US recommends yearlong prison sentence for former Wells Fargo exec after accounts scandal

Federal prosecutors on Friday said the former head of Wells Fargo’s retail banking division should serve a year of imprisonment for “obstruction of a banking examination.”

They also requested “one year of supervised release” following the sentence for Carrie Tolstedt, who pleaded guilty to the charge earlier this year. She was the only executive at the bank to be charged in the fake accounts scandal of 2016.

Tolstedt “attempted to conceal from regulators one of the biggest banking scandals in modern history,” prosecutors said in the court filing. “Corporate wrongdoers must be sent a clear message that maintaining a lucrative position through criminal behavior is not worth the risk.”

Wells Fargo was required to pay $3 billion in penalties in 2020 for opening checking and credit card accounts without customers’ authorization — an attempt to meet sales goals, Bloomberg reported. The bank, according to reporting, said it found over 3.5 million fake accounts.

“As head of the Community Bank, defendant was best equipped to assist the [Comptroller] in rooting out the problems at Wells Fargo,” the prosecutors wrote in the Friday filing. “Instead, she prepared a memo that she knew the bank would provide the [Comptroller] and corruptly withheld key information.”

“In particular, she withheld data on the number of employees who were terminated or resigned pending investigation for sales-related misconduct, and the fact that, of the many employees flagged by the bank’s own metrics for potential sales-related misconduct, only a tiny percentage were investigated,” the filing reads.

In her plea deal, Tolstedt agreed to a ban on working in the banking industry and to pay a $17 million civil penalty. She also faces a 16-month prison sentence.

The former banking executive settled charges she faced from the Securities and Exchange Committee (SEC) in May as part of the same scandal.

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