-- Two former Wells Fargo employees have filed a lawsuit against the bank related to the unauthorized accounts scandal that has engulfed the institution in controversy. The plaintiffs are seeking class-action status for the lawsuit.
The suit, filed on Sept. 22 in California Superior Court by former employees Alexander Polonsky and Brian Zaghi, seeks to represent employees or former employees who worked for the bank during the last 10 years and who, the suit alleges, were “either demoted, forced to resign, or terminated,” for not meeting “impossible” quotas the bank set as goals for employees to open accounts on behalf of customers.
The lawsuit, which is seeking at least $2.6 billion in damages, notes that Wells Fargo is incorporated in Delaware, but its principal place of business is San Francisco.
The two plaintiffs say they did not engage in any of the alleged misconduct -- referred to as “gaming” in the suit -- and were thus unable to achieve “impossible” quotas and in turn were “counseled, demoted and later terminated,” the suit alleges.
“In order to be able to perpetrate their fraudulent scam, Wells Fargo fired employees who did not meet their impossible quotas,” the suit said.
The suit alleges that the bank set a sales goals for employees that expected them to open 10 accounts per day and work to ensure that every existing customer had eight accounts to their name.
In a statement today in response to the lawsuit, Wells Fargo officials said they "disagree with the allegations in the complaint and will vigorously defend against the misrepresentations it contains about Wells Fargo and all of the Wells Fargo team members whose careers have been built on doing the right thing by our customers every day."
"Wells Fargo works hard to foster a culture that is centered on doing what is right for our customers and exhibiting high ethical standards and integrity, and the vast majority of our team members serve our customers’ best interests every day in every interaction," the statement added.
The quotas, or sales goals, at the heart of the suit, have been central to the scandal that has rocked the bank since it was revealed on Sept. 8.
The Consumer Financial Protection Bureau, one of a handful of regulators that fined the bank a combined $185 million on Sept. 8, said at the time that the bank implemented the goals because it “sought to distinguish itself in the marketplace as a leader in 'cross-selling' banking products and services to its existing customers.”
In turn, according to the Los Angeles City Attorney, another regulator that imposed part of the fine, employees were opening and funding accounts on customers’ behalf without their knowledge or consent, in order to "satisfy sales goals and earn financial rewards under the bank's incentive-compensation program."
Since then, the bank has promised to end the sales goals program, saying on Sept. 13 that the program would cease to exist effective Jan. 1, 2017.
The lawsuit filed by the former employees alleges that “Wells Fargo’s fraudulent scam which was set at the top and directed toward the bottom was to squeeze employees to the breaking point so they would cheat customers so that the CEO could drive up the value of Wells Fargo stock and put hundreds of millions of dollars in his own pocket.”
“Wells Fargo could then place the blame on thousands of $12 an hour employees who were just trying to meet cross-sell quotas that made the CEO rich,” the suit alleges.
The lawsuit filed by the former employees follows one filed on Sept. 19 by three customers who say they were affected by the alleged misconduct.
“You should give back the money that you gained while this scam was going on, and you should be criminally investigated by the [Department of Justice] and the [Securities and Exchange Commission]," Warren said during the tense Sept. 20 hearing.