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.
It now appears the scheme may run deeper, and impact some customers who purchased life insurance policies through those same employees.
A fresh lawsuit alleges that bank employees signed up customers up for low-cost life insurance through Prudential Financial Inc., which they may not have asked for. The wrongful-termination suit was filed by three former managers in Prudential’s corporate-investigation who say they were fired for trying to bring attention internally to Wells Fargo’s conduct. Prudential claims the employees were terminated for nonretaliatory reasons.
This latest legal action also has spurred an investigation by insurance regulators in California and New Jersey. California Department of Insurance Commissioner Dave Jones has asked investigators to dig into all aspects of these allegations, including possible violations of California laws requiring persons transacting insurance to have an insurance license issued by the department.
“Investigators with the California Department of Insurance will investigate new allegations of fraud and misconduct made by former Prudential employees regarding Wells Fargo and its employees,” said Commissioner Jones. “Former Prudential employees who filed a whistleblower lawsuit allege that Wells Fargo signed up consumers for Prudential insurance policies without consumer permission much as Wells Fargo admitted its employees illegally signed up consumers for bank products without permission. We will also examine Prudential Insurance company’s practices in this regard.”
Prudential challenges 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.
On Tuesday, Smith and Mullin, a husband-and-wife legal team, spoke out about their latest whistleblower matter regarding 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.
What follows are excerpts from that interview.
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 (seen here at right): 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?