Manhattan U.S. Attorney Announces $72.6 Million Settlement of Fraud Lawsuit Against Wells Fargo Bank
Audrey Strauss, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that the United States has simultaneously filed and settled a civil fraud lawsuit against Wells Fargo Bank, N.A. (“Wells Fargo” or the “Bank”) alleging that it violated the Financial Institutions Reform Recovery and Enforcement Act (“FIRREA”) by fraudulently overcharging hundreds of commercial customers, many of them small and medium-sized businesses and federally-insured financial institutions, who used the Bank’s foreign exchange (“FX”) service.
As part of the settlement, approved today by U.S. District Judge John G. Koeltl, Wells Fargo will pay a total of approximately $72.6 million, with approximately $35.3 million having been paid directly to the 771 customers collectively as restitution and approximately $37.3 million to be paid to the United States as civil penalties under FIRREA and as asset forfeiture.
Wells Fargo also made extensive admissions of certain conduct alleged in the Government’s complaint, including that many FX sales specialists overcharged hundreds of commercial customers by applying larger sales margins or spreads than they represented they would, and that, in certain instances, when customers contacted the Bank to inquire about higher-than-agreed-upon pricing, FX sales specialists would give customers false explanations for the inflated prices.
U.S. Attorney Audrey Strauss said: “We all put trust in our banking institutions to deal with us honestly, fairly, and transparently when we are their customers. For the better part of a decade, Wells Fargo abused this trust, using tricks, false information, and other deceptive practices to fraudulently overcharge customers who used the Bank’s foreign exchange service. This settlement, which requires Wells Fargo to make its customers whole for their losses and pay a substantial penalty, sends a strong message to the banking industry that financial institutions who take advantage of their customers will be held to account.”
The lawsuit alleges that from 2010 through 2017, Wells Fargo FX sales specialists defrauded 771 customers by systematically charging them higher markups on FX transactions than they represented the Bank would charge, and concealing these overcharges through various misrepresentations and deceptive practices.
Wells Fargo profited from these transactions by marking up the prices on currency it was selling to and marking down the prices on currency it was buying from its customers. Wells Fargo employees referred internally to this currency mark-up as a “spread” or “sales margin.”
Wells Fargo will pay a total of approximately $72.6 million, with approximately $35.3 million going directly to the 771 customers as restitution and approximately $37.3 million to the United States as civil penalties under FIRREA and as asset forfeiture.
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Key Facts
- State: New York
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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