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Former Wells Fargo exec faces prison over fake accounts scandal

Posted On: Mar. 16, 2023 11:08 AM CST

Wells Fargo

(Reuters) — The former head of Wells Fargo’s retail bank is facing prison time after agreeing to plead guilty to obstructing a bank examination in relation to the sweeping phony accounts scandal that roiled the bank in 2016.

Carrie Tolstedt, 63, faces up to 16 months in prison under a plea agreement with federal prosecutors filed on Wednesday. The development marks a rare instance of a senior bank executive facing prison time as a result of their job.

She also faces a civil penalty of $17 million announced separately by the Office of the Comptroller of the Currency, who said Ms. Tolstedt was “significantly responsible” for the widespread sales abuses at the bank, where potentially millions of accounts were opened without customer approval.

Ms. Tolstedt agreed to plead guilty to one count of obstruction of a bank examination and is expected to make her initial court appearance in Los Angeles in the coming weeks, the Los Angeles U.S. attorney’s office said in a statement.

A lawyer for Ms. Tolstedt, who ran the bank’s retail and small business lending from 2007 to 2016, declined to comment.

Wells Fargo paid $3 billion in February 2020 to settle federal civil and criminal probes, admitting at the time that it pressured employees between 2002 and 2016 to meet unrealistic sales goals, which led them to open fake accounts for customers.

A spokesperson for Wells Fargo declined to comment.