Wells Fargo hopes to minimize damage to its public image over an exec's alleged use of a surrendered home. Its rules of conduct prohibit employees from 'personal use of properties' held by the bank.
Wells Fargo & Co., seeking to distance itself from a company executive's alleged personal use of a $12-million beachfront Malibu home owned by the bank, said Friday that it would "take decisive action" against any employee "who may have violated Wells Fargo's policies."
The bank's strongly worded statement came as it faced a potentially embarrassing public relations imbroglio in the aftermath of reports that one of its senior executives had lived in the home that was surrendered by victims of Bernard L. Madoff's massive fraud.
"I almost fell out of my chair" when reading about the Wells Fargo allegations Friday morning, said Jerry Swerling, director of public relations studies at USC's Annenberg School for Communication. "That these folks could think this would not somehow become public astonishes me."
The Times reported this week that Cheronda Guyton, a Wells Fargo senior vice president responsible for foreclosed commercial properties, allegedly spent weekends this summer at the home with her family. The paper cited eyewitness reports from residents of the exclusive Malibu Colony gated community.
Guyton has not responded to phone calls or e-mails seeking comment.
In a statement, the bank said that its rules of conduct prohibited employees from "personal use of properties held by Wells Fargo." The company reiterated Friday that it had launched a full investigation into the allegations.
The San Francisco bank also said it regretted "the disruption to the neighboring property owners since these allegations were made."
The property was transferred to Wells Fargo in May by the home's then-owners, bank customers who were said to have suffered heavy losses in Madoff's Ponzi scheme.
Neighbors recounted a summer evening during which guests arriving for a party at the plush modern home were ferried on a dinghy from a yacht offshore.
The use of the house, Swerling said, suggests that Wells Fargo has failed to ensure that executives "make concern for the company's reputation an organization-wide priority. They need to ask themselves, 'Is this consistent with who we want to be?' If it's not consistent, don't do it."
Kevin Stein, associate director of the California Reinvestment Coalition, an advocacy group for low-income tenants, said the executive's alleged use of the Malibu house looked especially bad inasmuch as Wells Fargo and other banks often swiftly evicted renters from foreclosed houses to speed their resale.
"At the same time at least one bank executive was [reportedly] moving into a house in Malibu, I was imagining that scene a few miles away in the San Fernando Valley where people are getting kicked out because Wells Fargo says they have to put those houses back on the market immediately," Stein said.
He said his group was working with Wells Fargo and other lenders to defer selling foreclosed homes that were occupied by tenants so renters could remain in them longer.
"I expect this is an aberration. I don't know if it is widespread, but I hope it is not widespread," Stein said of the Malibu situation.
Even if the incident was isolated, he said, the harm to the image of Wells Fargo and the banking industry is more broad. "It plays into the public's distrust and skepticism about the role of large financial institutions in this crisis."
Real estate agents contacted by The Times on Friday said they had not heard of similar cases, despite the huge increase in homes surrendered to lenders in the last two years as the housing market collapsed.
Most expressed surprise over the use of the home, and many echoed the sentiments of Adrienne Kessler, an agent with Keller Williams Realty, who said she was "appalled" by the alleged conduct and what appeared to be an obvious abuse of a position.
For Patricia Ruben of Sotheby's International Realty, Los Feliz, the issue hit close to home.
"My saddest day this year was meeting victims of Madoff's Ponzi scheme who were also forfeiting their home," she said. "The idea that another family is frivolously frolicking around the home of a victim's lifelong work leaves a second stain on humanity, a second robbery."
An exception was agent Farrell "Burt" Bakman of Coldwell Banker in Beverly Hills, who said he saw no problem with a lender using a property "as some sort of a bonus."
"It makes sense," he said. "It's thinking outside of the box for Wells Fargo. They just hold on to it as an asset."
According to Coldwell Banker, the 3,800-square-foot home with direct access to the beach has been listed as a vacation rental since April at a rate of $60,000 a month.
One online listing describes the home as having "dramatic architectural" features and touts a "rare opportunity to lease one of the finest homes in exclusive Malibu Colony."
Sunday, 13 September 2009
Wells Fargo vows 'decisive action' in alleged use of Malibu mansion by an executive
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