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The role of in-house counsel is undeniably difficult. Balancing the legal interests of the company with the pressures of performing for the business side puts lawyers in the difficult position of confronting legal quandaries with an eye more toward making the situation “good enough” than ideal. White-collar matters usually turn on someone misjudging the landing on “good enough.”
Which is all prelude to say that former Wells Fargo general counsel James Strother owes the Office of the Comptroller of the Currency $3.5 million as part of a settlement over the bank’s phony accounts scheme from a few years back. The feds had originally sought $5 million.
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The scheme, which ran for nearly 14 years, involved local branches creating fake accounts in customer names, bolstering the activity of the bank on paper, and helping the branch meet sales goals. Before all was said and done, the bank had millions of fake accounts running around. It was kind of like Schrödinger’s Bank — customers had hundreds of potential accounts at any given time and it was only when the Comptroller tried to observe them that they all collapsed.
From Corporate Counsel:
The OCC alleged in a charging document that Strother admitted in sworn testimony that the bank had a “systemic sales practices misconduct problem rooted in the community bank’s business model,” referring to Wells Fargo’s retail branch network, its largest line of business.
Presumably his next words were, “You know, now that I hear myself saying those words I see the problem.”
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The government alleged that Strother, who served as general counsel throughout the life of the fraud, was aware of the scheme for at least five years and that his department was aware for the entire period. It seems like “doing something about it” is a key part of the in-house counsel job description.
Ex-Wells Fargo General Counsel to Pay $3.5M Penalty for Role in Phony Account Scandal [Corporate Counsel]
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.