Articles Posted in Bank whistleblower

Howard Wilkinson, the mysterious  former employee of Danske Bank who uncovered $234 BILLION in money laundering, will be featured on “60 Minutes” this Sunday at 7:00 p.m. ET on CBS. This is his first major statement made in the U.S. Wilkinson discovered the scheme while working for the bank’s branch in Tallinn Estonia. He is represented by Kohn, Kohn & Colaptino. Wilkinson’s job was to run the market trading side of the bank for the Baltic region. A colleague asked him for some help getting information about a customer registered in the United Kingdom as Lantana Trade LLP. He checked the firm’s assets and income on the British business registry. When he did so, Lantana was listed as dormant. However, he saw by looking at their account at the bank, transactions worth multiple millions of dollars a day. As this is considered the largest money laundering scheme ever uncovered, there has been intense interest in it. Given the players involved including various persons in Russia, the story is expected to be the basis of a major Hollywood film.

For his part, Wilkinson, a British citizen, did not wish to have his name become public. The suspicious payments flowing through the bank came from Russia through Danske to the West. Wilkinson was dragged into the spotlight after an Estonian newspaper published his name in September.

In a press release following the leak of Mr. Wilkinson’s identity, his counsel  Stephen Kohn, made the following statement:

According to Reuters, a newly filed lawsuit alleges that four years before the bank ended its scamming auto insurance program,  Wells Fargo executives were specifically warned that the bank’s fraudulent car insurance program could be overcharging customers. According to the report, a complaint released from seal this week said that executives were briefed in 2012 about the auto insurance program which was ended in 2016.  which resulted in 800,000 people being forced to buy insurance they didn’t need.  The bank called it “collateral protection insurance.” Reuters reports that company execs were warned that the plan could be overcharging customers four years before the bank ended the program in September 2016.

The class action lawsuit was filed in August of this year in the Central District of California but was kept under seal at the request of Wells Fargo until some details were released this week. It is unusual for such a case to be sealed by the court and unclear as to why this was kept from the public The plaintiffs in the suit are seeking reimbursement for wrongful charges and say that Wells Fargo pressured drivers with poor credit into insurance policies more often than well-off customers.

In television commercials, Wells Fargo says that “we’re sorry we screwed up.”

Attorneys for Howard Wilkinson, the whistleblower who discovered and revealed the 235 plus billion dollars of Russian money laundering scandal at Denmark’s Danske Bank are demanding that steps be taken to protect him from retaliation. An Estonian newspaper last week identified him as the whistleblower an act which his lawyer say was illegal. Both Estonia and Denmark have signed international treaties to support whistleblowers and protect their identities. In addition, his counsel is fearful that harm might befall Mr. Wilkinson from the Russian entities which participated in the money laundering.

Danske Bank has admitted, after an internal investigation, that some 200 billion euros flowing through its accounts were suspicious. Its CEO resigned.  It is still not presently clear who in Russia moved the $235 Billion through the bank. Denmark’s financial regulator reopened a probe that it had closed in May and the top prosecution authority opened a criminal investigation.

The Danish paper Berlingske, which received an email from him after he was named in Estonian media, reports that Wilkinson is a British citizen who headed Danske Bank’s trading unit in the Baltics.

The whistleblower who revealed the massive $200 Billion money laundering scheme from Russia through the Danish Bank Danske Bank is Howard Wilkinson, head of markets at Danske in Estonia from 2006 to 2014, according to press reports. He apparently warned manages as early as 2013 that the bank had breached numerous regulatory requirements and had a near total process failure.  The bank did not begin its own investigation until 2017.

Danske Bank’s CEO resigned last week after an inquiry revealed that 200 billion euros ($235 billion) of payments, many of which the bank said were suspicious, had been moved through its Estonian branch over a period of eight years.“I can confirm that I worked as Head of Markets in the Baltics based in Tallinn from 2007 until my last working day in April 2014, just four months after my first whistleblower report to the top management in Copenhagen,” a newspaper reported Wilkinson as saying.

The case, which has triggered regulatory, political and financial shockwaves, is a risk for Denmark’s entire financial sector, the Systemic Risk Council, which monitors threats to the stability of the country’s financial system, said.

The Royal Bank of Scotland will pay a $4.9 billion settlement to end the federal civil claims that RBS misled investors in the underwriting and issuing of residential mortgage-backed securities (RMBS) between 2005 and 2008. It is the largest penalty under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which authorizes the federal government to seek civil penalties against financial institutions that violate various predicate criminal offenses, including wire and mail fraud.

The wrongdoing asserted includes using contemporaneous calls and emails of RBS executives – how RBS routinely made misrepresentations to investors about significant risks it failed to disclose about its RMBS  and also alleged that;

  • RBS failed to disclose systemic problems with originators’ loan underwriting. RBS’s reviews of loans backing its RMBS (known as “due diligence”) confirmed that loan originators had failed to follow their own underwriting procedures, and that their procedures were ineffective at preventing risky loans from being made. As a result, RBS routinely found that borrowers for the loans in its RMBS did not have the ability to repay and that appraisals for the properties guaranteeing the loans had materially inflated the property values. RBS never disclosed that these material risks both existed and increased the likelihood that loans in its RMBS would default.

Wells Fargo says the computer error impacted certain accounts undergoing foreclosure between April 2010 and October 2015 and that around 625 customers were incorrectly denied a loan modification or were not offered one even though they were qualified, according to the filing. In about 400 cases, the customers underwent foreclosures. Wells Fargo says it is “very sorry that this error occurred” .

The information was released by the on August 3, in a routine regulatory report which said that a review of the bank’s internal systems had revealed a calculation error affecting hundreds of  homeowners who had applied for mortgage modifications between April 2010 and October 2015.  Wells Fargo’s underwriting tool had apparently improperly miscalculated whether homeowners were eligible for the Home Affordable Modification Program or other government programs designed to help people remain in their homes despite difficulty making payments. Because of the glitch, around 625 Wells Fargo customers either were improperly denied mortgage modifications or were not informed they could qualify to have their loan terms modified.

Wells Fargo says it has set aside $8 million to compensate these victims.  The Home Affordable Modification Program helps families modify their mortgages in cases of documented financial hardship. It allows homeowners to reduce their monthly mortgage payments reduced by a median of more than $530 through interest rate adjustments, loan forgiveness, forbearance, and extended repayment terms.

Wells Fargo has agreed to pay over $1 Billion in fines and penalties for fraudulently creating accounts without customers’ authorizations; forcing customers to pay fees the bank should have covered requiring borrowers to pay for insurance policies they did not need and in some cases pushing them into default. The bank paid $185  million to federal regulators in 2016.The Federal Reserve said that Wells Fargo had engaged in widespread consumer abuses and other compliance breakdowns. In addition, in March Wells Fargo reported to federal agencies that it has been asked about its wealth-management business which may have directed customers to inappropriate investments which benefitted the bank.

The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency are the regulators levying the penalty. Notably, the bureau is led by Mick Mulvaney, who wants the agency to take a gentler towards banks. Some analysts wonder whether the bank has been punished enough to alter its culture.Wells Fargo can afford the $1 Billion sanction as it earned a profit of $22.2 billion last year and $5.9 billion in this year’s first quarter.

Jeffrey A. Newman represents whistleblowers

A whistleblower who revealed that JP Morgan Chase didn’t inform wealthy investors about investment conflicts of interest will receive a record reward of $30 million. JP Morgan agreed to pay $367 million for improperly failing to disclose that it was steering asset management customers to investments that would be profitable for the bank. Of the Commodity Futures Trading Commission (CFTC) portion, $30 million will go to one of several whistleblower applicants.

Under the Dodd-Frank Act of 2010, the SEC and CFTC operate separate whistleblower programs. Each can provide claimans between 10 percent and 30 percent of recoveries based on the value of the information provided.

The Securities and Exchange Commission said that starting in 2007, JPMorgan developed basic investment portfolios, in a program known as the Chase Strategic Portfolio, that automatically invested a significant portion of any money in proprietary JPMorgan mutual funds. The company developed a similar program for wealthier clients in JPMorgan’s private bank, known as the JPMorgan Investment Portfolio, which funneled money into the bank’s own hedge funds. JPMorgan also gave a preference to outside hedge fund managers who were willing to pay placement fees — or retrocessions — to JPMorgan. In some cases, regulators said, the clients were put into products with higher fees, which earned JPMorgan more money, even when the same JPMorgan product was available for a lower fee.