going to jail— and the fine is not substantial. The $190 million is just over 3% of the $5.6 billion in revenue that Wells Fargo pulled in for just the second quarter of this year.

What you need to know is that when Wells Fargo agreed to pay this pittance of a fine, the government also agreed to something else. It gave the bank immunity for any uncovered crimes that may have taken place during this same time period.

So in short: no one goes to jail; the bank pays a comparatively tiny fine; the government gets a big pile of cash; and the victims continue to be scammed by the banks.

So what about this deal would actually stop Wells Fargo or any other bank from doing the exact same thing over and over again in the future?

Just recently U.S. courts slapped British banks Barclays, HSBC and Royal Bank of Scotland with nearly $1 billion in fines related to forex improprieties. Goldman Sachs and BNP Paribas also got hit with combined fines approaching $250 million in related cases. Other huge Wall Street names, including JPMorgan Chase, Bank of America and Citigroup, have faced penalties as well.

Not one person went to jail.

Can You Trust Big Banks With Your Money? The lesson from Cyprus: Your hard-earned savings can vanish in the vault.

It’s hard to believe considering what happened in 2008 on Wall Street and in Washington, but banking is built on trust.

You hand off your hard-earned dollars to a teller and trust the money will be deposited and available for withdrawal when needed. Despite the crash on Wall Street, we still trust bankers to safeguard deposits from robbers and reckless investments.

Consider what has happened in the past. A U.S. Senate investigation revealed that the Dodd-Frank banking reforms utterly failed in the case of the $6.2 billion “London Whale” gambling loss at JPMorgan Chase. Then a U.S. House committee passed seven measures to weaken Dodd-Frank. And there was the European Union’s demand that Cyprus expropriate money from depositors to prevent that nation’s big banks from failing. That means no depositor can trust that a government won’t dip its hands into savers’ accounts to bail too-big-to-fail banks. The trust is gone!

In 2008, the U.S. Congress did not take bailout money from depositors, but instead from every taxpayer. And it wasn’t a mere $700 billion in Toxic Asset Relief Program (TARP) money. Including loans and other help offered by the Treasury Department, Federal Reserve and FDIC, it’s more like $4.76 trillion, with $1.54 trillion not paid back.

The Dodd-Frank Wall Street Reform and Consumer Protection Act was supposed to give taxpayers some trust that the banks would be sufficiently regulated, that too-big-to-fail wouldn’t happen again. But the London Whale drowned that fantasy.

You can continue to pretend that we live in a world where the banks and politicians care about us, or you can wake up and start to educate yourself and others.

Become a part of the Informed, awake and Aware.