Risk & Compliance

Wells Fargo Facing California Criminal Probe

The state attorney general is investigating whether bank employees stole customers' identities when they created unauthorized accounts.
Matthew HellerOctober 20, 2016
Wells Fargo Facing California Criminal Probe

The fallout from the Wells Fargo sales practices scandal continues to widen, with the California attorney general conducting a criminal probe into whether bank employees committed identity theft when they created unauthorized accounts.

The Los Angeles Times confirmed the probe by obtaining a search warrant and related documents that show Attorney General Kamala Harris has joined the list of public officials and agencies investigating Wells Fargo.

“[T]here is probable cause to believe that employees of Wells Fargo Bank unlawfully accessed the bank’s computer system to obtain the PII [personal identifying information] of customers,” state investigator James Hirt said in a statement of probable cause.

“The bank’s employees then used the unlawfully obtained customers’ PII to commit false impersonation and identity theft by opening unauthorized accounts, credit cards and various other products that resulted in the accumulation of fees and charges for Wells Fargo,” he added.

The search warrant seeks information including the identities of California customers who had unauthorized accounts opened in their names, the names of the Wells Fargo employees who opened the accounts, and the names of those employees’ managers.

Since the Los Angeles city attorney’s office and federal bank regulators announced a $185-million settlement with Wells Fargo last month, lawmakers and others have questioned whether the bank may have violated criminal laws.

Paul Stephens, policy director at the Privacy Rights Clearinghouse, said an identity theft prosecution would be a somewhat novel approach.

“One wouldn’t typically think of a financial institution opening an account in the name of a customer as being an act of identity theft,” he told the Times. “It’s a creative way of looking at these activities and finding them unlawful under a statute that arguably could be prosecuted in state court.”

Harris is running for the U.S. Senate and has made her crackdown on wrongdoing by financial institutions a central theme of her campaign.

“Going after a big, unpopular bank can only help her with the electorate,” said Jack Pitney, a professor of politics at Claremont McKenna College. “Wells Fargo has gone into Voldemort territory when it comes to popularity.”

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