By Steve Gelsi
Carrie Tolstedt avoids prison for Wells Fargo's fake-account scandal, which resulted in billions of dollars in fines for the bank and the termination of thousands of employees
Former Wells Fargo & Co. executive Carrie L. Tolstedt avoided jail time but was sentenced to three years of probation including six months of home confinement on Friday for her part in the bank's fake-account scandal, which resulted in billions of dollars in fines and thousands of layoffs.
Tolstedt's sentence handed down in U.S. District Court for the Central District of California, in Los Angeles also included a $100,000 fine and 120 hours of community service.
Federal prosecutors earlier this month filed a recommendation for a 12-month sentence, followed by one year of probation, according to a court filing. Tolstedt's lawyers asked for three years of probation, the Wall Street Journal reported.
While former Wells Fargo (WFC) executives, including former Chief Executive John Stumpf, have been banned for life from the banking business, Tolstedt is the only executive thus far to receive a criminal sentence and face the possibility of jail time.
"Sentencing such a corporate executive to six months of home confinement presumably in a mansion cannot seriously be considered a punishment," said Dennis Kelleher, co-founder and chief executive of Better Markets, a consumer advocacy group.
Tolstedt agreed to a maximum 16-month sentence in March when she pled guilty to obstructing a government examination into the bank's widespread sales misconduct, including the opening of millions of unauthorized bank accounts.
Government prosecutors had said a16-month term would be at the high end of the sentencing guideline range for the obstruction offense.
Tolstedt retired in 2016, around the time of Wells Fargo's fake-account scandal. In May, she paid a $3 million civil penalty to the Securities and Exchange Commission to settle allegations that she misled investors about the success of Wells Fargo's Community Bank.
In March, she also was assessed a $17 million civil penalty by the Office of the Comptroller of the Currency for her role in "systemic sales practices misconduct," the government said.
She also had $65 million in compensation clawed back by Wells Fargo after the scandal, which also resulted in the ouster of Stumpf, as well as billions in fines for the company. Thousands of employees were also fired as the bank took action to get its sales practices in line.
Also read: Wells Fargo worker says employment at the bank was more stressful than Gulf war military service
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09-15-23 1632ETCopyright (c) 2023 Dow Jones & Company, Inc.