Big bank: Government targeting of exec is retaliation

by Ryan Smith03 Dec 2013
The government’s request to add a Wells Fargo executive as a defendant in its fraud case against the big bank may be retaliatory, the lender said Monday.

In a motion opposing the government’s request to add executive Kurt Lofrano as a defendant, Wells Fargo said the request was made just three days after the bank withdrew from settlement negotiations with the government, according to a Reuters report.

“In the absence of any other explanation for the lengthy delay, this intervening event -- within days of the notice -- raises questions about whether the United States acted in bad faith, in retaliation for Wells Fargo's message,” Wells Fargo lawyers wrote in the motion.

The lawsuit accuses Wells Fargo of misleading the Department of Housing and Urban Development into believing that shoddy home loans qualified for insurance through the Federal Housing Administration, precipitating hundreds of millions of dollars in losses.

Lofrano, who was in charge of quality control, “played a critical role in the bank’s decision not to report to HUD, as required, more than six thousand materially defective loans that Wells Fargo had falsely certified to HUD for FHA insurance,” the DOJ wrote in a court filing.

Wells Fargo, however, has denied the allegations and said it stood by Lofrano “unequivocally.”
 

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