Carrie Tolstedt

MONEY & BUSINESS: Ex-Wells Fargo exec Carrie Tolstedt avoids prison time

The former head of Wells Fargo’s retail bank on Friday avoided prison time after pleading guilty to an obstruction charge related to the bank’s sweeping fake-accounts scandal.

Carrie Tolstedt was sentenced to three years of probation including six months of home confinement by US District Judge Josephine Staton in Los Angeles. She will also pay a $100,000 fine and serve 120 hours of community service.

Tolstedt, 63, pleaded guilty in March to obstructing a government probe into misconduct at San Francisco-based Wells Fargo’s retail and small business lending business, which she led from 2007 to 2016.

She is the only top executive to face criminal charges over revelations starting in 2016 about Wells Fargo’s sales culture, where employees opened millions of accounts and sold products that customers did not want in order to meet unrealistic sales goals.

Tolstedt is also the rare top executive at a major US bank to have faced potential time behind bars. None went to prison as a result of the 2008 global financial crisis.

Carrie Tolstedt was sentence to three years’ probation and six months of home confinement.
Bloomberg via Getty Images

Prosecutors had sought a one-year prison term for Tolstedt, but the judge said it would unfairly make Tolstedt appear solely responsible for Wells Fargo’s misconduct.

The actual sentence mirrored Tolstedt’s request, and she accepted “full responsibility” for her crime.

A lawyer for Tolstedt declined to comment. The office of US Attorney Martin Estrada in Los Angeles had no immediate comment.

Wells Fargo paid $3 billion in 2020 to settle federal criminal and civil probes into its sales practices, admitting it pressured employees over 15 years to sell more products, known as cross-selling.

 Wells Fargo Bank
The scandal roiled Wells Fargo in 2016.
Getty Images

The scandal also toppled former Chief Executive John Stumpf, who in 2020 paid a $17.5 million civil fine and accepted a lifetime industry ban, and led the Federal Reserve in 2018 to cap Wells Fargo’s assets, limiting the bank’s growth.

That cap remains in place, though Wells Fargo remains the fourth-largest US bank.

Once called the “best banker in America” by Stumpf, Tolstedt also accepted an industry ban and agreed to pay $20 million in civil fines to resolve charges by the Office of the Comptroller of the Currency and the Securities and Exchange Commission.

Wells Fargo has also clawed back tens of millions of dollars of her pay.

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