Wells Fargo was fined $3 billion by the Department of Justice in 2020 for creating millions of fake accounts to generate millions of dollars in fees and interest. In 2023, is being sued by private citizens for pulling the same scheme a second time.
The lawsuit claims that Wells Fargo used fake and real personal information to open unauthorized accounts. Some fake accounts would use a real name and social security number and combine it with fake driver’s license information and false birth dates. Wells Fargo would allegedly use the “new” accounts to move thousands of dollars to other institutions, which would likely incur fees due to “insufficient funds.”
Wells Fargo would collect on fees and interests each time it attempted such transfers, which the Bank often attempted over a dozen times over a period of months. The fake transfers would be reported to the credit reports of the real names associated with the accounts, even though the alleged account holders had no knowledge that Wells Fargo had even opened an account in their name.
Early Warning Services, a Sacramento Credit Reporting Agency, allegedly furnished Wells Fargo with the names and social security names necessary to carry out this scheme. Early Warning Services is also named as a defendant. The lawsuit against Wells Fargo and Early Warning Services includes 54 complaints from individuals, forty of whom claim they have no prior relationship with the bank.
This is the third time in five years that Wells Fargo has been accused of financial wrongdoing. In addition to the 2020 fake accounts scheme, the bank was also fined $1 billion in 2018 for mortgage and loan abuses.
Stopping Bank Account Fraud Is Essential to Prevent another Global Recession
Bank fraud has become a major issue in the 21st century. The 2008 Great Recession was caused in part by numerous banks churning out fraudulent mortgage loans to under qualified applicants. Many of these loans were purportedly signed by bank executive vice presidents who didn’t exist.
When banks had to foreclose these bad loans, they often found they didn’t have the proper paperwork as the mortgages were often collected as part of bundles of mortgage loans sold and resold between financial institutions. Instead, many banks were forced to use tactics like “dual tracking” to try and recoup their losses, leading to more foreclosure fraud in addition to the loan fraud they had originally perpetuated.
It appears that Wells Fargo is attempting to replicate the same mistakes that brought down the housing market almost fifteen years ago. It would create a potential panic and bank run if all these fake accounts were closed at once, thereby replicating the depressions of 1933 and 2008.
More disturbing, Wells Fargo is seeking to do so despite federal regulators consistently fining them for their transgressions. In February 2023 though, Leopoldo Lora-Aguilera, a former Wells Fargo personal banker, was sentenced to 33 months in prison for money laundering and bank fraud. Clearly more prosecutions are necessary if Wells Fargo continues to perpetuate this kind of fraud on consumers and financial institutions alike.
Do I Need a Lawyer for Bank Fraud Claims?
If you are a victim of bank fraud, you should take immediate action to protect yourself. If you have been a victim of bank fraud, seek the assistance of an attorney who handles identity theft and other types of fraud cases. An attorney can help you understand your legal options and represent you in any legal proceedings related to the fraud.
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