Wells Fargo fraud charges escalate to sham insurance policies

When Wells Fargo admitted a few months ago that thousands of its employees had created as many as two million unauthorized accounts for its customers, alarm bells went off at Prudential, one of the nation's biggest insurance firms.

Wells Fargo has a partnership with Prudential to sell a low-cost life insurance policy to the bank's retail customers. After news of the Wells Fargo settlement in September, Prudential ordered an internal review of its dealings with the bank, to make sure nothing was amiss with the joint endeavor. A lot was amiss. According to three former managers in Prudential's corporate investigation division, Wells Fargo employees appeared to have signed up bank customers for Prudential insurance without the customers' knowledge or permission. In some cases, they even arranged for monthly premium fees to be withdrawn from their customers' accounts.

When investigators reviewed tapes of calls to Prudential's customer service line, they found complaints from Wells Fargo customers about policies they did not remember buying. Many of the customers did not speak Englishand needed a Spanish interpreter, the three plaintiffs said. 

“This definitely was the same kind of conduct that Wells was committing, but through Prudential," said one of the three whistle-blowers, Julie Han Broderick, an attorney and former co-head of Prudential’s corporate investigations division, which has about 30 employees.  Ms. Broderick and two of her colleagues, Darron Smith and Thomas Schreck, filed a wrongful termination suit against Prudential on Tuesday. They say they were fired in November for trying to escalate attention internally to their discoveries about conduct at Wells Fargo. Prudential said on Friday that the three were fired for “appropriate and legitimate reasons” that had nothing to do with Wells Fargo. 

A Prudential spokesman, Scot Hoffman, says the company continues to investigate the policies sold through Wells Fargo. Once it is finished, Prudential anticipates “reviewing this matter with our regulators,” he said.

Since bankers are not licensed to sell insurance, Wells Fargo employees were encouraged, without discussing specific terms, to steer customers to either a self-service kiosk in bank branches or a website on which they could sign up for MyTerm, a policy that does not require applicants to take a medical exam. Bankers who sold the product got credit toward their steep quarterly sales quotas.

Some Wells Fargo bankers appear to have signed people up for MyTerm without telling them, according to the three whistle-blowers from Prudential. In some cases, bankers opened MyTerm policies, closed them after a month or two and then promptly reopened them to bolster their sales numbers, the evidence in the lawsuit suggests. Wells Fargo said in a statement on Friday that it was investigating any alleged improprieties that were brought to its attention.

“As we have consistently reinforced, if we identify any instances where a customer received a product they didn’t ask for, we will make it right,” said Mary Eshet, a Wells Fargo spokeswoman.

© 2016 The New York Times News Service