What You Need to Know
- Carrie Tolstedt agreed to a ban on working in bank industry and to pay $21 million in civil penalties to regulators.
- She left the bank with about $125 million in stock, options and restricted shares, but the bank clawed back over $65 million in stock options.
- Wells Fargo paid more than $5 billion in fines and legal settlements and avoided criminal charges.
Wells Fargo & Co.’s former head of retail banking avoided prison for misleading regulators investigating one of the biggest banking scandals in modern U.S. history, as a judge imposed a sentence of three years of probation.
Carrie L. Tolstedt, 63, the only Wells Fargo executive to be charged in the fake-accounts scandal of 2016, had pleaded guilty to obstruction of a bank examination by the Office of the Comptroller of the Currency.
U.S. District Judge Josephine Staton on Friday agreed with the US Probation Office and Tolstedt’s lawyers on sentencing the former executive to probation because she doesn’t pose a danger to society.
The judge rejected a request from prosecutors for a 12-month prison term and instead ordered Tolstedt to serve six months of home confinement, pay $100,000 fine and perform 120 hours of community service.
Tolstedt, who left the bank in 2016, was at the center of the scandal involving thousands of Wells Fargo employees who attempted to meet their sales goals by using customers’ personal information without consent.
They opened millions of phony accounts or persuaded customers to open accounts the employees knew were of little or no use to them.
It was the first of several scandals that embroiled the bank, setting off leadership shakeups that ended up with the hiring of Chief Executive Officer Charlie Scharf, who joined the firm in 2019 after a string of predecessors stepped down.
Wells Fargo paid more than $5 billion in fines and legal settlements and avoided criminal charges.
At Friday’s sentencing hearing, Tolstedt’s attorney, Enu Mainigi, urged the judge to spare her client from being sent to prison, saying she’s been punished enough.
Tolstedt lost countless friends, received harassing phone calls and will live the remainder of her life as a felon, Mainigi said. She also has a life-threatening health condition, the lawyer said.
Tolstedt addressed the judge, her voice breaking, saying she sincerely apologizes.
“It is my commitment to lead an honorable life,” she told Staton.