Archive for fraud

Judge Dismisses Wells Fargo Class-action Lawsuit

A federal judge in California dismissed a class-action lawsuit brought against Wells Fargo by its shareholders. The plaintiffs claimed they had been defrauded when they bought Wells Fargo stock from Jan 1, 2012, through Aug 3, 2016. They sued the bank for misleading its shareholders about its deteriorating loan performance — and because it halted dividend payments during that same period. The investors in question were demanding a payout of $1 billion. The judge felt there was no evidence that anyone else had purchased stock during those three years and therefore dismissed the case with prejudice.

Wells Fargo Has Been Dealing with a $185 Million Fake Account Scandal

The bank has been fighting against a class-action lawsuit, which alleges that the company’s staff opened millions of fake accounts in customers’ names without their consent or knowledge.

Wells Fargo has admitted that it created millions of fake accounts but claims it did not intend to do so. On Friday, the bank announced that it would be dismissing the case filed by a dozen customers who claimed they were victims of fraud by Wells Fargo employees.

The reason? The judge decided that because these customers signed up for online banking services, they consented to have their information shared with Wells Fargo’s internal fraud department.

Judge Said Wells Fargo Customers Would Have to Take Their Case to Arbitration

In a decision that could have wide-ranging implications for other companies, U.S. District Judge William Alsup on Tuesday dismissed a class-action lawsuit against Wells Fargo, alleging that the bank used illegal sales practices to boost its financial results.

The ruling means that customers harmed by Wells Fargo’s alleged practices will not be able to pursue their claims in court. Instead, they will have to take their case to arbitration — a process that is less costly than going through the courts and which many consumers are unaware even exists.

Bottom Line

Even though the legal battle is far from over, this dismissal is good news for Wells Fargo. It means the judge agrees with Wells Fargo’s argument that the court does not have jurisdiction to hear its claims because Wells Fargo has fallen short of the minimum number of defendants required. But even if Wells Fargo is ultimately successful, it will have to re-file its lawsuit–and in some ways, its strategy going forward may have to change.

Easterday CFTC Cattle Fraud Lawsuit Case

Cody Allen Easterday might have a bit of room to breathe for a bit. Unlike what the Commodity Future’s Trading Corporation (CFTC) would prefer, Mr. Easterday will enjoy a respite from his civil litigation with the Corporation; the federal bankruptcy court effectively stopped any further action of the lawsuit pending Mr. Easterday’s current bankruptcy filing deliberation.

If Mr. Easterday’s name is unfamiliar, it becomes particularly notorious again in terms of association with the defrauding of Tyson Foods to the tune of $244 million. In that fraud case, which Mr. Easterday has pled guilty to, Tyson Foods was duped out of almost a quarter billion dollars for cattle care that never was provided because the cattle never existed. With regards to that criminal action, Mr. Easterday is facing up to 20 years in federal prison. However, that related sentencing is delayed pending the finalization of his Chapter 11 bankruptcy or May 10, 2022.

The CFTC had lined up among a handful of federal agencies, pursuing recovery from Mr. Easterday for his criminal activity, with the CFTC filing being late to the party and filed only a year prior, in March 2021. In that regard, the court determined that Mr. Easterday would be subject to a $30 million penalty for fraudulent securities activities and similar, in addition to his already existing restitution expected to Tyson Foods. The basis of the CFTC case hinged on Easterday racking up over $200 million in losing market cattle futures trades. That market pitfall, in turn, was the driver for Easterday’s fraudulent invoices to cover the losses.

Easterday positioned himself as a major cattle market player through to organizations, Easterday Farms and Easterday Ranches. Easterday purposefully misrepresented his values in his trades, stating he had more than sufficient cattle inventory to back his trades, particularly in the area of revenue from cattle sales. He did in fact have a real family operation in farming, but Easterday fabricated the buying of cattle and then feeding them, invoicing Tyson for the cost. Amazingly, the company paid the invoices without asking why.

In the bankruptcy liquidation, the bulk of Easterday’s holding will go to a holding company for the Church of Jesus Christ Latter-day Saints, auctioned off in June 2021. Among somewhere between 200 and almost 1,000 creditors, Tyson is at the top of the list arguing for some kind of recovery from Easterday’s holdings in bankruptcy. It’s a sad, cold ending for a family farm business started in 1958 and ruined by the market gambling of one person.