Federal prosecutors are opening a 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 mock interviews with non-white and female job applicants, according to two people with knowledge of the investigation.

The investigation is being conducted by members of a newly created Civil Rights Division within the Manhattan Criminal Division of the US Attorney’s Office, the people said. They asked for anonymity because they were not authorized to speak publicly.

The investigation, which is in its early stages, was prompted by a May 19 New York Times report that focused on a whistleblower, Joe Bruno. Mr Bruno, a former Wells Fargo employee, and others said bank managers interviewed applicants the bank classified as “diverse” — a collective term for racial minorities, women and members of other disadvantaged groups — for positions already promised to other people.

These sham interviews were the result of the bank’s drive to increase diversity — a lofty goal that has been twisted in practice because, according to some employees, it was more about documenting the bank’s efforts to hire more minorities than actually hiring them .

The practice was bound by Wells Fargo’s “diversity” policy, which mandated that at least half of candidates interviewed for jobs earning $100,000 or more had to be “diverse.” The regulation came into force in mid-2020. However, the practice of conducting fake interviews existed long before that because Wells Fargo had a similar unwritten policy.

A Wells Fargo spokeswoman declined to comment on the investigation.

It is not clear if and what charges could result from the investigation. But it shows a renewed willingness by federal authorities to pursue criminal prosecutions for civil rights abusers at a time when hate crimes are on the rise — especially because the penal code rarely applies to how companies treat workers or customers.

The civil rights division handling the Wells Fargo investigation was established in November by Damian Williams, the US Attorney for the Southern District of New York.

For example, under federal law, it is a criminal offense to disturb “an applicant for private employment” in a manner motivated by the applicant’s “race, color, religion, or national origin.”

Federal agencies typically invoke civil antidiscrimination laws when filing lawsuits against companies for hiring discrimination. Additionally, customers who experience racial abuse often rely on government anti-discrimination laws to seek justice.

In creating the Civil Rights Division, Mr. Williams said federal agencies needed to reconsider how the justice system deals with discrimination issues. Pursuing criminal cases, he said, would make efforts to bring justice to victims of discrimination “more effective”.

At Wells Fargo, one of the nation’s largest banks with nearly 250,000 employees, mock interviews took place in several areas of its business, including mortgage servicing, home loans and retail banking. The Times report last month focused on the bank’s wealth management business.

Since then, an additional 10 current and former employees have shared stories of being subjected to or conducted fake interviews or seeing documents documenting the practice. The individuals spoke on condition of anonymity, fearing retaliation from Wells Fargo or their current employers.

In an interview Monday, Bei Ling, Wells Fargo’s director of human resources, said she doesn’t believe the practice of fake job interviews is “a systematic problem.” The staff have not complained about it, she said.

“In the last eight months, I can tell you I’ve never heard anything like this from the recruitment community,” Ms. Ling said. “I’ve never heard the words ‘fake interview’.”

She added that there was no way for the bank to understand the scale of the problem unless staff spoke up. “We can’t react to things we don’t know,” she said.

In some cases, there were written records of the practice of conducting fake interviews. In late 2020, just days after Wells Fargo offered a job to a person deemed “diverse” by the bank’s standards, a human resources officer asked that person to apply for another position at the bank, according to one by The verified email Mal.

The first offer is still on the table, the Wells Fargo employee said, but the bank also wants to show that it has “qualified candidates” for both roles. “Just accounting for us,” the employee wrote in the email.

When asked about the message from the human resources officer, Ms Ling said, “We are reviewing the communications.”

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

The bank had already experimented with ways to streamline its hiring process. In February, Wells Fargo launched a pilot program that waived job postings and the diversity interview requirement in cases where internal candidates had been identified. The aim was to make it easier for employees to switch to new functions within the bank. Until then, the policy required each job to be advertised and “different” candidates to be interviewed unless managers specifically requested an exemption, which required senior management approval.

Ms Ling said the pilot program was unrelated to the problems arising from the “diverse slate” rule.

Wells Fargo has been working on a company-wide streamlining of its business practices for five years. Beginning in 2016, it became public knowledge that the bank had opened fake accounts on behalf of customers without their knowledge, charging some of them false mortgage loan fees and forcing others to buy unnecessary auto insurance. The scandals have cost the bank more than $4.5 billion in fines.

In early 2018, the Federal Reserve imposed an asset ceiling on Wells Fargo, preventing it from growing until regulators were satisfied that its risk management practices and customer service had stabilized. Since then, the bank’s leadership has changed, and Mr. Scharf took over in the fall of 2019. Regulators still haven’t given Wells Fargo the all-clear.

His sufferings have continued.

A group of black homeowners recently sued the bank for delaying refinancing their home loans. The Securities and Exchange Commission has fined Wells Fargo $7 million for failing to properly comply with 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” whom he suggested had their operating licenses revoked for violating too many financial regulations.

Matthew Goldstein contributed reporting.

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