A qui tam lawsuit filed against Wells Fargo by two whistleblowers has been unsealed. The suit claims that Wachovia, which was bought by Wells Fargo in 2008, defrauded the federal government by accepting billions from federal programs while engaging in and concealing fraudulent banking practices, including falsifying certifications of the bank's financial statements. Wells Fargo is accused of not being upfront about the fraud inherited from Wachovia.
The lawsuit, which was initially filed in 2011, was brought under the False Claims Act, which allows for whistleblowers to receive a percentage of the damages awarded as a result of the claim. The Justice Department has the option of intervening in qui tam lawsuits, but the government declined to join the suit in this case. Instead, the government said the plaintiffs could continue the case independently. If damages are awarded, the whistleblowers could receive up to 30 percent.
Specifically, the suit calls on the government to "do right by the U.S. taxpayer and recover monies from Wachovia and Wells Fargo under the U.S. False Claims Act for having bailed them out under outrageously false and fraudulent pretenses."
One of the plaintiffs was a Wachovia controller whose job it was to identify problems in mortgage-backed securities. However, according to the lawsuit, when he notified his superiors of inappropriate valuations, no action was taken. He eventually lost his job and filed suit in 2010, but in 2011 his complaint was dismissed by a judge because the former controller had come to a severance agreement with Wachovia.
The recently unsealed suit builds on the complaint that was dismissed in 2011.
A news article has more on the long list of allegations against Wachovia and Wells Fargo.
To learn more about the False Claims Act, FIRREA claims, Dodd-Frank, qui tam provisions and other legal matters important to whistleblowers, please visit our Whistleblower Claims overview.