Word of the Month for April 2017: Fraud

In today's news is the story of greed and stupidity.  That's greed (on the part of Wells Fargo and the banking system, in general) and stupidity because clearly the system thinks people are just too stupid to realize they've been hoodwinked.

This morning I was looking through our collection of resources related to banking law, namely:

• Banking Crimes: fraud, money laundering and embezzlement (Thomson Reuters)
• Michie on Banks and Banking (Lexis)
• The Law of Bank Deposits, Collections and Credit Cards (Lexis)
• Consumer Banking and Payments Law (NCLC)

because the other day I read a disturbing article in the Los Angeles Times about Wells Fargo's agreement to pay $110 million to settle a class-action lawsuit over fraudulently created accounts.  $110 million?! That's all? Seems a paltry amount considering that, as of December 31, 2016, Wells Fargo reported:

• $1.9 trillion in assets,
• Revenue of $21.6 billion (with net income of $5.3 billion)
• Return on assets of 1.08 percent and return on equity of 10.94 percent (i.e. they're making money hand over fist)

$1.9 TRILLION in assets and the best they can come up with is $110 million?!?  Gotta wonder if the someone higher up is on the take given the ease with which this is all going down.

The thing is, if you go to Wells Fargo's website, the description of what they do is actually comical, to wit:

Wells Fargo & Company (NYSE:WFC) is a diversified, community-based financial services company founded in 1852 and headquartered in San Francisco. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially.

As to that bit about "satisfy our customers' financial needs and help them succeed financially" I gotta wonder who they see as their customers and who are they helping to succeed? Themselves?!?  

See, a few months back, it was reported that Wells Fargo had opened up over 2 million fraudulent accounts on behalf of it's customers.  A consequence of this is that when new accounts are created, it indicates that people are investing more and that Wells Fargo is/was more profitable than it actually was/were. Seems this shady activity was occurring long before the initially reported 2011 date (even as far back as 2004).  

So, why were Wells Fargo employees opening these accounts with impunity?  Turns out, you need to dig no deeper than the complaint filed against Wells Fargo last year. According to the complaint, 

Wells Fargo has strict quotas regulating the number of daily "solutions" that its bankers must reach; these "solutions" include the opening of all new banking and credit card accounts. Managers constantly hound, berate, demean and threaten employees to meet these unreachable quotas. Managers often tell employees to do whatever it takes to reach their quotas.  Employees who do not reach their quotas are often required to work hours beyond their typical work schedule without being compensated for that extra work time, and/or are threatened with termination.  

The quotas imposed by Wells Fargo on its employees are often not attainable because there simply are not enough customers who enter a branch on a daily basis for employees to meet their quotas through traditional means.

In this case, "traditional means," I suspect, means "as people walk through the door." Thus, employees were encouraged by management to break the law by using non-tradional means (i.e making stuff up). 

The question(s) I have, then is why isn't anyone going to prison for FRAUD (a felony) and why is the settlement so low?!  According to Black's Law Dictionary, FRAUD is defined as:

Some deceitful practice or willful device, resorted to with intent to deprive another of his right, or in some manner to do him an injury. As distinguished from negligence, it is always positive, intentional.  Moore v. Crawford, 130 U. S. 122, 9 Sup. Ct. 447, 32 L. Ed. 878. Fraud, In the sense of a court of equity, properly includes all acts, omissions, and concealments which involve a breach of legal or equitable duty, trust, or confidence justly reposed, and are injurious to another, or by which an undue and unconscientious advantage is taken of another.

In the case at hand, Wells Fargo made out like bandits creating millions of accounts (and concealing that fact in violation of its duty to notify customers of said creation(s)) to its own pecuniary benefit.  I mean, where is the justice in a paying out a paltry $110 million when the company boasts of profits of $5.3 Billion (that's BILLION as in more money most anyone would ever spend in a BILLION lifetimes)?  

I mean, it makes no sense....unless, of course, someone got bought off.  Odds are, that's exactly what happened and we the people are being played for fools.  $110 million?  What a joke!