Lessons From Another Prudential Scandal

For three months, Wells Fargo has reeled from scandal, hit by the revelation the bank’s employees created thousands of unauthorized accounts for unknowing customers.

But it now appears the scheme runs deeper, with bank employees signing up customers up for low-cost Prudential Financial Inc. life insurance they didn’t ask for. In a new wrongful-termination suit, three former managers in Prudential’s corporate-investigation division alleged they were fired for trying to bring attention internally to Wells Fargo’s conduct. Prudential claims the employees were terminated for nonretaliatory reasons.

Prudential hasn’t escaped the glare of challenging whistleblowers.

More than two decades ago, New Jersey lawyer Nancy Erika Smith represented a Prudential executive named Mark Jorgensen, who blew the whistle on the overvaluation of properties in real estate funds that were sold to institutional investors. Smith and her husband, Neil Mullin, run the whistleblower firm Smith Mullin.

After six months of fighting the accusations, in 1994, and after discrediting and firing Jorgensen, Prudential admitted the whistleblower was right all along. Prudential’s chairman and CEO would praise Jorgensen’s “courage and conviction” and offer to reinstate him. Jorgensen declined the offer and settled his retaliation case against Prudential for an undisclosed sum.

The National Law Journal on Tuesday caught up with Jorgensen’s husband-and-wife legal team to get their perspective on the latest whistleblower matter to come out of Prudential. The firm now is representing, with co-counsel, Wells Fargo customers who claim they were enrolled without consent in Prudential’s “MyTerm” insurance program.

The interview was edited for clarity and length.

NLJ: More than 20 years ago, you represented a whistleblower who alleged retaliation after flagging misconduct at Prudential. How did you react when you learned about the whistleblowers who brought issues with Wells Fargo’s sales practices to Prudential’s attention?

Smith: The first thing I said when I heard about the whistleblowers’ case and their being fired is Prudential has no institutional memory. It’s like Jorgensen’s case in that Jorgensen was blowing the whistle on serious fraud on the pubic. And like the whistleblowers today, he naively thought ‘Oh my god I better tell people.’ He thought one or two people made a mistake. Like the current whistleblowers, he was met with incredible hostility. He didn’t get fired right away. He filed a lawsuit, and he was at work, and literally nobody would sit with him in the cafeteria.

Thinking back on your experience with Jorgensen, what did you do to get him through that road to vindication? And what tips do you have for whistleblowers in a similar situation?

Smith: We’re a small law firm, and Neil and I are husband and wife. We became very, very close with the Jorgensens. We had dinner at their house. A lot of my clients don’t have my cellphone to call me 24/7. Mark Jorgensen did. People who are in extremely difficult settings become more than just our clients. I hear from Mark Jorgensen all the time. I see his Christmas pictures. I see his children and grandchildren. I know what they’re doing. We become almost like family. … You need to be more than just their lawyers to understand what they’re going through.

In some of my cases, I have had a current whistleblower talk to a former whistleblower who got through it. It’s almost like a little individual support group, where you sort of get a pep talk. Because you lose so much when you’re thrown out of your workplace in this kind of setting where memos go around, saying you can’t talk to so and so. … You have to establish a support network. What were the hardest parts about the Jorgensen case?

Smith: There were two days that were very, very, very difficult. One was the day that my client called me and said he was sitting alone in the cafeteria. And people who’d been his friends for many many years wouldn’t look at him or talk to him. He just couldn’t believe it. I talked to him on the phone while he ate his lunch alone.

I think the other really rough day was the day they fired him. That was a very interesting day. I was in court on another matter, and the judge in the Prudential case insisted that I come right away to his courtroom. And the Prudential lawyers were there, and they were waving around a Bloomberg story saying we’d talked to the press. The judge started questioning me.