(Photo by Noam Galai/Getty Images)
Scandal-plagued Wells Fargo fired over 100 employees for allegedly “making false representations” in applying for and obtaining loans specifically intended for small businesses that desperately needed the funds due to the impact of the Covid-19 disease.
The loans were made under the Small Business Administration’s Economic Injury Disaster Loans (EIDL). The EIDL program is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue due to the pandemic.
Wells Fargo chief human resources officer David Galloreese said in a memo, “We have terminated the employment of those individuals and will cooperate fully with law enforcement.” Galloreese added, “These wrongful actions were personal actions, and do not involve our customers. We have zero tolerance for fraudulent behavior and will continue to look into these matters. If we identify additional wrongdoing by employees, we will take appropriate action.”
Wells Fargo previously agreed to pay $3 billion to settle civil and criminal probes into accusations of rampant fraudulent sales practices. The issues stem from allegations that Wells Fargo executives pressured rank-and-file bank personnel to aggressively cross-sell products to enhance sales and revenue to meet certain quotas. Wells Fargo workers created millions of fake savings and checking accounts for customers without their knowledge or approval.
Recently, Wells Fargo CEO Charles Scharf faced harsh criticism after he made remarks claiming that the banks couldn't meet its diversity goals because of the scarcity of qualified candidates. Scharf said, “While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of Black talent to recruit from.”
The chief executive issued an apology statement via Twitter, stating, “I am sorry my comment has been misinterpreted. The financial industry and our company do not reflect the diversity of our population. We, at Wells Fargo, are committed to driving change and improving diversity and inclusion.”
Wells Fargo employees aren’t the only bank workers that have filed false claims for loans meant to aid businesses in dire financial straits due to Covid-19. Back in May, the U.S. Department of Justice sent out grand jury subpoenas to a number of leading banks “seeking records as part of a broader investigation into potential abuse of a $660 billion emergency loan program to help small businesses hurt by the novel coronavirus.”
Law enforcement said that reviews of the program found "strong indicators of widespread fraud." Specifically, its investigation into hundreds of hotline complaints found $250 million in loans and grants to "potentially ineligible recipients" and another $45.6 million in potential double payments.
JPMorgan admitted that it discovered evidence that its employees and customers may have misused the PPP for their own benefits. JPMorgan is conducting an internal investigation looking into the abuse of the program by some of its employees and customers. The bank reported that it's collaborating with law enforcement in this matter.
