Former Wells Fargo executive Carrie Tolstedt does not deserve a prison sentence for her role in obstructing a bank examination, but she should serve three years of probation, her attorneys say.
In a court memo filed Thursday — just one day before Tolstedt, the former head of retail banking at the San Francisco-based bank, is scheduled to be sentenced in Los Angeles — her lawyers argued that a noncustodial sentence "would appropriately account for the fact that the conduct underlying the plea is an exception" to Tolstedt's "lifelong history of good character."
Three years of probation, including six months of home confinement, would allow Tolstedt, 63,
Tolstedt "already has endured punishment for her offense," including fines and penalties of more than $21 million, clawbacks totaling $67 million and constant public humiliation, the memo said.
"Further punishment in the form of a custodial sentence is not warranted," it said.
The recommendation from Tolstedt's attorneys matches that of the U.S. Probation Office, which advises federal courts based on U.S. Sentencing Commission guidelines. It is less severe than
In a Sept. 1 court filing, prosecutors said that imprisonment for one year is a better option than probation alone because it would not only reflect the seriousness of the crime, but it would also deter others from committing white-collar crime and promote a greater respect for the law.
Tolstedt is the only former Wells Fargo executive to be charged criminally in connection with the phony-accounts scandal, which followed several years of misconduct regarding sales practices.
Before Tolstedt's departure from Wells Fargo in 2016, she oversaw the company's retail division, which meant that she was in charge of sales goals for branch employees. Some employees felt so pressured to meet their sales goals that they cheated for years by opening millions of fake customer accounts, many of which were unused, prosecutors have said.
In a deal struck with the Justice Department in March, Tolstedt
In a separate consent order with the Office of the Comptroller of the Currency, Tolstedt
The 52-page sentencing memo filed by Tolstedt's attorneys describe her as a native of Kimball, Nebraska, whose humble beginnings led her to find unexpected success in the banking industry.
She started in banking as a wire clerk and achieved "success beyond what she ever dreamed as a young girl," rising to become one of the top leaders at Wells Fargo, the memo said. She worked tirelessly, often to the point of exhaustion, but stuck to her values, the memo said.
A big part of the argument for probation over imprisonment is the role she plays as caregiver for her 86-year-old mother. Tolstedt handles her mother's financial and health decisions. Probation would allow her to "continue her critical service" as the key caregiver, her attorneys said.
In addition, she supports her elderly in-laws, serves as a mentor to younger family members and friends' children and continues her lifelong role as a volunteer, which began as a candy striper at a skilled nursing facility and persists today during two-hour shifts at a food bank, the memo said.
In recent years, as a result of "losing her job in a very public fashion" and subsequent media attention, she "has faced significant financial and reputational consequences," the memo said.
"Among the media and the public who do not know her, she stands as the villain at the center of Wells Fargo's sales practices troubles," the memo said. "She has been forced to live in a state of constant personal humiliation, knowing that anyone she meets for the first time may not want to meet her for a second time after they type her (uncommon) name into Google."
Bankers, not banks, commit crimes, so "the only way to actually punish and deter crime is to meaningfully and personally punish those bankers, especially officers and executives like Tolstedt," Dennis Kelleher, the president and CEO of the nonprofit Better Markets, said in a press release issued Thursday noting Tolstedt's upcoming sentencing.
"Clawing back all their compensation, barring them from the industry and, when appropriate, sending them to prison simply has to be the expectation if not the norm for bankers breaking the law," Kelleher said. "That is the only way to actually deter corporate white-collar lawbreaking in the financial industry and end the crime spree on Wall Street.
But "while prosecuting Tolstedt is better than nothing," it may have limited impact, he said.
"She is just one person out of dozens if not hundreds of Wells Fargo executives, officers, board members and others who engaged in, were aware of or grossly deficient in connection with the … conduct," he said. "It is also noteworthy that the one person prosecuted out of all those possible targets just happened to be the most high-ranking woman."
"Such a prosecution, while important and merited, is likely to be viewed as a one-off that will not deter anyone, regardless of the sentence she receives," he added.
