Wells Fargo Fires More Than 100 Employees For Availing Coronavirus Aid Wrongfully

Financial services company Wells Fargo sacked more than 100 employees who allegedly misrepresented themselves to collect coronavirus relief funds meant for small businesses, Bloomberg reported.

The employees made false representations and applied for funds through the Economic Injury Disaster Loan (EDIL) program, a scheme by the U.S. Small Business Administration (SBA) to support businesses hit by the pandemic. David Galloreese, head of human resources at Well Fargo, in a memo to employees said, they may have ‘defrauded the SBA,’ as per the report.

“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,” Galloreese said in the memo, according to Bloomberg.

It is not illegal for employees of larger companies to apply for this aid for their legitimate side businesses. Wells Fargo’s investigation, however, claims to have found signs of abuse.

JPMorgan and Chase (JPM) had also started investigating in September the potential abuse of several relief programs including the Paycheck Protection Program (PPP), the report said. Many individuals have been charged with misusing funds.

The EDIL was launched during the pandemic to provide economic relief to small businesses and non-profit organizations experiencing a temporary loss of revenue. It can offer loans up to $2 million, but a New York Times report suggests that the amount has been capped at $15,000 per borrower. As of Sept. 14, SBA had approved over 3.5 million loans under this program.

Other relief programs like PPP provide money to applicants through intermediaries. For EDIL, the money comes directly from SBA, which has asked banks to be on the lookout for fraudulent transactions. The concern stems from the fact that the advance given out to successful applicants, which can be as much as $10,000, does not have to be repaid.

The government body itself has identified aid worth over $250 million to ineligible recipients and as much as $45.6 million in duplicate payments, according to the report.

Wells Fargo has been going through tough times, posting a loss of $2.4 billion in the second quarter. It has also been slashing its workforce to cut costs and survive during the pandemic.