Supervisor Of "Massive Fraud" At Wells Fargo Leaves Bank With $125 Million Bonus

Tyler Durden's picture

There was a burst of righteous populist anger anger last week, when it emerged that Wells Fargo had engaged in pervasive, "massive" fraud since at least 2011, including opening credit cards secretly without a customer’s consent, creating fake email accounts to sign up customers for online banking services, and forcing customers to accumulate late fees on accounts they never even knew they had. For this criminal conduct, Wells was fined $185 million (including a $100 million penalty from the CFPB, the largest penalty the agency has ever issued). In all, Wells opened 1.5 million bank accounts and "applied" for 565,000 credit cards that were not authorized by their customers.

As "punishment" Wells Fargo told CNN that it had fired 5,300 employees related to the shady behavior over the last few years. The firings represent about 1% of its workforce and took place over several years.  The fired workers went to far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said. What was hushed away is that not a single employee will go to prison, and that ultimately it will be Wells Fargo's shareholders - such as Warren Buffett - who will end up footing the bill.

What Wells did not disclose publicly to anyone is that the head of the group responsible for Wells' biggest consumer fraud scandal in years, is quietly leaving the bank with a $125 million bonus, a bonus which as Fortune's Stephen Gandel writes today will not see even one cent clawed back as part of the dramatic revelations.

According to Gandel, Carrie Tolstedt, the Wells Fargo executive who was in charge of the unit where employees opened more than 2 million largely unauthorized customer accounts—a seemingly routine practice that employees internally referred to as “sandbagging”— is leaving the giant bank with an enormous pay day, some $124.6 million.


Carrie Tolstedt

Tolstedt is walking away from Wells Fargo with a very full bank account, and praise: in the July announcement of her exit, which made no mention of the soon-to-be-settled case, Wells Fargo’s CEO John Stumpf said Tolstedt had been one of the bank’s most important leaders and “a standard-bearer of our culture” and “a champion for our customers.” In light of the record fine levied by the CFPB for the unit which Tolstedt headed, we wonder if Stumpf would like to retract his statement.

What is just as troubling is that despite beefed-up “clawback” provisions instituted by the bank shortly after the financial crisis, "it does not appear that Wells Fargo is requiring Tolstedt, the Wells Fargo executive who was in charge of the unit where employees opened more than 2 million largely unauthorized customer accounts—a seemingly routine practice that employees internally referred to as “sandbagging”—to give back any of her nine-figure pay."

As a reminder, on Thursday, Richard Cordray, the head of the CFPB, said, “It is quite clear that [the actions of Tolstedt’s unit] are unfair and abusive practices under federal law. They are a violation of trust and an abuse of trust.”

However, cited by Gandel, a spokesperson for Wells Fargo said that the timing of Tolstedt’s exit was the result of a “personal decision to retire after 27 years” with the bank. The spokesperson declined to comment on whether the bank was considering clawing back Tolstedt’s back pay.

In a statement following the settlement, Wells Fargo said, “Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us. Wells Fargo is committed to putting our customers’ interests first 100% of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.”

In other words, this has become yet another instance where bank subordinates were engaged in activity that seemingly none of their supervisors was - mysteriously - aware of, a pattern observed in virtually every major crackdown against a prominent sellside bank, from Goldman's Fab Tourre to the Libor conspiracy. While Fortune writes that it is not clear how closely Tolstedt was responsible for or even aware of the widespread abusive tactics at the bank, it is a fact that Tolstedt ran the community banking division of the bank, which included its retail banking and credit card divisions, during the entire period in which the customer abuse was alleged, which goes back to 2011. The CFPB said about three quarters of the unauthorized accounts opened by employees of Wells Fargo were bank deposit accounts. Another 565,000 were unauthorized credit card applications. Tolstedt took over the division in 2008, after Wells Fargo merged with Wachovia during the financial crisis.

Ironically, Tolstedt was a regular on Fortune‘s Most Powerful Women list. She was replaced on this year’s list by Mary Mack, who is taking over her job at the bank.

Tolstedt was regularly praised for her unit’s ability to get customers to open numerous accounts. For a number of years, Wells Fargo’s proxy statement, which details executive pay, cited high “cross-selling ratios” as a reason that Tolstedt had earned her roughly $9 million in annual pay. For instance, in Wells Fargo’s 2015 proxy statement, the company said that its compensation committee had authorized Tolstedt’s $7.3 million stock and cash bonus that year, because “under her leadership, Community Banking achieved a number of strategic objectives, including continued strong cross-sell ratios, record deposit levels, and continued success of mobile banking initiatives.

However later in 2015, the L.A. City Attorney’s office sued the bank because of its sales tactics, saying that many of the abusive practices came from intense pressure on Wells Fargo’s employees to get customers to open up numerous accounts. A separate class action of former employees alleges they were fired for not meeting cross-selling goals, or going along with the aggressive sales tactics.

Meanwhile, the awards for Toldstedt continued piling in, and earlier in 2016, when Wells Fargo released its annual proxy statement, it once again said that in order to justify her multimillion dollar bonus, Tolstedt’s division had “achieved a number of strategic objectives.” But this time, for the first time in years, cross-selling wasn’t listed as one of them.

While one can speculate if Tolstedt decided to leave in advance of the CFPB crackdown on her division, one thing that is certain is how much money she is taking with her: according to Gendell, when Tolstedt leaves Wells Fargo later this year, on top of the $1.7 million in salary she has received over the past few years, she will be walking away with $124.6 million in stock, options, and restricted Wells Fargo shares. Some of that hasn’t vested yet. But Tolstedt gets to keep all of it because she technically retired. Had she been fired, Tolstedt would have had to forfeit at least $45 million of that exit payday, and possibly more. It is safe to assume that had she waited until after the CFPB settlement, that her parting present may have been one third smaller, and that she could have been the bank's scapegoat, fired to placate regulators.

Alas, now we will never know what "could"have happened, which means that the only recourse Wells and its shareholders have - if they feel like bothering - is to try to recoup some of her ill-gotten bonus. As Fortune concludes, "the bank's proxy statement says that the bank has “strong recoupment and clawback policies,” and that the bank will revoke bonus pay if it is found that the conduct of an executive resulted in representational harm to the bank, or that the executive was not able to “identify or manage” risks in his or her division. But there is no sign that Wells Fargo is going to ask Tolstedt to return even a sliver of her stock jackpot."

As we pointed out last week, when we observed that yet again nobody is going to prison, Gandel's parting assessment is similar: "on Wall Street, the carrots are still widely handed out. The sticks, however, remain out of sight."

This also means that the biggest crime on Wall Street remains a more prosaic one: getting caught.

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kliguy38's picture

Sounds like she musta been doin' her job as instructed

Bush Baby's picture

Where does one go to sign up for one of these jobs?

Bush Baby's picture

For 125 million, not only would I be willing to lie and steal , but I'd even be willing suck a few cocks.

J S Bach's picture

Where greed rules over ethics, crime pays.

Jim Sampson's picture

You would think they would just suicide her instead of paying her.

Save_America1st's picture

they look at it this way:  How can they be breaking the law when they're just playing games with their own currency? 

Remember:  We don't own any dollars that we deposit in the bankster system.  It's theirs.  We are unsecured creditors who have given it to them and so they aren't truly accountable to us for shit.  Yeah, fines get "paid", low-level aholes get fired, but that's just to keep up some kind of appearance. 

But what is a fine of 100 Million or a 100 Billion?  It's just their own fiat going to a scumbag government agency to fund whatever they want with it and it still goes on the backs of the middle-class tax payers at some point down the line.

And the Fed can just print up more Monopoly money to infuse right back into the banksters accounts anytime they want. 

THEY DON'T GIVE A FUCK.

Get as much as you can out of the bankster system now while you can.  They're just going to confiscate it anyway they can at some point in the near future anyway whenever they finally feel like they've destroyed us enough and own as much as they possibly can and then they'll pull the trigger and essentially "nuke" everything.

Stack phyzz Ag as much as you can now so that the fiat you will lose that's trapped in the bankster system in 401k's and shit like that won't hurt so bad after the great monetary reset.

bitchez ;-)

espirit's picture

The Looters Outnumber the Producers.

Everything is a Con.

Survival of the Fittest in the Jungle.

Shemp 4 Victory's picture

For Carrie Tolstedt, such wealth will allow her to select the finest, triple-distilled tar and genuine peacock feathers for the warm-up ceremony, and an exquisite, hand-woven silk rope to caress her neck during the main event.

The money that remains will, of course, be returned to those from whom it was stolen.

Manthong's picture

..a little crypto.. some boxes  of physical, other stuff as deemed appropriate, and only enough kept in the system to keep the bills paid.

Father ¢hristmas's picture

Oh there's "Cryptos" involved, alright.

*chuckle*

de3de8's picture

It's only illegal if you get caught........right?

jeff montanye's picture

why does that woman remind me of hillary?

bleu's picture
bleu (not verified) Clashfan Sep 12, 2016 9:50 PM

Easy money has corrupted the entire system. https://goo.gl/IoiSjv

83_vf_1100_c's picture

For half of $125 mm I would marry her ass. Under TX law I get half. In the meantime treat her like Bill treats hillary.

I bet she does suck a mean cock. Broke thru the glass ceiling and got a $125mil payday. You don't do that in a man's world without some primo fellatio skills.

RiverRoad's picture

A Wells FartGo rep tried to force me to open another checking account last year.  When the bullying became ridiculous, I reported him to his manager who just smiled.  So I smiled back and closed all my accounts.  It was a chunk.  Fucked them before they could fuck me.

cheeseheader's picture

So say the Clintoons, and all other psycho D's.

Frito's picture

And then only if a "reasonable prosecutor" would bring such a case.

Liberty2012's picture

Yes, illustrated by the distortion of the phrase "innocent till proven guilty", which was until recently "presumed innocent until proven guilty", and which in fulll should be "in a court of law, one is presumed innocent until proven guilty."

One is either innocent or guilty - period.

HalinCA's picture

It's all public record  https://www.google.com/#q=Carrie+Tolstedt

She can be found.

http://traj.net/news/215054/wells-fargo-executive-who-led-employees-resp...

Property websites state the Alamo, California estate was sold in late June for $3.45million

I'm sure she is a rabid HillaryHead, too.

California Nightmare-ing's picture

The truth courtesy of Mr. Robot.  (Couldn't find the full audio in one clip, but you can piece it together).

 

https://www.youtube.com/watch?v=pfkwdLee0EU

https://www.youtube.com/watch?v=JwZSYGqPRiQ

 

checkessential's picture

Hillary said she is going to fix all of this.  Does it matter that they are all her big donors?   

Frito's picture

The way I heard it, she was going to "fix" all of it.

Clashfan's picture

Sounds fair.

Is she single?

SimpleJackBlack's picture
SimpleJackBlack (not verified) Jim Sampson Sep 12, 2016 4:06 PM

It's just fiats. They can print more.

HalinCA's picture

No can do.  She's got the proof where the orders came from, safely stashed away.  This happened over years, and her bosses did not stop it.  

Liberty2012's picture

Too obvious - there were already multiple related lawsuits

Plus, it's small potatoes - a few fees, minor inconveniences

It's not obvious, at least not to me, that this is an integral piece of a foundational fraud.

Still, why not at least make an attempt at showing remorse?

Twee Surgeon's picture

Because she put the files on the disk that an associate or 3 will release if she has an accident ? Hence the 25 Mil, or they would have told her to take a hike .

Insuring her own ass, smart girl. (Speculation only.) It does look suspicious though. The timing is awkward for Wells Fraudo, to say the least.

SimpleJackBlack's picture
SimpleJackBlack (not verified) major major major major Sep 12, 2016 4:15 PM

Wells Fraudgo.

Twee Surgeon's picture

We had to change banks years ago as Wells Fargo was burning our Dick-Broke bank account so badly.

It was the Debit card overdraught scam they got busted for....more than a decade ago. I imagine that Mr Wells and Mr Fargo are rolling in their graves.

Wells Fargo used to run the heavy wagons that got gold miners gold to the banks.

Once an honorable (or mostly honorable company.) Is now a Fuck You Sucker mill, scam op.

No real Law in the USA except for the Worker Bee's. Pendulums do swing though.

I'm not sure why a threat to the Nations Banking system from so many quarters is not recognized as a National Security threat ?

Are the Military intelligence branches looking into this Shit ? If not , Why not ?

The Corporate takeover of the Nation by bribery and "Donations" is grounds for Intervention by any Constitutional body (With Powers of Arrest.) that might actually give a damn. (Do they not have the juice on a single crooked banker or Senator?) What do the NSA do, other than round up george Orwell infomatics ?

I guess the Pension is more important to the .Gov peons. The FBI are clearly, in bed and sleeping, Fed.Gov fully infiltrated, National security is about some dick heads in Magic Carpet land, the USA is FUCKED . Get used to it, Bring your own lube. They will show you more fun tricks tomorrow. surely there must be an Honorable agency still within the US government ? Not.

Twee Surgeon's picture

Yeah, no worries, it's legal now. the boys in blue will have any criminal behavior wrapped up lickety split and the perps will be off to the hoosegow.

She must be innocent or they would have her in a cell by now. Mrs Gollum was just doing her best for the corporation and any unfounded insinuations that she's holding the files that prove institutional fraud, are unfounded. She earned every penny of her bonus, stow yer envy.

Able Ape's picture

If she eats hot dogs, she can suck cock...

Okienomics's picture

Those are two very different skill sets.

Handful of Dust's picture

"Hush money" evidently.

 

Must be nice to be in the financial industry these days, immune from prosecution for fraud and/or any other misdeeds.

E.F. Mutton's picture

Exactly.  Wells Fargo can't do Arkancide, and she knows too much. 

Mutually Assured Destruction works equally well in Business and Politics.

Shemp 4 Victory's picture

She's a close personal friend of Linda Green.

SomethingSomethingDarkSide's picture

How low will you go?  This is how Welfare States are developed!  Lol.

LadiesLoveCoolJames's picture

You'd even tickle the balls and engage in some assplay!

Vatican_cameo's picture

 

After you've sucked the first one, you've "Crossed that Bridge" and there is no going back.  Might as well suck them all at that point.

Sanity Bear's picture

my ex-girlfriend felt the same way

Bill of Rights's picture

Now that's some funny shit right there...Barry says fill out an app.

ndotken's picture

I'm sure she did all of that

Urban Redneck's picture

For $125 million, she must have video of Uncle Warren sucking little boy cocks while diddling his ukulele. Over ten years of bankster salary AND bonuses as severance for running retail operations. I either retired myself too early instead of being fired, or should have included a map of where all the bodies were buried in my letter of resignation.

SoDamnMad's picture

For a buck or three fifty I'll put 6 hollow points in her chest.

Oswald did it's picture

Just admit it, you'd probably suck the cocks without the money