Tag Archives: whistleblower

JPMorgan Ordered to Pay Damages for Firing Whistle-Blower

JPMorgan Chase inappropriately retaliated against a former employee who raised questions about the bank’s sales tactics and investment products, the Labor Department found.

The bank was ordered to pay back wages and damages to Johnny Burris, a former broker at one of its Arizona branches. A letter released on Tuesday by the Occupational Safety and Health Administration, a division of the department, said that JPMorgan had violated provisions of the Sarbanes-Oxley law designed to protect whistle-blowers.

A spokeswoman for JPMorgan, Patricia Wexler, said the bank planned to appeal the findings. Ms. Wexler noted that the Financial Industry Regulatory Authority, the industry’s self-funded regulator, had previously ruled against Mr. Burris when he told an arbitration panel that he was fired as retaliation.

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For Whistleblowers, Repercussions Are Felt Beyond Wells Fargo

Former workers at Wells Fargo who resisted pressure to push banking products on customers who didn’t want them say the bank retaliated against them by docking their permanent record, sabotaging future job prospects.


2016 saw one of the biggest banking scandals in U.S. history. Regulators say Wells Fargo opened as many as 2 million credit card and checking accounts in customers’ names without their approval. On top of that, former Wells Fargo workers tell NPR that the bank destroyed their careers after they tried to report wrongdoing. Capitol Hill is investigating. We should say, NPR receives financial support from Wells Fargo. NPR’s Chris Arnold has our story.

CHRIS ARNOLD, BYLINE: It hasn’t been the happiest holiday season for a former Wells Fargo worker named David. After the bank fired him from his job at a branch in Florida last year, David’s been making half of what he used to. He can’t afford his rent anymore. So instead of wrapping up presents, David’s been packing up his belongings.

DAVID: It is a strain. I’m packing boxes, putting stuff in storage. And I’m moving a one-bedroom apartment into a storage unit and then moving into one room in a person’s house.

ARNOLD: Which is not where David wants to be at 54 years old and heading into the new year.

DAVID: On New Year’s Eve, I will be moving.

ARNOLD: Over the past few months, NPR has talked to former Wells Fargo workers in Florida, Pennsylvania, New Jersey, Los Angeles and San Francisco. They all say that managers at the bank retaliated against them for calling the company’s ethics line and pushing back against intense sales pressure to sign customers up for multiple credit cards and checking accounts.

DAVID: There’s no need to have all those accounts, especially when they’re charging you fees.

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Whistleblower sues Wells Fargo amid accounts scandal

SAN FRANCISCO — A former branch manager for Wells Fargo has filed a federal lawsuit against the embattled bank, claiming that supervisors harassed her after she had alerted them to improper sales and account activity by employees.

Diana Duenas-Brown, who worked for Wells Fargo for 14 years, including 11 as a branch manager in a Sonoma County community, reported at least 25 instances of illegal or improper sales activity by employees in the bank district where she worked, according to the federal lawsuit.

“This case presents a classic example of whistleblower retaliation,” Duenas-Brown stated in the lawsuit, which was filed on Dec. 9. The former branch manager told her supervisor of “fraudulent, illegal, and deceptive practices against Wells Fargo customers,” according to the litigation.

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Whistleblower Didn’t Live to See Landmark Allied Mortgage Verdict, Taxpayers Recover $92 Million

In May, 2011, Peter Belli filed a complaint in Boston. With guidance from whistleblower experts at Mahany Law, he accused Allied Home Mortgage Capital Corporation of massive mortgage fraud in a False Claims Act “qui tam” whistleblower lawsuit.

Over five years later, and after a trial that lasted five weeks, a jury found both the corporation and its CEO, Jim Hodge, guilty of knowingly representing to Housing and Urban Development (HUD) that certain loans were properly prepared and eligible for Federal Housing Administration (FHA) insurance, when in fact they were not.

Belli had managed several Allied branches in Massachusetts, Rhode Island, Arizona, and other states. He was thus in an ideal position to observe Allied Capital’s fraudulent practices, and he was determined to bring the scheme to light. Unfortunately, he passed away before the verdict came out only days ago in Texas. The move to a Texas court had been a choice of the defendants.

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Former Federal Investigator Says Government Didn’t Investigate Wells Fargo Whistleblower Cases

Darrell Whitman, a former investigator for OSHA’s Whistleblower Protection Program, says his agency failed to investigate warnings from Wells Fargo employees in 2010.

Six years ago, two Wells Fargo employees filed whistleblower complaints with the federal government.

They sent their cases to the Department of Labor’s Whistleblower Protection Program, which is administered by the Occupational Health and Safety Administration.

But an investigator who reviewed cases for the agency says no one actually investigated the complaints.

This revelation comes as the nation reels from an enormous Wells Fargo banking scandal. The San Francisco-based company was fined $185 million last month after employees opened two million phony bank accounts and credit cards to meet sales goals.

Now Darrell Whitman is breaking his silence to the NBC Bay Area Investigative Unit, claiming if his agency had done its job, the bank’s widespread practice of opening fraudulent customer accounts could have been exposed and fixed years ago.

“I think it’s pretty obvious they don’t follow protocols,” Whitman said of OSHA. “You don’t do the job, that’s pretty close to dropping the ball, isn’t it?”

Whitman worked in the agency’s San Francisco office from 2010 to 2015. He says in May 2010, OSHA received two complaints from former Wells Fargo employees who claimed the company retaliated against them for raising red flags about the bank’s business practices.

Whitman says instead of investigating, the agency held the complaints for six months. He says in November 2010, after the two complainants decided to file federal lawsuits against Wells Fargo, his supervisors assigned him the cases simply to close them.

“They assigned it to me only for the purpose of dismissing the complaint,” he said.

According to OSHA policy, the agency is relieved of pursuing whistleblower cases when complainants head to court. But, Whitman says the agency should have started and completed the investigations before the whistleblowers filed their lawsuits.

Source: Former Federal Investigator Says Government Didn’t Investigate Wells Fargo Whistleblower Cases | NBC Bay Area http://www.nbcbayarea.com/news/local/Former-Federal-Investigator-Says-Government-Didnt-Investigate-Wells-Fargo-Whistleblower-Cases-397518261.html#ixzz4NavdiMn6

Dwight Haskins: Why did regulators ignore rising risks at Citigroup despite warnings of the oncoming crisis?

 That tweet is from Dwight Haskins who is follow on Twitter. Dwight is a whistleblower and former government bank regulator. We more people like Dwight Haskins, William Black, and others to continue to speak out since we have a current government agencies that won’t go after the repeated offender banks and big corporations that continue to pay records fine instead of indict the corporate and banks execs.

December 6th, 2014


 By Dwight Haskins.

My concerns with Citigroup’s derivatives exposure was communicated to FDIC senior management in 2007. I doubt I could have been any more clear in my warnings that Citigroup and its accountants were “hiding” the risk exposure the banking company presented to the FDIC insurance fund.

My supervisors buried my warnings and pretended they were unaware of such risk exposure right up until mid-2008. Why weren’t senior regulatory officials and accountants held accountable? Why did the Financial Crisis Inquiry Commission ignore reports of these regulatory lapses?

From: Haskins, Dwight J.
Sent: Thursday, October 18, 2007 11:12 AM
To: Corston, John H.; Hirsch, Pete D.
Subject: Long and Short of Citigroup SIV exposure, insurance implications?


FYI — looks like we will want to consider how best to track some of these unique, off- balance sheet, complex bank risks and how they are aligned with deposit insurance premium considerations. The SIV (structured investment vehicle) presents a particularly challenging policy and accounting issue I suspect, for us, and the National Risk Committee, and Policy staff.

There has been lots of press this week regarding potential exposure to the banks regarding their Structured Investment Vehicles (SIVs). I was trying to explain the situation to others earlier and thought it worthwhile to consider the unfolidng risks. Considering the Citigroup exposure, here’s the important issues as I see it.

Citi sets up the SIV but since the SIV has no credit history, Citi had to guaranty any loan provided by the investors that the SIV transacts. The loan by the SIV is also secured by the mortgage- backed securities, commercial paper, or CDOs purchased by the SIV. The loan proceeds were used by the SIV to purchase MBS/CDOs that pay 7.5% interest, while borrowing at 4.5% interest.

The SIV borrows short term at 4.5%, lends long term at 7.5%, and remits the spread to the investors and pays a fee to the bank for administering the SIV. What promotes investor interest is the guaranty by the bank and the fact that the rating agencies opined that there was very little risk in lending to the SIV in part because there was “over-collateralization” (initially, that is) to support the loan.

Everything is fine until now when it turns out that the investments the SIV purchased are not performing as planned. The mortgages aren’t getting paid, so the value of the mortgage-backed securities purchased for say $100 are only worth $80. The lender/investors gets word and ask the SIV to pay back the loan.

The SIV can’t really pay the loan back because it used the cash to buy the MBS. Citi doesn’t necessarily have the cash reserves to make good on its guaranty without having to sell some of its investments to get cash — and that most likely would require having to unload under-water assets, causing loss recognition. The SIV can’t sell the MBS because the marketplace knows they are bad investments and nobody wants them.

But Citi guaranteed the loans, so if push comes to shove, Citi is on the hook. Citi would have to buy the investments for the amount the SIV owes even though they are not worth that much, or sell the underlying investments and pony up the rest. This could cause the bank major losses. By the way, I saw no mention of any of this in Citigroup’s latest 10-Q so it could be interesting to see if the SEC embarks upon some inquiry since I would think some discussion was warranted in the Management and Discussion Analysis.

There is a lot of commercial paper issued by the SIV apparently due in November and Citigroup doesn’t apparently think investors are going to be interested in rolling over new commercial paper for old commercial paper knowing the collateral value is suspect. Solution? Create the M-LEC as super SIV. The major banks will put some cash into this super SIV account, and that pool of cash, together with new commercial paper issued byM-LEC, will be used to purchase the bad investments that the SIV is unable to finance.

While the underlying investments haven’t changed or gotten any better, the transactionestablishes a new carrying value and prevents mark-to-market impairment from being realized. So, instead of accepting that the investments are worth $80 and recognizing the loss, they are sold to the M-LEC who is willing to pay $95 instead of $80. M-LEC gets $15 from the banks (the cash they invested in the M-LEC) and $80 by issuing new commercial paper. The commercial paper lenders (investors) are fine with this apparently since the banks will take the first loss if the investments end up not paying off.

The only thing not mentioned is the accounting rules. How does the investment get valued when it is sold to the M-LEC? It may be worth $80 which looks to be the market value. But if the new investors are willing to pay $95 the accountants may go along with that value. Lets say at $95.

The “loss” to the bank (Citi in this case) that guaranteed the selling SIV is only $5, and not $20 — all because of the newly created super-SIV was constructed. The theory, I suppose, is that in time investors will be less worried about the value of the investments and the investments may rise in value again as the market returns to normalcy. Lets say the value goes back to $100. Everyone gets their money back with no losses reflected. One could see this as a “win-win” situation, perhaps giving the banks a chance to fund reserves for any future losses.

But, one could take the argument that this unique arrangement is to prevent any equity capital impairment to Citigroup.

Shouldn’t there be some “additional” or implicitdeposit insurance premium charged to Citigroup to reflect the scenario that the bank’s capital was at least temporarily impaired until the M-LEC could save the day? 

One could argue that Citi should be exacted a charge for being a guarantor to the SIV which puts their capital position at risk.

In addition, charging Citigroup for this additional risk could counter the argument by some that moral hazard is being encouraged by the Treasury for encouraging this workout scheme.

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FDIC continues to be hyper-aggressive in using lawsuits to punish adversaries whether the agency has a case or not

July 14th, 2014

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Wells Fargo whistleblower tried to warn company years ago

DES MOINES, Iowa —A Wells Fargo whistleblower who said she tried to warn the company years ago has a friend in Des Moines telling the same story.

The Chicago City Council approved Monday a one-year suspension for Wells Fargo from city business because of its scandal over phony accounts, joining the states of Illinois and California in punishing the bank.

A former coworker of the whistleblower said she is proud information on the company came to light, but sad so many Wells Fargo workers were fired for doing what they felt was necessary to keep their jobs.

Danita Doris said she only lasted a year at the Wells Fargo branch in St. Helena, California because of daily sales pressure.

Her co-worker was Yesenia, the whistleblower who claims she first alerted the Wells Fargo seven years ago about fake accounts forced on unsuspecting customers.

“I’m frustrated that it’s A, taken so long to come to light, and B, that all the higher ups are acting surprised,” Doris said.

Doris said even as a teller the pressure to meet a daily quota was immense, and she and others often participated in helping co-workers meet their goals.

“I would say (I had) 10 different accounts, 15 different accounts,” Doris said.

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