Wells Fargo And The Sinaloa Cartel: Love At First Sight?

*IMPORTANT EDITOR’S NOTE* Before you start reading, this is for entertainment purposes only. I’m not trying to purposely offend or hurt anyone’s feelings. We’re just trying to make light of a world that seems to be going a little crazy lately.

Wells Fargo has been so squeaky clean over the past few years that it’s hard to believe what just happened.  A personal banker for Wells Fargo, Luis Figueroa of Tijuana, pleaded guilty to being part of an operation that laundered roughly $19 million across the U.S. between 2014 and 2016. He opened “funnel accounts” for drug traffickers, including the infamous Sinaloa Cartel of Mexico. If you’re not familiar with the Sinaloa Cartel, they have a lot it common with Wells. The cartel is considered by the United States Intelligence Community as  “the most powerful drug trafficking organization in the world.” In 2011, the Los Angeles Times called it  “Mexico’s most powerful organized crime group.” So, you can probably see that they’re kindred spirits.

“Funnel accounts” are bank accounts that people use to deposit funds into that are below the threshold for regulatory reporting—so authorities won’t investigate it—and then wire the funds to shell companies based in Mexico for the cartel to pick up.

Figueroa faces 20 years in jail and $500,000 fine. The FBI and IRS have arrested and charged eight other people connected to the cartel operation. What do you think would happen to the former personal banker if the cartel gets a hold of him first? If you you’re interested in the hijinks that Wells is involved with, check this out.* (also listed below)

Routinely Ignoring The Compliance Department?

I know that you’re #sad that you’ve not seen nearly enough news about President Trump. Try as hard as you can, it’s so damn difficult to find mass media coverage of the guy. We have a rare piece about him today. Trumps go-to bank, Deutsche Bank—stock hit an all time low today at $7.43 from a high of over $145.00—and, yes, I’m using U.S. Dollars and not the annoying Euros. I don’t even think I have the Euro key on my made-in-America computer. Deutsche Bank’s  relationship with President Donald Trump is under review. The bank ignored employees’ calls to report transactions made by legal entities controlled by President Trump and his son-in-law, Jared Kushner (who’s married to his favorite daughter) to the Treasury Department’s financial crimes unit, according to The New York Times.

Transactions in 2016 and 2017 triggered automated controls at Deutsche Bank meant to catch illicit activity. Compliance workers then prepared what’s known as suspicious activity reports that they believed should be sent to the Treasury, according to The Times, which cited five current and former bank employees. But the reports were never filed with the government, the article states.

The red flags raised by employees don’t mean the transactions were improper, said The Times. The newspaper said it couldn’t determine the exact nature of the transactions, but that some of them involved funds flowing overseas, which typically brings greater scrutiny.

The move to disregard the compliance workers’ recommendations was part of a pattern at Deutsche Bank of rejecting concerns to protect relationships with valued clients. The German bank—along with other global institutions—has been fined billions of dollars over failing to police internal transactions tied to illicit activity.

Call me crazy, but I think we’ll hear a little bit about this on MSNBC and CNN—not so much on FOX, I’d bet.

Lloyd’s Culture Change Survey

Lloyd’s Bank / Lloyd’s of London — can we just for once acknowledge that this is an embarrassing name for a  330-year-old London institution? Here in America, we’d never ever name a bank, Tony’s Bank or Suzie’s Insurance Company.  

Lloyd’s Bank has hired the Banking Standards Board to create and conduct a survey that will be sent to all of its employees to gauge the culture of the organization.

This is in response to the Bloomberg article, The Old Daytime-Drinking, Sexual Harassing Ways Are Thriving at Lloyd’s, which details a type of culture that would be commonplace at least 40+ years ago.

The survey is aiming to foster an inclusive and innovative culture by asking employees what is working and what needs to be improved. Why do I feel that if the survey is anonymous, we’d see calls for keeping the status-quo, as it relates to boozy long lunches? I think we all agree that sexual harassment should be banished to the Castle Black along with Jon Snow.

Huawei Ban Hits U.S. Semiconductors Makers

The ban on China’s massive telecommunications company Huawei has halted any trading with U.S. companies—and that includes the $20 billion worth of semiconductors that Huawei purchases from the U.S. each year. In addition, Google has suspended business activity with them, which hurts the Android market in China.

There was a large sell-off in chip stocks (semiconductors make computer chips for phones/computers) following the news. Many of the U.S. companies affected are facing a loss in revenue tied to the development of 5G internet that Huawei was leading the world industry on.

They say war is hell—and this trade war is no different. We’re going to have to suck it up as a nation and bear with slightly slower internet speed without Huawei’s 5G. If we made it through World War I and II, we can endure.

*Timeline of Wells Fargo’s transgressions, as referenced above:

On Sept. 8, 2016, Wells Fargo (WFC) admitted that it had created millions of accounts in the names of its clients without their permission. For the one big bank that had escaped the financial crisis of 2008 with a good reputation as a Main Street firm, this breach of the most basic element of banking — trust — unspooled that reputation.

Twenty-three months later, the bank’s reputation has not been recovered. In fact, it has sunk deeper as more news of its bad behavior has steadily trickled out, along with the announcement of fines and settlements.

Even after the bank’s CFO John Shrewsberry, who, at a conference in New York on May 30, said the bank’s scandals were all out in the open (“I don’t think at this point that there’s anything meaningful that we aren’t already talking about”), the bank has struggled to steer clear of the headlines.

Just last week, Wells Fargo disclosed that a software glitch accidentally denied nearly 400 customers the ability to modify their mortgages, which led to the bank foreclosing on their homes. It can be difficult to keep track of everything. Here is a list of the important points. For the ongoing ones, of course, some may end in the bank’s favor.

September 2016: The fake account scandal

Wells Fargo’s public woes kicked off with $185 million in fines from the CFPB, the Office of the Comptroller of the Currency, and the City and County of Los Angeles for the creation of 1.5 million fake deposit accounts and over 500,000 fake credit cards, all in customer names and without their permission. The bank had fired 5,300 low-level employees for creating these accounts under extreme sales pressure. This kind of sales pressure was known to cause similar issues at large banks, academic research had shown.

In the aftermath of this scandal, then-CEO John Stumpf was fired and had $41 million in compensation clawed back. Later that month Wells Fargo said it would stop unreasonable sales goals.

In a class action suit, Wells Fargo agreed to pay $142 million to the affected parties, which included millions of customers.

September 2016: Improperly repossessing service members’ cars

The Department of Justice slapped Wells Fargo’s wrist for improperly repossessing the cars of members of the military.

The bank did not limit interest rates to 6% (as is required by law), failed to tell courts the borrowers were active-duty when it asked for evictions, and failed to obtain court papers prior to repossessing cars.

The bank ended up paying $20 million in fines to the OCC and made restitution of over $10 million to wronged service members.

December 2016: Wells Fargo fails its ‘living will’ test

U.S. regulators restricted Wells Fargo’s size after it failed a “living will” test, a requirement that big banks must show how they would unwind in the event of a bankruptcy.

March 2017: More fake accounts

A new estimate of 3.5 million fake accounts emerges, a figure 1.4 million higher than the initial estimates when the fake account scandal emerged. Wells Fargo said this number was unverified and hypothetical, but eventually says there may be up to 3.5 million accounts.

March 2017: Flunked community lending test

Wells Fargo did very poorly on an OCC test for community lending, getting a “needs to improve.” The regulator cited “violations across multiple lines of business within the bank” and “significant harm to customers.” The regulation is to promote lending in lower-income communities.

April 2017: Whistleblower wins $5.4 million and his job back

OSHA ordered Wells Fargo to pay $5.4 million to a former Wells Fargo wealth manager, fired in 2010, after reporting potential fraud to a hotline. The bank has fought the fine and in August 2018 more of the story emerged.

August 2017: Lawsuit over overcharging small business retailers

Wells Fargo was sued for allegedly overcharging small business retailers for credit card services, hitting them with massive early termination fees and a “deceptive” 63-page fine print agreement that hid terms from small-business retailers. A former employee told CNNMoney that “God would have had a hard time” escaping the contract, and that the employee was told to target “mom-and-pop shops without legal support.”

The bank denies and is fighting the claims.

February 2018: Federal Reserve restricts size

In February, the Federal Reserve announced that it would restrict the bank’s growth, “responding to widespread consumer abuses and compliance breakdowns.”

February 2018: Sacramento sues over discrimination against black and Latino borrowers

The city sued the bank, citing illegal practices that suppressed property values in “minority and low-income communities,” costing the city in the process. According to the city, black borrowers with FICO scores over 660 were three times as likely to get a high-cost or high-risk loan as a white borrower.

The lawsuit is ongoing, and the bank is fighting the charges.

March 2018: Wealth management investigation emerges

The Wall Street Journal reported that the Justice Department had told Wells Fargo to investigate its wealth-management business. The bank said it was investigating “whether there have been inappropriate referrals or recommendations,” within its Wealth and Investment Management business.

April 2018: $1 billion settlement for mortgage locks and auto-loan issues

Wells Fargo, the CFPB, and the OCC reached a $1 billion settlement for auto-loan issues and mortgage practices. Wells Fargo acknowledged it had charged people with car loans for insurance without their knowledge, even if they already had insurance. The issues bubbled to the surface the previous summer and fall after the bank was hit by lawsuits from wronged consumers.

The bank had also charged customers for extending mortgage-rate locks, even if the bank was responsible for the delay.

May 2018: Altering business information without client knowledge

The Wall Street Journal reported that Wells Fargo’s wholesale banking division altered business information like Social Security numbers and dates of birth without client knowledge. The Journal said that the incidents happened as the bank was trying to comply with a deadline related to an anti-money laundering control.

Wells Fargo said no customers were negatively impacted.

May 2018: $480 million to settle securities-fraud lawsuit

In the wake of the fake account scandal, Wells Fargo faced securities fraud allegations. Investors claimed the bank knew about the fake account issue but failed to disclose it to investors, who considered it material. The bank settled for $480 million.

June 2018: SEC fine for leading investors astray

The SEC heaped a $4 million fine on Wells Fargo and forced it to repay over $1 million in ill-gotten gains and interest to mom-and-pop investors at Wells Fargo Advisors, the bank’s brokerage arm.

The bank was encouraging investors to actively trade high-fee debt products that were not supposed to be actively traded. The bank did not admit wrongdoing but made changes in response to the matter.

July 2018: Refunds over add-ons like pet insurance and legal services

Wells Fargo refunded tens of millions of dollars, according to the Wall Street Journal, after adding services like pet insurances and legal services to consumers’ accounts without consumers’ “full understanding,” and the CFPB is looking into it. The bank stopped add-on products in 2017. Other banks have paid settlements over similar issues.

July 2018: Private Bank wealth management issues

Yahoo Finance uncovered issues with the Private Bank part of Wells Fargo’s wealth management business. For years, the bank had operated with a heavy sales culture that pressured advisors to make decisions not necessarily in their clients’ best interest.

August 2018: Wells Fargo pays $2.1 billion for its role in housing bubble

Wells Fargo agreed to pay a $2.1 billion fine after facing allegations that it had improperly represented mortgages it sold to investors during the housing bubble. This was expected and is similar to the other banks involved in the financial crisis, but Wells Fargo was one of the last banks to deal with these issues.

August 2018: Hundreds of houses foreclosed on due to computer glitch

The bank had to set aside $8 million to make things right for 625 people who were incorrectly denied loan modifications; 400 of them had their homes foreclosed upon.

One Response
  1. May 21, 2019

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