Federal prosecutors open criminal investigation into Wells Fargo’s employment practices

Federal prosecutors in New York have opened a criminal investigation into whether Wells Fargo violated federal laws by conducting fake interviews of minorities and women candidates for the jobs, according to two people familiar with the investigation.

The investigation is conducted by newly created members Civil Rights Unit Inside the criminal division of the Manhattan District Attorney’s office, People said. They requested anonymity because they are not authorized to speak publicly.

The investigation, still in its early stages, was prompted by a May 19 report in the New York Times that focused on detective Joe Bruno. Bruno, a former Wells Fargo employee, and others said bank managers were interviewing job applicants the bank deemed “diverse” — an umbrella term for ethnic minorities, women and members of other disadvantaged groups — for roles already undertaken by other people.

These mock interviews were the result of the bank’s quest to increase diversity—a lofty goal that became devious in practice because, some employees said, it was about recording the bank’s efforts to hire more minorities rather than actually hiring them.

This practice has been linked to Wells Fargo’s “diversified” policy, which states that at least half of the candidates interviewed for jobs paying $100,000 or more must be “diversified.” The rule was set in mid-2020. However, the practice of doing mock interviews had existed long before that, because Wells Fargo had a similar unwritten policy.

A Wells Fargo spokeswoman declined to comment on the investigation.

It is not clear what charges, if any, may arise from the investigation. But it shows a new willingness by federal authorities to pursue criminal prosecutions for civil rights violations at a time when hate crimes are on the rise—particularly since criminal law is rarely applied to the treatment of workers or customers by businesses.

The civil rights unit dealing with the Wells Fargo investigation was set up in November by Damien Williams, the US attorney for the Southern District of New York.

Under federal law, for example, interfering with an “applicant for a special job” in a manner motivated by “race, color, religion, or national origin” is a crime under federal law.

Federal authorities typically cite civil anti-discrimination laws when filing lawsuits against companies for employment discrimination. Also, clients who find themselves abused because of their race often rely on state anti-discrimination laws to achieve justice.

In creating the civil rights unit, Mr. Williams said federal authorities need to reconsider how the justice system handles discrimination cases. He said that pursuing criminal cases would make efforts to achieve justice for victims of discrimination “more effective”.

At Wells Fargo, one of the largest banks in the country, with nearly 250,000 employees, mock interviews were conducted across multiple lines of business, including mortgage services, home lending and retail banking operations. The Times’ report last month focused on the bank’s wealth management business.

Since then, 10 other current and former employees have shared stories about how they underwent fake interviews, how they gave them, or saw papers documenting the practice. The people spoke on condition of anonymity because they feared retribution from Wells Fargo or their current employers.

In an interview on Monday, Bai Ling, Wells Fargo’s head of human resources, said she didn’t think the mock interview practice was a “systematic problem”. She said the staff didn’t complain about it.

“For the past eight months, I can tell you that I’ve never heard such a thing from the recruiting community,” Ms. Ling said. I haven’t even heard the phrase ‘fake interview’. “

She added that there was no way for the bank to understand the scope of the problem unless employees spoke up. “We can’t act on things we don’t know,” she said.

In some cases, there were written records of the practice of conducting fake interviews. In late 2020, just days after Wells Fargo offered a job to someone considered “diversified” by the bank’s standards, an HR staffer asked that person to apply for a different job at the bank, according to an email reviewed by The Times.

The Wells Fargo employee made it clear that the premiere was still on the table, but the bank also wanted to show it had “qualified candidates” for both roles. “Simply keep the reservation for us,” the employee wrote in the email.

When asked about the HR officer’s letter, Ms. Ling said, “We are reviewing communications.”

On Monday, Wells Fargo CEO Charles W. Scharf announced that the bank would do so pause Rule “Miscellaneous List” to study its implementation and make changes to prevent further mock interviews.

The bank had already experimented with ways to simplify the hiring process. In February, Wells Fargo began a pilot program that eliminated job postings and “miscellaneous roster” interview requirements in cases where internal candidates had been identified. The goal was to facilitate the transition of employees to new positions within the bank. Until then, every job had to be posted and interviewed with “diverse” candidates in line with the policy, unless managers specifically applied for a waiver that required approval from high-level executives.

Ms. Ling said the pilot had nothing to do with problems arising from the “diverse list” rule.

Wells Fargo has been working its way through an enterprise-wide cleanup of its business practices for the past five years. Starting in 2016, it was publicly revealed that the bank was opening fake accounts in customers’ names without their knowledge, charging some with fake fees on mortgage loans and forcing others to buy unnecessary auto insurance. scandals cost the bank More than $4.5 billion in fines.

In early 2018, the Federal Reserve Asset cap imposed At Wells Fargo, growth was held back until regulators were satisfied that their risk management practices and their treatment of customers were stable. The bank’s leadership has since changed, and Mr. Scharf took office in the fall of 2019. Regulators still haven’t given Wells Fargo all the clarity.

His hardships continued.

A group of black homeowners recently lawsuit Bank to delay in refinancing their mortgage. Securities and Exchange Commission Wells Fargo fined $7 million for failing to properly follow anti-money laundering laws. Rohit Chopra, director of the Consumer Financial Protection Bureau, has put Wells Fargo at the top of its list of “repeated offenders”. Suggestion They should be stripped of their operating licenses because they violated a lot of financial regulations.

Matthew Goldstein Contribute to the preparation of reports.