Sun, Nov 24, 2013 - Page 13 News List

Wells Fargo’s Lofrano was ‘critical’ to fraud: US

Bloomberg

The US government claimed in a filing in Manhattan federal court that Wells Fargo & Co vice president Kurt Lofrano played a “critical role” in helping the bank hide fraudulent home loans that cost the country US$189 million.

Lawyers for the US on Friday asked a judge to let it add Lofrano to its fraud suit claiming Wells Fargo was reckless in underwriting mortgage loans and failed to report fraudulent and noncompliant loans to the US Department of Housing and Urban Development (HUD). The fraud forced the Federal Housing Administration (FHA) to pay US$189 million in insurance claims on defaulted loans, the US said.

Lofrano, who was in charge of self-reporting for Wells Fargo, “played a critical role in the bank’s decision not to report to HUD, as required, more than six thousand materially defective loans that Wells Fargo had falsely certified to HUD for FHA insurance,” the government said in the filing.

The US sued Wells Fargo last year under the Federal False Claims Act and the Financial Institutions Reform, Reinvestment and Recovery Act of 1989. The government said it notified Wells Fargo on Nov. 1 that it planned to add Lofrano to the case.

“Wells Fargo is very disappointed that the government is seeking to add Mr Lofrano as a defendant in this civil case,” bank spokesman Ancel Martinez said in an e-mail on Friday. ‘‘Wells Fargo has not been presented with any facts or circumstances warranting this action nor has the government explained why it is even remotely appropriate to include Mr Lofrano more than a year after first filing suit.’’

Martinez said Lofrano is a ‘‘well-respected team member’’ and that Wells Fargo stands by him ‘‘unequivocally.’’ He said the bank has denied all allegations of wrongdoing.

Lofrano worked as Wells Fargo’s vice president in charge of quality control from 2002 through 2010, according to the government. He is still with the bank, Martinez said on Friday.

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