Lawsuit: Wells Fargo opens accounts for 'undocumented immigrants' (2023)

Wells Fargo stores across the country purposely opened savings and checking accounts for "undocumented immigrants" to meet aggressive sales targets, court documents show.

In affidavits obtained by the Burlingame plaintiffs' attorney, Joseph Cotchett, former employees describe a pattern in which Spanish-speaking colleagues visited places they knew were frequented by immigrants (including construction sites and 7-Elevens) , drove her to a branch and convinced her to open an account. Some employees give immigrants $10 each to open an account. It has been a decade since the events described in the statement.

"The behavior we are proposing is disgraceful," said Cochet. "The idea of ​​regulators letting banks get away with it is outrageous."

The alleged plan appears consistent with previous reports of Wells Fargo's runaway sales culture, in which store associates are under pressure to meet high sales quotas. But that raises new questions about whether bank employees are simply defrauding customers by opening accounts in their names -- or whether they're crossing the line even further.

Under federal law, banks are required to verify the identity of their customers. The statements provide no evidence that Wells Fargo balked at the demands.

"These allegations run counter to our policies, values ​​and the relationships we seek to build with all parties in our community," company spokeswoman Ancel Martinez said in an email. “Wells Fargo has long been committed to providing immigrant banking services in a manner that is fully compliant with the law, and we have controls in place to ensure we comply.

"These allegations are objectionable because they are contrary to Wells Fargo's expectations and our applicable anti-abuse policies," he said.

But given Wells Fargo's well-documented rush to hit sales targets, experts say it's likely employees didn't comply. Regardless, the targeted targeted immigration of immigrants to meet revenue targets should raise alarms among the bank's numerous compliance and risk officers, banking experts said.

Clifford Rossi, former chief risk officer for Citigroup's consumer credit arm, said the rude behavior of bank employees shows banks are more interested in opening accounts than performing the necessary due diligence and genuinely want to help. Immigrants meet their financial needs. Now teaches finance at the University of Maryland.

"I have a hard time believing they're trying to do the right thing," he said.

The documents were filed on WednesdayCochet shareholder lawsuitA lawsuit has been filed in the San Francisco Supreme Court against top Wells Fargo executives.

Last year, the San Francisco-based banking giant admitted that thousands of employees had created up to two million fraudulent accounts on behalf of genuine consumers without their consent.

Wells Fargo eventually fired CEO John Stumpf and paid a $185 million fine. A report commissioned by the board concluded that the bank's aggressive culture forced employees to cheat. However, the report exonerated the directors of any wrongdoing and accused Stumpf of failing to uncover the fraud and notify the board.

Cochet's lawsuit is specifically aimed at the board, alleging that directors acted negligently and breached their fiduciary duties to shareholders.

"If they don't know (the scam), at least they're incompetent," Cochet said.

At Wells Fargo's annual stockholders' meeting on TuesdayAll directors were re-elected, although in some cases closely.

The latest allegations add an extra twist to the Wells Fargo scandal, as they suggest a level of complexity and coordination between employees in different offices that the company has not previously acknowledged. For example, the board report makes no mention of any recognized immigration-related fraud.

Under the USA Patriot Act and the Bank Secrecy Act, banks are required to have customer identification procedures in place to provide reasonable assurance as to the true identity of account holders. Undocumented immigrants can open an account as long as they have an address, a driver's license, and an IRS Individual Tax Identification Number. The IRS issues such numbers, similar to Social Security numbers, regardless of immigration status. Some banks also accept foreign passports or other forms of identification, such as Mexicanconsular registration.

Wells Fargo said it accepts the "consular card" as ID.

"Of the 2 million potentially unauthorized accounts we analyzed, we had no indication that Consular card customers were affected to any degree," Martinez said.

Denny Russo, who worked at Wells Fargo from 2008 to 2011, said in a statement that the store manager directed Hispanic employees to "round up" Hispanics who would gather in a 7-Eleven for the Petaluma daily work.

“Wells Fargo employees were instructed to round up a group of undocumented workers and drive them back to Wells Fargo branches to open checking and savings accounts. In return, they waived the check cashing fees that day laborers would otherwise have to pay.” Russo explains.

"My colleagues commute to this location constantly to meet their sales goals," he said. "From my conversations with other Wells Fargo employees and managers, I am aware that these practices ... are also common throughout the state of California."

Kelsey Hess, who worked as a cashier in Draper, Utah, from 2013 to 2014, described in her statement a similar plan that would see workers targeting immigrants at construction sites and at a nearby Coca-Cola plant.

"Many factory workers cannot bank because of their immigration status," Hess said. "With management's permission, cashiers promised factory workers cash for new account registrations."

Julia Miller, a former Wells Fargo branch manager in Macunji, Pennsylvania, described "taking to the streets on Thursday," during which bankers and Latino cashiers were ordered to "patrol the streets and local security offices for new potential customers and find them." ...to mediate". They are attacking local branches and forcing them to open new accounts," the statement said.

Banks have historically courted Hispanic immigrants, who are often "unbanked" and represent a potentially wealthy new customer base.

According to a report by the Federal Reserve Bank of Kansas City, 53 percent of Mexican immigrants and 37 percent of other Hispanic immigrants are unbanked, compared to 20 percent of Asian immigrants and 17 percent of European immigrants.

It is difficult to win new customers; Banks would open new branches or acquire competitors to do so, said Mike Arnold, co-owner of Alco Partners, a consulting firm that advises financial institutions on risk management.

But once you have a customer, that person is less likely to switch banks because of the inconvenience of closing and opening new accounts, he said.

"The loyalty of customers is what makes them really valuable," said Arnold, a former executive at Citigroup and Bank of America.

But Arnold said he's never heard of a bank targeting illegal immigrants. If Wells Fargo doesn't ensure employees follow identity verification rules, the bank's reputation and operations are at serious risk, he said.

Many immigrants who enter or stay in the country without permits avoid established financial institutions, and experts say it's hard to believe Wells Fargo employees can overcome their fear of the bank during these "raids".

"Undocumented immigrants also fear banks will share their information with immigration officials or be denied access to funds if they are deported," according to a report by the Federal Reserve Bank of Richmond, Virginia.

“This is a real fear for undocumented immigrants and a potentially high hurdle to overcome, as it can mean the difference between staying in the United States to work (and sending money home) and being forced to leave the country , could make up,” the report says.

Richard George, head of Bank Experts Group, a San Francisco-based firm that provides expert opinions for financial institutions in court, said he's never heard of a bank living there without a permit to meet revenue targets. Immigrants from the US as targets.

But it seemed right that Wells Fargo happened, said George, a former Citibank executive and McKinsey & Company consultant.

George says I'm not surprised that "some enterprising store managers, under pressure to hit sales targets, find ways" to open new customers.