Wells Fargo terminates 100 employees accused of pocketing coronavirus relief funds

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Wells Fargo fired more than 100 employees this week on charges that they defrauded one of the Small Business Administration’s coronavirus relief programs.

The company told its employees in a memo obtained by NPR that it had identified employees who it says took advantage of the SBA’s Economic Injury Disaster Loan program in order to benefit themselves.

“We have terminated the employment of those individuals and will cooperate fully with law enforcement. These wrongful actions were personal actions, and do not involve our customers,” wrote David Galloreese, the head of human resources at Wells Fargo.

The disaster loan program was launched in tandem with the SBA’s Paycheck Protection Program to help small businesses and nonprofit organizations that have experienced a loss in revenue because of the coronavirus pandemic. The loans were meant to help businesses pay normal operating expenses such as healthcare benefits for employees, rent, and utilities.

The ability of banks to check whether aid has been deposited into employees’ accounts has led to a number of revelations like this most recent one from Wells Fargo, adding evidence to claims that the relief programs were widely abused.

JPMorgan Chase & Co. discovered similar fraudulent incidents among dozens of bank staff in September after it identified more than 500 employees who had accessed Economic Injury Disaster Loans.

The SBA has encouraged banks to check for suspicious activity related to disaster relief programs among both customers and staff.

A July memo from the SBA’s office of the inspector general outlined what it called “serious concerns of potential fraud in the economic injury loan program pertaining to the response to COVID-19.”

“OIG has been inundated with contacts to investigative field offices from financial institutions across the nation and the complaint Hotline,” Inspector General Hannibal Ware wrote. “We have received complaints of more than 5,000 instances of suspected fraud from financial institutions receiving economic injury loan deposits. Nearly 3,800 of those reported instances of suspected fraud came from only six financial institutions.”

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