Wells Fargo & Co. has fired more than 100 employees that the financial services company suspected of underhandedly collecting COVID-19 relief funds. Bloomberg News first reported the incident based on information from a person with knowledge of the situation.
Wells Fargo says members of its staff committed fraud against the Small Business Administration (SBA) “by making false representations in applying for coronavirus relief funds -- specifically the Economic Injury Disaster Loan program (EIDL) -- for themselves,” according to an internal memo reviewed by Bloomberg.
“We have terminated the employment of those individuals and will cooperate fully with law enforcement,” David Galloreese, Wells Fargo’s head of human resources, said in the memo. “These wrongful actions were personal actions, and do not involve our customers.”
More than 500 JPMorgan employees were also caught pulling the same stunt just last month. The mere fact that so many could easily tap into the EIDL program sent shockwaves through the company, leveraging an internal probe.
How the employees pulled this off
Unlike other business owners and employers, banks have the right to check whether employees had aid deposited into their accounts. Sensing that, the SBA pressed banks to look out for suspicious deposits from the program -- both to their customers and also their own staff.
One particular aspect of the EIDL program that was evidently too good to pass up was financial advances of as much as $10,000 that don’t have to be repaid. A Bloomberg Businessweek analysis of SBA data in August identified at least $1.3 billion in suspicious payments.The SBA’s inspector general also admitted that more than $250 million in aid was likely given to ineligible recipients in addition to $45.6 million in duplicate payments.