Statement of Probable Cause
Background: In both October and December of 2013, the Los angeles
Times newspaper printed a series of articles concerning the practices
of Wells Fargo bank employees signing customers up for new accounts
and services without their knowledge. Based upon those articles, the
Los Angeles City Attorney's Office and the U. $. Consumer Fraud
Protection Agency opened an investigation into alleged illegal
conduct. Wells Fargo also launched an internal investigation into
these allegations as well. On May 4, 2015, the Los Angeles City
Attorney's Office filed a civil complaint against Wells Fargo in Los
Angeles Superior Court alleging “unlawful, unfair, and fraudulent
sales and related business acts and practices in violation of
California Business and Professions code 17200, et seq.”
on September 13, 2016, Wells Fargo entered into a “Stipulated Final
Judgment" with the Los Angeles City Attorney's Office to settle the
consumer fraud allegations
Wells Fargo’s internal investigation resulted in the termination of
approximately 5,300 employees out of 100,000 employed in its retail
banking operation for allegations related to account sales fraud.
Summary: Without the knowledge or consent of its customers, Wells
Fargo bank employees engaged in a practice of opening unauthorized
customer accounts. The goal of this activity was to generate profits
for the bank by collecting fees and charges from the unauthorized
accounts and credit cards. Bank employees profited from this activity
by obtaining bonuses based on their individual productivity. This
activity was allegedly committed between May of 2011 and July of 2015,
and until September of 2015 for credit cards.
Current estimates from open sources indicate that Wells Fargo
employees opened in excess of 2 million unauthorized accounts
nationwide (1.5 million bank accounts and 565,000 credit card
accounts). Fees generated from those accounts include $2.6 million from
85,000 of the fraudulent bank accounts and $403,000 from 14,000 of the
fraudulent credit card accounts. The total number of accounts opened
in California has not been provided; however, the Los Angeles City
Attorney's Office determined that a significant portion of the
fraudulent activity was “clustered” in the southwestern United states,
and Wells Fargo itself used a bank branch in the Los Angeles area as a
training example for other branches on how to achieve sales goals.
Los Angeles City Attorney’s Investigation: According to an extensive
investigation conducted by the tos Angeles City Attorney's Office
into Wells Fargo’s activities, they determined that Wells Fargo
engaged ina“. . . pernicious and often illegal sales tactics toStatement of Probable Cause
maintain high levels of sales of banking and financial products.” The
City Attorney's complaint when on to say, ‘Wells Fargo imposes
unrealistic sales quotes on its employees, and has adopted policies
that have, predictably and naturally, driven its bankers to engage in
fraudulent behavior to meet those unreachable goals." Adding, “The
result is that Wells Fargo has engineered a virtual fee-generating
machine, through which its customers are harmed, its employees take
the blame, and Wells Fargo reaps the profits.”
‘The City Attorney's investigation revealed that in order to open these
unauthorized accounts Wells Fargo employees improperly accessed the
bank's computer system and used the Personal Identifying Information
(PII) of its customers. This is a violation of California Penal Code
(CPC) section 529 - False Personation of Another, and CPC 530.5 -
Unauthorized use of personal identifying information. The unauthorized
activity by Wells Fargoemployees not only included bank accounts, but
also lines of credit, credit cards, mortgages, and wealth management
accounts.
I know from personal experience and professional dealing with various
banks that their records are generally computerized. This allows
customers to go from branch to branch, as well as online, to conduct
business. Bank employees would have to unlawfully access Wells Fargo’s
computer system to obtain customers’ information to open or create
unauthorized accounts
The City Attorneys complaint went on to state, ‘Wells Fargo has known
about and encouraged these practices for years. It has done little,
if anything, to discourage its employees’ behavior and protect its
customers. Worse, on the rare occasions then Wells Fargo did take
action against its employees for unethical sales conduct, Wells Fargo
further victimized its customers by failing to inform them of the
breaches, refund of fees they were owed, or otherwise remedy injuries
that Wells Fargo and it bankers have caused.”
‘The City Attorneys complaint also alleged that Wells Fargo employees
engaged in a practice referred to as “gaming.” Gaming consisted of
“opening and manipulating fee-generating customer accounts through
often unfair, fraudulent, and unlawful means ." This included
omitting signatures or adding unwanted secondary accounts to primary
account, without the account holder's permission. Moreover, the city
Attorney's complaint alleges, “Other practices utilized as part of
these ‘gaming’ schemes have included misrepresenting the costs,
benefits, fees, and/or attendant services that come with the accountsStatement of Probable Cause
Additionally, the City Attorney’s complaint stated, *. . . gaming
practices have caused significant stress to, and hardship and
financial loss for its customers. Specifically, Wells Fargo had: (a)
withdrawn money from customer's authorized accounts to pay for the
fees accessed by Wells Fargo on unauthorized accounts opened in the
customers’ name; (b) placed customers into collection when the
unauthorized withdrawals from customer accounts went unpaid; (c)
placed derogatory information in the credit reports when fee went
unpaid; (4) denied customers access to their funds while Wells Fargo
stockpiled account applications; and (e] caused customers to purchase
identity theft protection.”
‘The City Attorney’s complaint identified the following “pervasive”
gaming practices Wells Fargo utilized to create fraudulent accounts
and defraud customers of fees:
“Sandbagging” was a practice used by Wells Fargo employees to
stockpile customers’ account applications and then open the accounts
at a later time when it was convenient for the institution.
“Pinning” was the practice of Wells Fargo employees to assign
Personal Identification Numbers (PINs) to customers’ accounts without
their knowledge or permission. This was done to allow a Wells Fargo
employee to impersonate the customer online and enroll him/her in
online banking and online bill pay without the customer’s knowledge or
consent.
“Bundling” was the Wells Fargo employee practice of incorrectly
informing the customer that certain products were available only in
packages with other products such as additional accounts, insurance,
annuities, and retirement plans
As a part of its investigation, the Los Angeles City Attorney’s Office
operated a “compliant hotline” for possible victims of Wells Fargo’s
consumer fraud. The hotline was established on May 5, 2015 through a
press release by the City attorney's Office. The hotline received
1,090 calls complaining about Wells Fargo’s fraudulent accounts and
its banking practices.
The City Attorney's investigation also revealed that Wells Fargo
employees generated and used contact information, including email
addresses, which would prevent the customer from being notified of the
account opening. Those email addresses frequently consisted of a
place holder name and the then @wellsfargo.com, e.g.
nonameowellsfargo.com or 1234@vellsfargo.com.Statement of Probable Cause
BU. S. Consumer Financial Protection Bureau (CFPB) Consent Order: The
CFPE is a federal government agency created after the 2008 financial
crisis to protect consumers
On September 4, 2016 the CFPM entered into a Consent Order with Well
Fargo where CFPB determined that Wells Fargo “engaged in the following
acts and practices: (1) opened unauthorized deposit accounts for
existing customers and transferred funds to those accounts from their
owners’ other accounts, all without their customers’ knowledge or
consent; (2) submitted applications for credit cards in consumers’
names using consumers’ information without their knowledge or consent;
(3) enrolled consumers in online banking services that they did not
request; and (4) ordered and activated debit cards using consumers’
information without their knowledge or consent.”
As reported in the consent order Wells Fargo “performed an analysis to
assess the scope of Improper Sales Practices that occurred between May
2011 and July 2015, including the number of potential instances of
such practices.” Wells Fargo's “analysis concluded that its employees
opened 1,534,280 deposit accounts that may not have been authorized
and that may have been funded through simulated funding, or
transferring funds from consumers’ existing accounts without their
knowledge or consent. That analysis determined that roughly 85,000 of
those accounts incurred about $2 million in fees, which Respondent is
in the process of refunding. The fees included overdraft fees on
linked accounts the consumers already had, monthly service fees
imposed for failure to keep a minimum balance in the unauthorized
account, and other fees.” This analysis does not reveal which of
these customers were in California.
Testimony before the U.S. Senate Banking, Housing, and Urban Affairs
Committee: On September 20, 2016, Mr. John Stumpf, CEO and Chairman of
the Board of Wells Fargo bank, provided sworn testimony before the
U.S. Senate Banking committee. In his testimony Mr. Stumpf stated,
“Well, I have the numbers by State, and it typically related to there
was some over index or over - people did more wrong things, but more
associated with the size of the business were much larger bank in
Southern California and Arizona, New Jersey. There were places where
we are larger and it fit more the pattern of the size of our
organization in those communities.”
This testimony was in reference to where Wells Fargo employees had
opened the greatest number of fraudulent bank and/or credit card
accounts
Follow-up Investigation: Based upon the information obtained from the
“hotline” complaints received by the Los Angeles City Attorney's
office, I contacted the following alleged victims of the Wells FargoStatement of Probable Cause
account opening fraud, and they provided me with statements detailing
their dealing with the bank
I am requesting that the identity of the below witnesses to be kept
confidential in accordance with People vs Hobbs. The information
offered herein is provided solely for the purposes of establish
probable case. These witnesses were obtained from the data base of the
Los Angeles City Attorney's Office “hotline” call log. That log is
marked “Confidential Pursuant to Protective Order." Moreover, the Los
Angeles Deputy City Attorney handling their case asked that the names
of witnesses remain confidential. I ask that the names and identifying
information on the below listed witnesses remain confidential to
protect their identifies from disclosure to the public
on 09/29/16, I spoke to Mr. A, Los Angeles, CA. Mr. A. told me that
on a Saturday morning in early May of 2015 he went to his local wells
Fargo branch, in Sherman Oaks, to transact business. While he was
dealing with the teller, the teller asked him if he would be
interested in any additional “products and services” offered by the
bank. To be polite, he told the teller he was. The teller then
introduced him to a female bank employee by the name of “Gabriela.” He
spoke briefly with “Gabriela,” but he did not commit to opening any
new accounts, nor did he authorize her to open any new accounts or
sign him up for any new services. Mr. A told “Gabriela” that he did
not have a time to talk with her at length at that time, and he asked
her to call him. He distinctly remembered this encounter because as
he was leaving, "Gabriela" asked him for his mother’s maiden name. He
felt this was somewhat unusual, but he believed she asked for it so
that she could verify his identity; he provided his mother’s maiden
name before departing.
on the following Monday he returned home from work and discovered a
message on his answering machine from "Gabriela." He believed it was a
‘sales" call, so he fast forwarded through the message without
listening to it entirely. He intended to return at a later time and
listen to the message.
on the following Saturday (seven days after his in person visit to the
bank), he went online to check his accounts. When he logged on, he
discovered he now had a $10,000.00 line of credit linked to his
accounts. He remembered the message from “Gabriela” on his answering
machine, so he went back and listed to the entire message.
The message from “Gabriela” informed him she had opened a $10,000.00
line of credit in his name and linked it to his accounts. she toldStatement of Probable Cause
him that the entire process had been completed and that he did not
need to come to the bank to sign any documents.
Mr. A stressed that had not given anyone at the bank permission to
open anything in his name, and that he was not planning on opening any
new accounts or purchasing any new service. (He already had a checking
and saving account with the bank.) He had only spoken with “Gabriela”
to be "polite."
After discovering the line of credit, Mr. A said that he called Wells
Pargo’s customer service line. He had them cancel the line of credit.
He said he got the impression from the customer service representative
with whom he spoke that this was a common occurrence
Mr, A said that he could not be sure of the exact dates these events
occurred, but he did remember they occurred around the time the LA
City Attorney’s Office put out its press release concerning the law
suit against Wells Fargo, and that was why he called.
on 09/30/16, I spoke with Ms. B, Los Angeles, CA. Ms. B said she has
been a long time customer of Wells Fargo Bank. In either late 2011 or
2012, while she was in a West Los Angeles branch of the bank, she
spoke with a teller whom she had dealt with on several occasions in
the past. The teller complained to her that they (bank employees)
were under a lot of pressure to open new accounts. The teller asked
her if she would be interested in opening any additional accounts with
the bank. Ms. B told me that she already had three accounts with the
bank (two business and one personal checking), so she declined the
offer. Her husband also had a separate checking account with the bank.
According to Ms. B, this conversation occurred in late 2012 or early
2013.
In either late 2013 or early 2014, Ms. B said that she and her husband
began to receive notices from Wells Fargo concerning payments they
allegedly owed on three life insurance policies held by the bank. Ms.
Alfred said neither she nor her husband had ever purchased any life
insurance policies, and they had never spoken to anyone at the bank
about buying life insurance policies.
Ms. B also said that between 2011 and 2015, she was told by bank
employees that she would have to close and then reopen her accounts no
fewer than six or seven different times. The bank employees
consistently told her that there were “problems” with her accounts and
that they (the bank) had closed her account and reopened new ones in
her name. She said that because of this she “bounced” checks and had
to pay fees to the bank. she said that no one at the bank could ever
explain to her what the issues were with her accounts.
6Statement of Probable Cause
On 09/30/16, I spoke with Ms. C, Long Beach, CA. Ms. C said that she
has banked with Wells Fargo since 2000. Ms. C said that she does not
use the ATM or any form of electronic banks, but rather always
transacts business in her local branch. She only opened one account
with Wells Fargo, and that was checking account.
According to Ms. C, she began to have issues with Wells Fargo in 2013.
Initially, she discovered that her money was being transferred out of
her checking account into a saving account. At first, the monthly
transfer was $50; however, over time, the amount grew to $150. When
she asked the teller about his, the teller told her it was done as
overdraft protection for her checking account. Ms. Debose said she
asked for all the bank statements related to her accounts, but the
bank employees refused to provide them. On several occasions she
asked to speak with the branch manager, she was told he was notin
On several occasions when she went to the bank to transact business,
she was told that her account had been closed and her money had been
transferred to a new account because of unspecified problems with the
original account. On one occasion, the new account the bank opened for
her was not in her correct name, and she had great difficulty getting
the bank to correct the spelling error and allow her access to her
money.
Ms. C estimated this occurred six or seven times over a period of
between two or three years beginning in August of 2013.
On one occasion she deposited a $550 money order into her checking
account. She was later told that she was overdrawn on her checking
account. When she questioned this, she discovered that the teller had
deposited the $550 money order into a saving account that she did not
even know she had.
Between 2014 and 2015, Ms. C said she numerous trips to the bank to
meet with the branch manager and obtain copies of her all of her bank
statements. On each of these occasions, she was told the manager was
not available, and bank employees refused to provide her with copies
of her statements. Finally, she was able to meet with the branch
manager. He promised to provide her with copies of her statements, but
she’s still waiting. at this point, Ms. C is still unsure exactly how
many accounts might have been opened in her name.
Ms. C said she has also received three or four sets of credit/debit
cards for various Wells Fargo accounts, and she also received a letter
thanking her for signing up for “online” banking. According to Ms. C,
7Statement of Probable Cause
she has never requested credit cards, nor did she ever sign up for
online banking. (Ms. C is 74 years of age.)
on 09/30/16, I spoke with Ms. D, Monrovia, CA. Ms. Martinez told me
that she has never had any accounts with Wells Fargo Bank. She was a
23-year employee with Bank of America and has her accounts with that
institution. She left BoA approximately one year ago. Her last
position with BoA was as a member of the quality control unit.
Ms. D told me that she is engaged. Her fiancé has a business checking
account with Wells Fargo, and she has access to the account. Ker
fiancé also has two children, and has a small saving account for each
of the children at Wells Fargo.
In April of 2014, Ms. D said her fiancé whet into their local wells
Fargo branch to obtain a new card. while he was there, the teller
asked him about the checking and saving accounts each of his sons had
with their mother. When he enquired further, the teller told him that
each of his sons had checking and saving accounts account linked to
his business account, and in both their names and their mother’s name,
Mr. D.
After learning of this from her fiancé Ms. D stated that she contacted
the bank to find out about the accounts. The bank employees provided
her with the same information, which was that she (Mrs D) and her
fiancé's children each had two accounts, and that she (Mrs. D) was
listed as their mother.
Ms. D said she was not the children’s mother, and she never opened any
accounts in their names. She asked the bank to close the accounts.
she did not know what the source of the money in the children’s
account was, but she assumed that it had probably been transferred
from her fiancé’s business account.
She also told me that shortly after this, the children and she
received ATM cards lined to the now closed accounts in the mail and
also received a letter stating that she had been sign up for online
banking for the boys’ accounts.
Conclusions: I believe based upon the above information, and the
statements of witness(es) contained in the Hobbs attachment, that
there is probable cause to believe that employees of Wells Fargo Bank
unlawfully accessed the bank’s computer system to obtain the PIT of
customers. The bank’s employees then used the unlawfully obtained
customers’ PII to commit false impersonation and identity theft by
opening unauthorized accounts, credit cards, and various otherStatement of Probable Cause
products that resulted in the accumulation of fees and charges for
Wells Fargo.
I am requesting the identity of all California customers, their
account information, and a listing of any account, credit card, life
insurance or any other product that have been identified by Wells
Fargo as being created or issued for the Customer without the
Customer’s Consent between May 2011 and July 2015. Additionally, I am
requesting an accounting of all fees incurred that are associated to
these account, credit card, life insurance, or other products that was
created or issued for the Customer without the Customer’s Consent.
I am also aware that this activity is the result of improper sales
practices occurring between May 2011 and July 2015. I am further
requesting the identity of the Wells Fargo agents and the location of
their branches or work place that created the above accounts. Because
this appears to have been systemic problem within Wells Fargo we are
further requesting the identity of the managers of the identified
employees that opened or created the above requested non-consensual
accounts. This would include branch managers, area managers and
regional managers.
In my training and experience, I am aware that business associates
communicate together via phone calls, text messages, emails, and
social network posts. These communications often contain direct and
indirect statements about customer account activity. I am seeking all
communications concerning the above requested accounts or referencing
the creation, maintenance, closing, or subsequent remediation of the
above requested accounts. This will assist in identifying those
employees and managers who opened accounts without the consent of the
customer.
Also, the above records will assist in identify those individual
responsible for creating these non-consensual accounts without the
knowledge of or consent of the account holder and the scope of
monetary loss.
Special Instructions: As required by California Penal Code section
1546.1 (d): Any information obtained through the execution of this
search warrant that is unrelated to the objective of this search
warrant shall be sealed and shall not be subject to further xeview,
use, or disclosure absent an order from the Court.
I further request pursuant to Penal Code Section 1546.1(d) (3) and
Evidence Code section 1560 (f) that Wells Fargo provide a Certificate
of Authenticity letter, that complies with the requirements set forthStatement of Probable Cause
in Section 1561 of the Evidence Code, to verify the authenticity of
the records produced.
on of
Service of the Search Warrant: A search warrant for the produ
records from Wells Fargo is generally served upon a branch office.
Senior Assistant Attorney General Robert Morgester has been in contact
with Wells Fargo pertaining to this warrant. Per Morgester, Wells
Fargo is requesting email service to expedite this request. They
requested that the warrant be served on
Production of records in electronic form: Financial crime
investigations typically involve analyzing transaction activity. where
the bank retains records of such activity in electronic form in
databases, law enforcement can make more efficient use of those
records if they are provided in the electronic format that the bank
retains them. This means banks do not have to create
age or paper
copies where the data is already stored electronically. We are
requesting that these records be produced in electronic format unless
they only exist in paper form
MALL TAL LTD LAAT DL
10Hobbs Attachment Court order
IT IS ORDERED THAT: the portion of the search warrant affidavit
identified as the “Hobbs Attggfiment” be sealed and maintained in a
manner that complies with gffriles or procedures promulgated by the
Los Angeles Superior Coyrj/ until further order of this court or any
competent court