Wells Fargo complaints show flaws in federal whistleblower program

WASHINGTON (Reuters) - Former Wells Fargo & Co WFC.N general manager Claudia Ponce de Leon filed a whistleblower complaint in December 2011 with federal labor regulators, alleging she was fired for telling superiors about employees opening unauthorized accounts.

Nearly five years later, she has not been interviewed by investigators at the Labor Department’s Occupational Safety and Health Administration (OSHA), said her attorney Yosef Peretz.

Her complaint claiming retaliation by Wells Fargo for reporting potential misconduct is one of several dozens filed against the bank over the last 14 years, Reuters has found.

Their existence shows U.S. government regulators are still not meeting targets set by law -- a problem that was also flagged in a critical internal report issued in September 2015.

As of Oct. 6, the agency had yet to close out 34 of the 91 complaints it has received since fiscal year 2002 from Wells Fargo employees alleging they faced retaliation after reporting potential wrongdoing, according to department data obtained through a Reuters public records request. The department did not disclose details of the claims or the dates they were filed, and it remained unclear how many were related to the ongoing scandal involving Wells staffers opening as many as 2 million accounts without customer permission. It is also unclear how those 91 complaints against Wells Fargo compares with other corporations.

The bank last month agreed to pay $190 million in fines and customer restitution in a settlement with the Consumer Finance Protection Bureau and other regulators.

In late September, Reuters identified Ponce de Leon and at least four other former Wells Fargo employees who reported to OSHA between 2009 and 2014 that they were fired for raising concerns about the opening of unauthorized accounts and credit cards. Of the five OSHA complaints seen by Reuters, Ponce de Leon’s case has been pending since December 2011, and another 2014 case was initially dismissed by an OSHA investigator on grounds that were later reversed on appeal by a Labor Department administrative law judge. The bank ultimately reached a settlement with the employee in 2015.

The three other complaints - one in 2009 and two in 2010 - were transferred to state and federal courts, respectively.

One employee of the Labor Department involved with the cases has since filed his own whistleblower claim against the agency, alleging his office has a history of mishandling cases. His complaint does not reference the Wells Fargo complaints specifically.

“It’s absolutely outrageous that whistleblowers contacted OSHA as early as 2009 about potential fraud at Wells Fargo, and yet these government bureaucrats failed to do their job,” said Sen. David Vitter, a Louisiana Republican who has been looking into how Wells Fargo’s sales practices have impacted small business owners.

Labor Department Secretary Thomas Perez said last month that the department has launched a “top-to-bottom” review of prior Wells Fargo whistleblower complaints.

FILE PHOTO -- Protestors gather outside the Wells Fargo & Co corporate campus in Manhattan, New York City, U.S., October 6, 2016. REUTERS/Brendan McDermid/File Photo

Agency spokesman Jesse Lawder said it is the department’s policy not to comment on specific whistleblower cases, but said the review aims to “ensure whistleblowers receive the protections and remedies afforded them.”

Richele Messick, a Wells Fargo spokeswoman, could not comment on individual cases, but said the bank “does not tolerate retaliation against team members who report their concerns and will take measures to protect team members from retaliation.”

From fiscal year 2005 through 2015, less than two percent of all whistleblower complaints filed with OSHA were won on the merits, federal statistics show. The rest were either settled, dismissed or transferred to federal courts. Lawyers who represent whistleblowers say OSHA investigators face challenges. One problem is the “crushing case load,” which can lead to significant delays, said attorney Jason Zuckerman.

OSHA, which received 3,288 whistleblower cases in fiscal year 2015, currently has 88 full-time investigators across the country in 10 regional offices.


OSHA refers whistleblower complaints to the relevant federal regulators to investigate. But the office does not always refer them promptly, or sometimes at all, the Labor Department’s inspector general found last year.

An earlier audit in September 2010 found that 80 percent of complaints it reviewed were not properly investigated, meaning OSHA staff did not take steps such as interviewing the employee, obtaining a witness list or allowing the employee to refute the employer’s defense. The subsequent audit in September 2015 noted improvements, finding that 18 percent of complaints reviewed failed to meet certain investigative criteria. Still, it also found that 72 percent of all of OSHA’s investigations were not performed within the 30, 60 or 90-day time frames specified by various whistleblower protection laws.

OSHA disputed some of those findings at the time, saying the audit relied on “inaccurate data” to determine how well it referred cases to other regulators.

Labor Department spokeswoman Amanda McClure said OSHA’s practice is to send copies of complaints when it receives them and its findings at the conclusion of the investigation to either the Securities and Exchange Commission or the CFPB, depending on which federal whistleblower law applies.

It is not clear whether OSHA, which received complaints of the unauthorized account openings at Wells Fargo dating at least as far as 2009, referred the matters to federal banking regulators, such as the CFPB and the Office of the Comptroller of the Currency.

The CFPB, a new agency launched in July 2011, has said it did not start investigating the issue until it received tips from whistleblowers in mid-2013.

The OCC has said it first learned about the issues after it received a “small number” of complaints from consumers and bank employees in March 2012. Those complaints and media reports in December 2013 led the regulator to step up its supervision of Wells Fargo.

An SEC spokeswoman declined to comment on whether OSHA had referred the complaints about Wells Fargo’s sales practices. A CFPB spokesman declined to comment on whether the office had received any OSHA referrals involving Wells sales abuses.


Darrell Whitman - a former OSHA investigator in the San Francisco office from 2010-2015 - was assigned to three of the five cases examined by Reuters from former Wells Fargo employees alleging retaliation for reporting improper sales tactics. Whitman said he only briefly dealt with Ponce de Leon’s 2011 case before it was transferred to another investigator, and he was instructed to close the two 2010 cases because they were slated to be transferred to a federal court.

Another investigator assigned at one point to Ponce de Leon’s case, Susan Kamlet, told Reuters the case sat in a stack of other files and that her manager controlled which cases had priority.

Now the former OSHA investigators are making their own claims of retaliation.

Whitman alleges he was fired for raising concerns about the agency’s mishandling of whistleblower complaints, and Kamlet says she was fired for supporting his accounts and for raising concerns about a particular case she was investigating.

Whitman has since filed a whistleblower complaint of his own with the Office of Special Counsel, an office that investigates retaliation against federal employees.

His complaint is still pending.

The Labor Department spokeswoman and the Office of Special Counsel declined to comment.

Reporting by Sarah N. Lynch; Editing by Soyoung Kim and Edward Tobin