Federal Public Ministry opens criminal investigation into Wells Fargo’s hiring practices

Federal prosecutors in New York have opened a criminal investigation into whether Wells Fargo violated federal law by conducting false interviews of non-white and female job applicants, according to two people with knowledge of the inquiry.

The investigation is being led by members of a newly created civil rights unit within the criminal division of the Manhattan district attorney’s office, the people said. They requested anonymity because they were not authorized to speak publicly.

The investigation, which is in its early stages, was spurred on by a May 19 story in The New York Times centered on a whistleblower, Joe Bruno. Bruno, a former Wells Fargo employee, and others said the bank’s managers were interviewing candidates for jobs that the bank considered “diverse” — a catch-all term for racial minorities, women and members of other disadvantaged groups — for positions that already they had been promised. for other people.

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

The practice was linked to Wells Fargo’s “diverse board” policy, which stipulated that at least half of the candidates interviewed for jobs paying $100,000 or more had to be “diverse.” The rule was implemented in mid-2020. However, the practice of conducting fake interviews existed long before that because Wells Fargo had a similar, unwritten policy in place.

A spokeswoman for Wells Fargo declined to comment on the investigation.

It is unclear what charges, if any, may result from the investigation. But it shows a new willingness by federal authorities to pursue criminal prosecution for civil rights violations at a time when hate crimes are on the rise — especially as the penal code is rarely applied to companies’ treatment of workers or customers.

The civil rights unit responsible for the Wells Fargo inquiry was created in November by Damian Williams, attorney for the Southern District of New York.

Under federal law, for example, it is a crime to interfere with “an applicant for private employment” in a manner motivated by the applicant’s “race, color, religion, or national origin.”

Federal authorities often cite civil anti-discrimination laws when filing lawsuits against companies for discrimination in hiring. In addition, customers who are mistreated because of their race are primarily dependent on state anti-discrimination laws for justice.

In creating the civil rights unit, Williams said federal officials needed to reconsider how the justice system handled discrimination issues. Pursuing criminal cases, he said, would make efforts to make justice for victims of discrimination “more effective.”

At Wells Fargo, one of the nation’s largest banks with nearly 250,000 employees, mock interviews took place across multiple lines of business, including its mortgage service, home loan 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 being subjected to, or conducted, fake interviews, or seen documents documenting the practice. People spoke on condition of anonymity because they feared retaliation from Wells Fargo or their current employers.

In an interview on Monday, Bei Ling, head of human resources at Wells Fargo, said he didn’t believe the practice of fake interviews was “a systematic issue.” Employees didn’t complain about it, she said.

“During these past eight months, I can say that I have never heard such a thing from the recruiting community,” Ling said. “I’ve never heard the words ‘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 false interviews. In late 2020, just days after Wells Fargo offered a job to a person it counted as “diverse” by the bank’s standards, a human resources employee asked that person to apply for a different job at the bank, according to an email reviewed by The Tempos.

The first offer was still on the table, the Wells Fargo official explained, but the bank also wanted to show that it had “qualified candidates” for both roles. “Just keep the accounting for us,” the employee wrote in the email.

When asked about the human resources employee’s message, Ms. Ling said, “We are looking into communications.”

On Monday, Wells Fargo Chief Executive Charles W. Scharf announced that the bank would temporarily pause its “multiple plans” rule to study its implementation and make changes to prevent more fake interviews from being conducted.

The bank had already been experimenting with ways to streamline its hiring process. In February, Wells Fargo began a pilot program that eliminated job postings and the “diverse board” interview requirement in cases where internal candidates were identified. The objective was to facilitate the migration of employees to new roles within the bank. Until then, all positions had to be announced and “diverse” candidates interviewed in accordance with the policy, unless managers specifically requested an exemption that required high-level executive approval.

Mrs. Ling said the pilot program has nothing to do with the problems arising from the “miscellaneous board” rule.

Wells Fargo has been working on an organization-wide cleanup of its business practices for the past five years. As of 2016, it was publicly revealed that the bank was opening fake accounts in customer names without their knowledge, charging some of them false fees on mortgage loans and forcing others to buy unnecessary auto insurance. The scandals cost the bank more than $4.5 billion in fines.

In early 2018, the Federal Reserve imposed an asset cap on Wells Fargo, restricting it from growing until regulators were satisfied that its risk management practices and its treatment of customers had stabilized. The bank’s leadership has since changed, and Scharf took over in the fall of 2019. Regulators have yet to give Wells Fargo the go-ahead.

His woes continued.

A group of black homeowners recently sued the bank for delaying refinancing their home loans. The Securities and Exchange Commission fined Wells Fargo $7 million for failing to properly follow anti-money laundering laws. And Rohit Chopra, director of the Consumer Financial Protection Bureau, put Wells Fargo at the top of a list of “repeat offenders” that he proposed to have their operating licenses withdrawn because they were violating too many financial regulations.

Matthew Goldstein contributed reporting.

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