Federal prosecutors in Charlotte and San Francisco are heading an investigation of sales practices at Wells Fargo that resulted in the bank paying $185 million in civil fines last week, a source familiar with the matter told the Observer Thursday.
The U.S. Attorney’s Offices for the Western District of North Carolina and the Northern District of California, which cover Wells’ two biggest corporate hubs, have issued subpoenas to the bank seeking communications and documents, the source said.
The investigation is at an early stage and it’s not clear how long it will take and whether it would result in civil or criminal charges, the source said.
Wells Fargo is based in San Francisco, but has its largest employee presence in Charlotte, where it has more than 23,000 workers following the 2008 acquisition of Charlotte-based Wachovia.
The Wall Street Journal and New York Times reported Wednesday that U.S. Attorney’s Offices in Manhattan, San Francisco and North Carolina were investigating the bank. Prosecutors in Charlotte and San Francisco will likely end up leading the probe, the source told the Observer.
In these types of investigations, prosecutors typically want to determine who was responsible for the conduct, how high it went in the organization, how many victims there were and how they were harmed.
A Wells Fargo spokesman said the bank had no comment.
Wells agreed last week to pay $185 million in fines to settle claims of wrongdoing in its sales practices. Regulators said the bank’s employees engaged in a “widespread illegal practice” by secretly opening more than 2 million deposit and credit card accounts that may not have been authorized by customers to meet sales goals. Wells Fargo reached the settlement without admitting or denying allegations.
In an email sent to customers on Wednesday, Wells Fargo CEO John Stumpf acknowledged “recent news” that the bank opened unwanted accounts and said the conduct was “simply not acceptable.”
“Last week’s news did not reflect Wells Fargo at its best,” Stumpf wrote. “Your trust and confidence in us is something we hold near and dear.”
Stumpf is set to testify before Congress Tuesday.
Wells Fargo made national headlines this week when it announced plans to eliminate sales goals at the start of next year. But the bank says it hasn’t fully figured out how it will compensate bankers in its branches and call centers once it makes the change.
Wells Fargo spokeswoman Richele Messick told the Observer the company is “working through the details” of how bankers will be paid once the bank abandons sales goals.