Former Wells Fargo executive, Carrie L. Tolstedt, is set to be sentenced in federal court on Friday for her involvement in the bank's fake-account scandal. The scandal led to significant fines and numerous layoffs.
Federal prosecutors have recommended a 12-month sentence for Tolstedt, followed by one year of probation. However, Tolstedt's lawyers are requesting three years of probation.
Jail Time for Tolstedt
While other former Wells Fargo executives, including the former Chief Executive, John Stumpf, have been permanently banned from the banking industry, Tolstedt is the first executive to face potential prison time. She agreed to a maximum sentence of 16 months in March when she pleaded guilty to obstructing a government examination into the bank's sales misconduct.
The Sentencing Hearing
Tolstedt is scheduled to appear before Judge Josephine L. Staton in the U.S. District Court for the Central District of California, in Los Angeles. Government prosecutors argue that a 16-month sentence would be at the high end of the guideline range for the obstruction offense.
Retiring amidst Scandal
Tolstedt retired in 2016 around the time of Wells Fargo's fake-account scandal. In May, she settled allegations that she misled investors about the success of Wells Fargo's Community Bank by paying a $3 million civil penalty to the Securities and Exchange Commission. Additionally, the Office of the Comptroller of the Currency assessed her a $17 million civil penalty for her involvement in "systemic sales practices misconduct".
Consequences of the Scandal
As a result of the scandal, Wells Fargo clawed back $65 million from Tolstedt's compensation. The scandal also led to the removal of Stumpf as CEO, hefty fines for the company, and the termination of thousands of employees.