Wells Fargo saw a federal appeals court Thursday (Sept. 7) order a federal district judge to take another look at a whistleblower lawsuit lodged against the bank.
According to a news report by Reuters, the lawsuit is by two ex-employees who contend they were let go for trying to report misdeeds by lenders that Wells Fargo later acquired. The 2nd U.S. Circuit Court of Appeals sent it back to the lower court for review.
The case was launched by Robert Kraus, a former Wachovia controller, and Paul Bishop, a former World Savings Bank mortgage salesman. The two said employers were hiding mortgage improprieties and billions of dollars of losses, which enabled the lenders and Wells Fargo to certify that they were compliant with laws. That, in turn, enabled them to borrow or get aid from the Federal Reserve at rates that were favorable to the bank and the lenders. The whistleblower lawsuit predates the fake account scandal and other woes that are plaguing the bank.
“We look forward to stating our legal position with the district court,” Wells Fargo spokeswoman Elise Wilkinson told Reuters. The lawsuit was thrown out in 2015 and that decision was upheld by a federal appeals court in May of 2016, reported Reuters.
But that all changed in June of last year, when the Supreme Court ruled in a separate case that some courts made it too difficult to pursue cases of false claims and said whistleblowers can sue over misinformation that impacted government payment decisions, noted the report.
In an interview with Reuters, Tejinder Singh, a partner at Goldstein & Russell representing the whistleblowers, said this is a warning shot to companies. “Going forward, companies will likely feel far less safe taking undue advantage of government programs, and when they do transgress, it will be easier for whistleblowers and the government itself to obtain redress,” he said.