Whistleblower Gives Wells Fargo A New Crisis

Posted: Dec 22 2016, 11:21am CST | by , in Latest Business News


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Whistleblower Gives Wells Fargo a New Crisis

Wells Fargo is in trouble yet again for their fraud crisis that just won't go away.

In early December, three whistleblowers filed a case against Prudential, alleging that they were fired as a result of bringing up a troubling pattern related to Prudential insurance sales made through Wells Fargo bank. The suit indicates that Prudential knew Wells Fargo was signing up consumers for Prudential’s MyTerm insurance without their knowledge or permission.

Wells Fargo Fraud Pattern May Have Spread

The suit, filed in New Jersey state court, indicates that Prudential knew as early as January 2015 that irregularities in the accounts existed. Wells Fargo has been in the news this year for fraud. To meet sales and other quotas, Wells Fargo employees signed customers up for bank services and accounts they didn’t request and in many cases were not aware of.

The recent whistleblower suit indicates that the pattern of fraudulent behavior to make quotas was not confined to bank products alone, but extended to other products from financial companies who made sales through Wells Fargo, such as Prudential.

The suit indicates that MyTerm insurance has sold primarily to low-income customers with Hispanic last names. The customers tended to not renew these policies, and Prudential’s internal staff noticed that many e-mails sent to these clients — as many as 700 of them — were being returned as undeliverable. Both lack of renewals and patterns of nonresponse can indicate fraud.

One then-internal regulator who is part of the suit suggested calling these clients to determine whether they understood the product they were buying, as part of a review.

According to the suit, her supervisor indicated that Prudential did not want to focus on the issue, and was also concerned about being linked to Wells Fargo’s troubles with fraud. Her recommendations were not acted upon.

The employee and two others were later terminated by Prudential. The company maintains that the terminations have nothing to do with discussions about the potentially fraudulent pattern.

Prudential has said it will reimburse the affected customers.

Multiple Whistleblowers Found in Wells Fargo Case

Employees raising red flags about potential fraud within financial companies was also a feature of the Wells Fargo case. The U.S. Occupational Health and Safety Administration (OSHA) received 65 complaints by Wells Fargo employees about the company creating conditions in which employees opened fraudulent accounts.

The complaints also show that government regulators and Wells Fargo itself knew of these conditions as early as 2010. The complaints began in 2010 and continued until this year.

Wells Fargo employees sent the charges to the Whistleblower Protection Program, a government program whose mandate is enforcement of whistleblower laws.

It is increasingly clear that whistleblowers are in the forefront of protecting citizens against fraud and waste in organizations around the country. The number of whistleblower cases has risen sharply over the past 26 years. In 1987, just 30 whistleblower cases were filed nationally. In 2013, 753 cases were filed.

The False Claims Act protects whistleblowers against retaliatory action such as termination, suspension or other discriminatory action related to their whistleblower activities.

If the whistleblower is found to have been let go or otherwise mistreated as a result of their whistleblower activities, they are entitled to reinstatement at the seniority level they had and double any amount of back pay they may be owed, plus interest.

This is just another blow for Wells Fargo, who have had a 2016 that they would like to forget. We will see if they’re able to move past it.

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The Author

<a href="/latest_stories/all/all/56" rel="author">Scott Huntington</a>
Scott Huntington is a writer and journalist from Harrisburg PA who covered movies, tech, cars, and more. Check out his blog Off The Throttle or follow him on Twitter @SMHuntington.




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