Fraud at Wells Fargo

Considering large corporate misdeeds have emerged throughout the past years. Thus, large corporations as Wells Fargo placed beneath the telescopic to guarantee they are not functioning fraudulently. However, Wells Fargo under investigation for the millions of accounts opened that lacks customer knowledge. Around 5,300 employees dismissed for generating over two million of phony accounts without customers’ consent. John Stumpf, the CEO of Wells Fargo had to step down due to his illegal banking practices that cost the company millions in fines. Besides, the employees opened 1.

5 million fraudulent bank accounts and applied for thousands of credit cards without customer’s knowledge. Additionally, “the phony accounts earned the bank unwarranted fees and allowed Wells Fargo employees to boost their sales figures and make more money.” (

These discrepancies have occurred due to Wells Fargo’s universal allocation for an opening, or the cross-selling of services, on new accounts by employees. This allocation caused pressure on the employees that leads to unethical behavior.

Still, it revealed that encounter the provision employees started establishing fake accounts for customers. So Far, “the way it worked was that employees moved funds from customers’ existing accounts into newly-created ones without the knowledge or consent, the regulator says.” ( This risk should have enlightened the employees that it’s illegal and eventually they would get caught. Especially, an act in a financial institution that can result in federal offense. Being naive to their deliberately behavior that doing such infringement would cause an overdraft to the accounts.

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Particularly the customers would not be aware to make payments.

Mahbier 2

Since, Wells Fargo has committed fraud, using the fraud triangle will assist us in understanding the rationale behind the criminality. Starting with the first elements, Opportunity to commit and conceal the fraud. Management control lost when opening customer accounts without the authorization of upper management. Subsequently, bank employees authorized to open accounts for relatives. As stated, “one of the opportunities to commit fraud that Auditor should consider include “significant related-party transaction.” (Johnstone, Grammerling, Rittenberg 46) If the internal auditor had recognized this opportunity that the employees were opening accounts for family and friends then a thorough examination could begin. Yet, internal auditors may perhaps impede their attempts to investigate the possibilities that were material to the financial statements.

Subsequently, the next element that applied to Wells Fargo is the incentive or pressure to commit fraud. Wells Fargo, potential leadership and employees pressured due to meeting a day-to-day sales goal, obtain higher bonuses, maintaining their jobs and benefits. Therefore, bank employees expected to open eight new customer accounts each day and if not, they would dismiss. On a regular basis, the manager makes sure employees are maintaining daily quotas. In turn, “former employees Alexander Polonsky and Brian Zaghi, seek to represent employees or former employees due to the impossible quotas the bank set as goals for employees.” (

Moreover, the rationalization, the mindset of the fraudster to justify committing the fraud.

This element is an important part of most frauds since the person use justification as a means to their misconduct. They say everyone is doing it, such as upper-level employees.

The new Mahbier 3 quotas are impractical, and they can’t meet them by selling a new account to customers. The given pressure that the employees received from the manager shows that they did not care how the account generated rather create one. Yet, their attitude deepens, “this is a one-time thing to get us through the current crisis and survive until things get better.” (Johnstone, Grammerling, Rittenberg 46) Such belief is naive and not being caught prompts a desire to persist. Moreover, John Stumpf stated, “we never directed nor wanted our employees, whom we refer to as team members, to provide products and services to customers they did not want or need.” ( As he remains furthermore to rationalize the dishonesty, “wrongful sales practice behavior goes entirely against our values, ethics, and culture and runs counter to our business strategy of helping our customers succeed financially and deepening our relationship with those customers.” (

Therefore, in the future Auditors should follow the corporate governance system. In order to avoid future fraud at Wells Fargo. As for corporate governance, the stockholders and creditors would utilize control and demand accountability for the funds entrusted to the company. Wayne Guay sees a better solution: “If we’re going to try to think about how to prevent these kinds of things from happening in the future, to my mind that’s the place to focus (executive compensation and corporate governance structures).” ( However, the board of directors ought to require supervision of the company’s actions and responsibility to shareholders. They need better review controls to detect false actions and better segregation of duties. Hence a stronger internal control would have meant that they couldn’t engage in this behavior.

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Fraud at Wells Fargo. (2022, Jun 24). Retrieved from

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