Controversies
Michael Serricchio, a broker for Prudential Securities, was called to active duty in the Air Force reserve, but was not offered his old position back after his military stint was over. He sued Wachovia, who had purchased Prudential. A jury found that Wachovia had breached the Uniformed Services Employment and Re-employment Rights Act by intentionally making Serricchio an offer that they knew that he would reject.
A May 2007 New York Times article described Wachovia's negligence in screening or taking action against companies connected to identity theft. These companies used stolen identities to remove funds from personal Wachovia bank accounts via unsigned checks. The article goes on to say "In all, Wachovia accepted $142 million of unsigned checks from companies that made unauthorized withdrawals from thousands of accounts, federal prosecutors say. Wachovia collected millions of dollars in fees from those companies, even as it failed to act on warnings, according to records." Furthermore, the article adds "In a lawsuit filed last year, the United States attorney in Philadelphia said Wachovia received thousands of warnings that it was processing fraudulent checks, but ignored them."
On April 25, 2008, Wachovia agreed to pay up to $144 million to end the investigation without admitting wrongdoing. The investigation found that Wachovia had failed to conduct suitable due diligence, and that it would have discovered the thefts if it had followed normal procedures. The penalty is one of the largest ever demanded by the Office of the Comptroller of the Currency.
In April 2008 Wachovia was also investigated by United States federal prosecutors as part of a probe into drug money laundering by Mexican and Colombian money-transferring firms. The investigation of the alleged laundering also included other large U.S. banks.
Wells Fargo has since admitted that its Wachovia unit was involved in money laundering for drug traffickers. It allowed money to be transferred in and out of casas de cambio, without proper due diligence, in violation of the Bank Secrecy Act. In March 2010 Wachovia agreed to pay a $160 million dollar fine for involvement in Mexican drug cartel money laundering that could total up to $420 billion dollars. Said Jeffrey Sloman, the chief US prosecutor in the case, "Wachovia's blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations."
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