The Wells Fargo Fiasco and the Complications of Internal Fraud Reporting

It is worth repeating a thousand times: Internal reporting is no substitute for external authority of whistleblowers to Act under the False Claims Act and other Whistleblower laws.

The many attackers of the False Claims Act want a Relator or really any whistleblower to be required to make an internal report to the company prior to being allowed to collect any reward.

That is part of the so-called “reform” agenda for the laws, which if they need any reform at all, do not need to include less rights for whistleblowers. I repeat this point because of reports regarding the recent Wells Fargo fiasco.

The Bank has paid millions in fines thanks to the insistence of the Consumer Financial Protection Bureau and because of the efforts of journalists and public servants to hold the Bank accountable, including having the CEO testify before Congress.

Of course, many relatively low-paid employees (hourly workers in fact) have been fired because they allegedly illegally opened duplicate bank accounts for clients who had to pay fees as a result.

The hourly employees apparently got the idea to do this out of the clear blue sky and with no prodding from the upper level of the Bank, which accepted the extra income, because no high-level executive has lost a dime or missed a paycheck as a result of this so far.

Apparently, the Board of Directors of Wells Fargo is happy to have to pay $185 million in fines and accept the idea that management should go right along accepting bonuses.

Now it turns out people claim they did try to blow the whistle on the whole scam calling an ethics hotline for example.

Guess what? The Bank fired them. Oh sure they were not fired for reporting. One guy who called the ethics hotline was supposedly fired for “tardiness,” not for reporting the issue. Retaliation? No, the Bank’s CEO claims that he encouraged workers to raise their hands, when he testified before Congress.

Yes, employees having a right to an action for retaliation under whistleblower laws, is good but suing, hypothetically a major bank after you get fired is not a great option.

This is why anyone would be advised to discuss their rights with their own counsel before taking any action. It is why internal reporting can never be made to be a requirement for reporting this kind of fraud under the False Claims Act or SEC whistleblower programs.

There is little evidence that internal reporting in any major company is a safe thing to do.  There is plenty of evidence that internal reporting can get a whistleblower fired.

If this Bank is guilty of retaliation, obviously we all hope the employees will be made whole.

Still, anyone faced with this problem at work should get advice before they act. I wish getting fired after reporting fraud internally were not a typical result.  I wish an internal reporting system were always safe. But it is not and any such reporting rights are dependent on the right of a whistleblower to go to an outside authority and report as well.

Tony Munter Whistleblower Attorney

Tony Munter Attorney at Law
409 7th St NW,

Washington DC  20004