Controversies
On February 4, 2009, Wells Fargo announced it was canceling a four-day business meeting and employee recognition event in Las Vegas. There had been negative allegations from the media, members of Congress and other public officials that the trip was a "pricey Las Vegas casino junket" and that the company was misusing taxpayers' money, since Wells Fargo had been one of the banks that received "bailout" funds from the government a few months earlier.
Illinois Attorney General Lisa Madigan filed suit against Wells Fargo on July 31, 2009, alleging that the bank steers African Americans and Latinos into high-cost subprime loans. A Wells Fargo spokesman responded that "The policies, systems, and controls we have in place – including in Illinois – ensure race is not a factor..."
In a March 2010 agreement with federal prosecutors, Wells Fargo acknowledged that between 2004 and 2007 Wachovia had failed to monitor and report suspected money laundering by narcotics traffickers, including the cash used to buy four planes that shipped a total of 22 tons of cocaine into Mexico.
In August 2010, Wells Fargo was fined by U.S. District Judge William Alsup for overdraft practices designed to "gouge" consumers and "profiteer" at their expense, and for misleading consumers about how the bank processed transactions and assessed overdraft fees.
On April 5, 2012, a federal judge ordered Wells Fargo to pay $3.1 million in punitive damages over a single loan, one of the largest fines for a bank ever for mortgaging service misconduct. Elizabeth Magner, a federal bankruptcy judge in the Eastern District of Louisiana, cited the bank's behavior as "highly reprehensible", stating that Wells Fargo has taken advantage of borrowers who rely on the banks accurate calculations. She went on to add, "perhaps more disturbing is Wells Fargo's refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods."
The fine has come at a time that the Department of Housing and Urban Development (HUD) has launched an investigation of Wells Fargo into racial discrimination practices, the second federal probe in 2012 of alleged violations of misconduct with regard to race. The other, began in 2011 by the National Fair Housing Alliance has found "overwhelming" and "troubling" evidence that six of the nation's major banks handle foreclosures in neighborhoods populated primarily by minorities differently than in white communities.
On July 13, 2012, Wells Fargo entered a settlement agreement with the U.S. Department of Justice for allegedly discriminating against African-American and Hispanic borrowers from 2004 to 2009. Wells Fargo will pay $125 million to subprime borrowers and $50 million in direct down payment assistance in certain areas, for a total of $125 million. Wells Fargo spokespersons denied all claims and are settling only to avoid contested litigation.
On August 14, 2012, Wells Fargo agreed to pay around US$6.5 million to settle SEC charges that in 2007 it sold risky mortgage-backed securities without fully realizing their dangers.
On October 9, 2012, the Unites States Federal Government sued the bank under the Federal False Claims Act at the federal court in Manhattan, New York. The suit alleges that Wells Fargo defrauded the Federal Housing Administration (FHA) over the past ten years, underwriting over 100,000 FHA backed loans when over half did not qualify for the program. This suit is the third allegation levied against Wells Fargo in 2012.
In October 2012 Well Fargo was sued by US federal attorney Preet Bharara over questionable mortgage deals.
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