According to an employee memo obtained by Bloomberg, the bank found the activity believed to show that some employees cheated the US Small Business Administration “by making false representations in applying for aid funds to coronavirus for themselves. ” The Economic Injury Disaster Loan program was particularly involved in abuse, Bloomberg reported.
EIDL funds come directly from the SBA. That is in contrast to the government’s Paycheck Protection Program where banks serve as a third party.
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“We have completed the work of those individuals and will fully cooperate with law enforcement,”; David Galloreese, head of human rights at Wells Fargo, said in a memo. “These wrong actions are personal action, and do not involve our customers.”
Someone familiar with the situation told ABC7 News that nearly 125 employees had been laid off. The bank did not identify the employees who were fired, but Galloreese wrote in a memo that no customers were involved in the alleged fraud.
He added that the company will further investigate the issue and fully cooperate with law enforcement.
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Wells Fargo is not the first bank to have concerns about misuse of government stimulus funds. In September, JPMorgan Chase said it had identified misuse of COVID-19 customer assistance funds, and was investigating whether some of the bank’s employees might be involved.
Potential illegal behavior “includes opportunities for customers to misuse Paycheck Protection Program loans, unemployment benefits and other government programs,” according to a memo obtained by ABC News.
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