According to a memo obtained by Bloomberg, the bank has detected activity that it says shows some employees defrauded the US Small Business Administration “by making false statements by asking for coronavirus relief funds for themselves. “. The abuse specifically involved the economic disaster loan program, Bloomberg reported.
EIDL funds came directly from the SBA. This is contrary to the government’s paycheck protection program, where the banks served as third parties.
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“We have terminated the employment of these people and will cooperate fully with law enforcement,” David Galloreese, chief human resources officer for Wells Fargo, said in the note. “These illegal actions were personal actions and do not involve our clients.”
A person familiar with the situation told ABC7 News that nearly 125 employees have been made redundant. The bank did not identify the dismissed employees, but Galloreese wrote in the note 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 isn’t the first bank to worry about the misuse of government stimulus funds. In September, JPMorgan Chase said it had identified misuse of COVID-19 relief funds by customers and was investigating whether some of the bank’s employees may have been involved.
The potentially illegal conduct “includes cases of clients misusing Paycheck Protection Program loans, unemployment benefits and other government programs,” according to a note obtained by ABC News.
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