LOS ANGELES - Roughly 100 to 125 Wells Fargo employees have been terminated after they allegedly fraudulently obtained coronavirus relief funds intended for small businesses, according to a source familiar with the situation.
In a memo released by David Galloreese, the company’s head of human resources, the employees allegedly “defrauded the U.S. Small Business Administration (SBA) by making false representations in applying for coronavirus relief funds for themselves through the Economic Injury Disaster Loan program, which is administered directly through the SBA.”
“We have terminated the employment of those individuals and will cooperate fully with law enforcement. These wrongful actions were personal actions, and do not involve our customers,” the memo read.
“We have zero tolerance for fraudulent behavior and will continue to look into these matters. If we identify additional wrongdoing by employees, we will take appropriate action,“ wrote Galloreese.
The SBA did not immediately respond to a request for comment.
Since the onset of the coronavirus pandemic, fraud has been a persistent issue in the economic recovery aid package aimed at helping various businesses struggling to stay afloat during the crisis.
In July, a report from the Office of Inspector General of the SBA detailed complaints of thousands of instances involving suspected fraud from financial institutions apparently receiving economic assistance from the Coronavirus Preparedness and Response Supplemental Appropriations Act and the Paycheck Protection Program and Health Care Enhancement Act.
A person wears a protective face mask outside Wells Fargo bank in Union Square as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on September 24, 2020 in New York City.
The report, titled, “Serious Concerns of Potential Fraud in the Economic Injury Disaster Loan Program Pertaining to the Response to COVID-19,” said that the SBA inspector general’s office has received complaints of more than 5,000 instances in which suspected fraudulent activity has taken advantage of funds distributed from aid programs.
Several others have been arrested for fraudulent activity surrounding loans intended for businesses hurt due to the ongoing coronavirus pandemic.
A Florida man was arrested on July 27 after federal authorities said he used $3.9 million in PPP loans to purchase a Lamborghini sports car for himself.
Earlier this month, A North Carolina man was charged with fraudulently seeking over $6 million in PPP loans and receiving more than $1.7 million in benefits for companies named after “Game of Thrones” characters, the U.S. Department of Justice said.
Tristan Bishop Pan, 38, of Garner, North Carolina was charged with wire fraud, bank fraud and engaging in unlawful monetary transactions.
The money that Pan was seeking was from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted on March 29. Some of the funds from the act were intended to provide emergency financial assistance to millions of Americans who have been negatively impacted by the economic effects of the COVID-19 pandemic.
In April, Congress authorized over $300 billion in additional PPP funding to businesses impacted by the ongoing pandemic.