Wells Fargo fires 100-plus workers for abusing federal pandemic aid
Wells Fargo & Co. fired more than 100 employees suspected of improperly collecting coronavirus relief funds, according to a person with knowledge of the situation.
The company determined that the staffers defrauded the Small Business Administration “by making false representations in applying for coronavirus relief funds for themselves,” according to an internal memo reviewed by Bloomberg. The review focused on employees who tapped the Economic Injury Disaster Loan program, or EIDL, a key part of the government’s effort to prop up businesses during the pandemic.
“We have terminated the employment of those individuals and will cooperate fully with law enforcement,” David Galloreese, Wells Fargo’s head of human resources, said in the memo. “These wrongful actions were personal actions, and do not involve our customers.”
Although it’s possible for employees at large companies to legitimately tap U.S. aid for businesses they operate on the side, Wells Fargo’s findings add to evidence the program was widely abused — with little sign that such activity was limited to bankers. Unlike other employers, banks can check whether staff had aid deposited into their accounts. An earlier review by JPMorgan Chase & Co. found that more than 500 employees tapped the EIDL program, and that dozens did so improperly.
The Small Business Administration urged banks to look out for suspicious deposits from the program to their customers and even their own staffers. Much of the concern has focused on the program’s advances of as much as $10,000 that don’t have to be repaid. A Bloomberg Businessweek analysis of SBA data in August identified at least $1.3 billion in suspicious payments.
The SBA urgently expanded the EIDL program this year as shutdowns to fight the virus left small businesses desperate for cash lifelines. The agency’s inspector general has since flagged evidence of fraud in the program, saying it identified more than $250 million in aid given to potentially ineligible recipients as well as $45.6 million in possibly duplicate payments.
Wells Fargo “will continue to look into these matters,” Galloreese wrote. “If we identify additional wrongdoing by employees, we will take appropriate action.”
Chief Executive Charlie Scharf joined Wells Fargo last October with a mandate to clean up the company and bolster controls after years of scandals. This year he told lawmakers he has brought a sense of urgency that is “very different” from the bank’s past efforts to address lapses.
The Wednesday memo said the bank has “zero tolerance for fraudulent behavior.” Between 100 and 125 people were terminated, the person with knowledge of the matter said, asking not to be identified discussing an internal review.
Unlike the government’s Paycheck Protection Program, in which banks served as intermediaries, EIDL funds came directly from the SBA. The agency has said that it has “stringent fraud-protection safeguards” and that it had been under pressure to move the money quickly as the economic effects of the COVID-19 pandemic bit into the U.S. economy.
Levitt writes for Bloomberg.
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