WASHINGTON — The former head of Wells Fargo’s retail bank is facing prison time after agreeing to plead guilty to obstructing a bank examination in relation to the sweeping phony accounts scandal that roiled the bank in 2016.
Carrie Tolstedt, 63, faces up to 16 months in prison under a plea agreement with federal prosecutors filed Wednesday. The development marks a rare instance of a senior bank executive facing prison time as a result of their job.
Tolstedt agreed to plead guilty to one count of obstruction of a bank examination and is expected to make her initial court appearance in Los Angeles in the coming weeks, the Los Angeles U.S. attorney’s office said in a statement.
She also faces a civil penalty of $17 million announced separately by the Office of the Comptroller of the Currency, who said Tolstedt was “significantly responsible” for the widespread sales abuses at the bank, where potentially millions of accounts were opened without customer approval.
A lawyer for Tolstedt, who ran the bank’s retail and small business lending from 2007 to 2016, declined to comment. Reuters previously reported prosecutors were targeting Tolstedt.
Wells Fargo paid $3 billion in February 2020 to settle federal civil and criminal probes, admitting at the time that it pressured employees between 2002 and 2016 to meet unrealistic sales goals, which led them to open fake accounts for customers.
A spokesperson for Wells Fargo declined to comment.
No criminal charges against individuals were announced at the time, though in 2020 the OCC filed civil charges against and fined Tolstedt and several other former senior bank executives and barred its former CEO, John Stumpf, from the banking industry. Tolstedt is also now barred from the industry. The penalty announced on Wednesday resolves those charges.
“The justice system and regulators rely on corporations and their executives to fully cooperate during investigations into potential wrongdoing. But, in this case, Ms. Tolstedt took steps to cover up misconduct at Wells Fargo,” Joseph McNally, acting U.S. attorney for the central district of California, said in a statement.
Some said the development did not go far enough.
“Finally, decades after the largest fraud in American history, a banker is going to jail,” said Bartlett Naylor, a financial policy advocate with Public Citizen in Washington. “But Tolstedt did not operate alone; she had bosses. They must face real justice as well.”