Darrell Whitman Petitions Attorney General Sessions About Wells Fargo Investigation

August 7, 2017

I'm often asked about my political affiliation or leanings. Some folks think that I'm a Democrat but others believe that I'm a Republican -- and the same goes for whether I'm a liberal or conservative. As I have noted from time to time in the BrokeAndBroker.com Blog, I always describe myself as a libertarian with a small "l".

I find the traditional labels of "liberal/progressive" and "conservative" to serve no purpose other than to divide our population into fairly meaningless feuding camps.

I have no use for organized political parties, which seem composed of opportunists, who promise the world and deliver nothing. As a self-professed cynic, curmudgeon, skeptic, and otherwise grouchy fellow, I aspire to be left alone to pursue my follies.

I want government out of my bedroom and boardroom but that desire does not give me license to harm others or to run a fraudulent business. Freedom comes with responsibilities and consequences. How to best balance an individual's rights with those of a larger community's has bedeviled mankind since we first ate the forbidden apple. I do not pretend to have the wisdom to solve the dilemma. It is a daily struggle between those who assert inalienable rights that do not flow from any government and those who believe that government is the best way to protect those same rights from the tyranny of the majority (and, at times, a minority). In waging war against those we deem encroaching on our rights and liberties, we should remember that sage admonition of Nietzsche: "He who fights with monsters should be careful lest he thereby become a monster. And if you gaze long into an abyss, the abyss will also gaze into you."

I want government to have the smallest footprint necessary so as to be nimble without expanding into an overblown bureaucracy. I want government services to be delivered fairly, timely, and in a respectful manner. I do not believe that bigger government is better but I also know that City Hall and the State House are rife with corruption. I detest the political patronage and cronyism that fills government with managerial hacks who are merely padding their resumes for a more profitable return to the private sector. I detest the arrogance of those in government who think they know better than those of us who have worked for a living. I champion a civil service based upon a "merit system," which enables competency and rewards excellence.

Ultimately, I detest the pervasive corruption that flows into every pipe and cistern of 21st Century government in America. Foolishly, perhaps, I believe that most Americans share my core values but have been overwhelmed by a sense of alienation from those who govern and from the tools of government. That is why I rage against the machine.

Year after year, we read about government investigations that got waylaid or side-tracked when some higher-up pulled a file from a lower-down investigator's hands and some twit of a supervisor inexplicably sat on the case. The investigator calls and calls and calls about the status of the aging matter, and, in response, there's usually a barrage of non-responsive explanations about how it's "under review" or a semi-colon should be a comma and the chosen font doesn't quite work. At some point, the superior tells the subordinate to mark the file "Closed."

Trust me, I've been there during my career as a Wall Street regulatory lawyer. I've been there when trying to represent whistleblowers whose cases seem to disappear into some bureaucratic black hole at the Securities and Exchange Commission ("SEC"). Frankly, you've probably been there too in one fashion or another.

Darrell Whtiman Rages Against the Machine

In 2010, attorney Darrell Whitman became a Regional Investigator for the San Francisco Region Office of Whistleblower Protection Programs ("OWWP"), which was part of the United States Department of Labor's ("DOL's") Occupational Safety and Health Administration ("OSHA"). As stated on the homepage for OWWP:

About the Program

OSHA's Whistleblower Protection Program enforces the whistleblower provisions of more than twenty whistleblower statutes protecting employees who report violations of various workplace safety and health, airline, commercial motor carrier, consumer product, environmental, financial reform, food safety, health insurance reform, motor vehicle safety, nuclear, pipeline, public transportation agency, railroad, maritime, and securities laws. Rights afforded by these whistleblower protection laws include, but are not limited to, worker participation in safety and health activities, reporting a work-related injury, illness or fatality, or reporting a violation of the statutes herein.

Workplace Safety and Health

Section 11(c) of the OSH Act prohibits employers from discriminating against their employees for exercising their rights under the OSH Act. These rights include filing an OSHA complaint, participating in an inspection or talking to an inspector, seeking access to employer exposure and injury records, reporting an injury, and raising a safety or health complaint with the employer. If workers have been retaliated or discriminated against for exercising their rights, they must file a complaint with OSHA within 30 days of the alleged adverse action.

Since passage of the OSH Act in 1970, Congress has expanded OSHA's whistleblower authority to protect workers from discrimination under twenty-two federal laws. Complaints must be reported to OSHA within set timeframes following the discriminatory action, as prescribed by each law. These laws, and the number of days employees have to file a complaint, are:
Occupational, Environmental, and Nuclear Safety Laws
Transportation Industry Laws
Consumer and Investor Protection Laws

Beginning in 2011, Whitman and others in the San Francisco OWWP office complained that they were being hamstrung and short-circuited in their efforts to protect whistleblowers against perceived retaliation -- essentially being prevented from doing the job that they were being paid to do. In May 2015, Whitman was fired. How ironic that Whitman, an OWWP investigator charged with protecting whistleblowers from retaliation, found himself the victim of alleged retaliation by OWWP. In response to his termination, Whitman sued. See, "Amended Disclosure and Whistleblower Protection Act Complaint," (filed by the Government Accountability Project, April 6, 2016). A reiteration of the headings in Whitman's April 2016 Complaint provides sufficient insight into the nature of his grievances:

Assigning enforcement of whistleblower laws to unqualified staff without necessary training;
Inexcusable delays in resolving cases;
Obstruction of investigations;
Violation of whistleblowers' rights
Favoritism to corporate defendants;
Falsification and censorhip of record in final Reports of Investigation;
Abuse of settlement process;
Rewriting whistleblower statutes to deny protection;
Rewriting statutory burdens of proof; and
Failure to issue final orders.

Yesenia Guitron Complains

Among his various allegations, Whitman references how in May 2010, a couple of Wells Fargo employees contacted OSHA with claims that the firm had retaliated against them for raising issues about the opening of unauthorized accounts. According to press accounts, Yesenia Guitron, one of the whistleblowers, could never quite figure out why OSHA didn't follow up on her complaints. She had first become aware of the opening of unauthorized accounts at Wells Fargo in 2008. Guitron did what she thought was the right thing to do and communicated her concerns to her boss, her human resources department, and even used the firm's ethics hotline. Guitron believes that Wells Fargo retaliated against her by firing her. She complained to OSHA.

When Guitron's file came to Whitman, who had been on the job for about three months, the newbie OWWP investigator wasn't told to conduct an investigation of Guitron's allegations; to the contrary, as Whitman alleges, he was told to close out the investigation and move the paperwork. By the time Whitman prepared his final investigative reports, Wells Fargo was still declining to defend against the allegations. You'd sort of think that such silence would have imbued Guitron's allegations with enough merit as to warrant some substantive action by OSHA on her behalf. Whatever should have happened didn't. Her file was stamped "Closed."

Guitron sued Wells Fargo in furtherance of her wrongful termination claims but her lawsuit was dismissed in 2012. In 2015 the last of her appeals were denied. It is not my role here to spin the facts. Each BrokeAndBroker.com Blog reader should draw your own conclusion as to the merits of Guitron's allegations and Wells Fargo's defenses; however, as far as the federal court's conclusion, she lost and her former employer won. As stated in Yesenia Guitron, Plaintiff/Appellant, vs. Wells Fargo Bank, NA, Wells Fargo & Company, and Pam Rubio, Defendants/Appellees (Memorandum, United States Court of Appeals for the Ninth Circuit, 13-16023 / July 27, 2015):

SOX whistleblower claims are governed by "a burden-shifting procedure [under] which a plaintiff is first required to make out a prima facie case of retaliatory discrimination." Van Asdale v. Int'l Game Tech., 577 F.3d 989, 996 (9th Cir. 2009). "[I]f the plaintiff meets this burden, the employer [then] assumes the burden of demonstrating by clear and convincing evidence that it would have taken the same adverse employment action in the absence of the plaintiff's protected activity." Id. Because we find Wells Fargo met its burden in showing it would have taken the same adverse employment action, we need not reach the question of whether Guitron made out a prima facie case.

Wells Fargo presented clear and convincing evidence that Guitron (1) failed to meet her quarterly sales goals, (2) had been insubordinate to her direct manager, and (3) refused to return to work after Wells Fargo repeatedly informed her that she had only been placed on administrative leave and not fired. This evidence demonstrates that, even without Guitron's protected activity, Wells Fargo would have issued her verbal and informal warnings, placed her on administrative leave, and terminated her, respectively. See Halloum v. Intel Corp., 24-IER-50, 2006 WL 618383, Final Decision and Order (Dep't of Labor SAROX Jan. 31, 2006), aff'd, 307 F. App'x 106, 107 (9th Cir. 2009); Kim v. Boeing Co., No. C10-1850-RSM, 2011 WL 4437086 (W.D. WA. Sept. 23, 2011), aff'd, 487 F. App'x 356, 357-58 (9th Cir. 2012). Guitron has failed to create a genuine issue of material fact with respect to the facts surrounding her warnings, administrative leave, and subsequent termination. Therefore, we affirm the district court's summary dismissal of Guitron's SOX claim.

Wells Fargo's $186 million Fines

About a year after its 9th Circuit victory over Guitron, Wells Fargo agreed to pay $185 million in fines and penalties to settle a Consumer Financial Protection Bureau ("CFPB") investigation that uncovered some two million unauthorized accounts. The "relevant period" cited in the CFPB Consent Order was from January 1, 2011, to September 2016. READ the CFPB Wells Fargo Consent Order. The relevant period from 2011 to 2016, also covered the time when Guitron had complained to Wells Fargo, when she was fired by the firm, when she filed her lawsuit against the firm, when she lost her lawsuit, and when she lost her appeal. That relevant period also covered the time when Whitman and his colleagues were complaining about OSHA's half-hearted and half-assed oversight of its whistleblower anti-retaliation mandate; and when they were fired; and when they sued.

The Gift That Keeps On Giving?

We just don't seem to be quite done with lurid tales about Wells Fargo's unauthorized account openings or inappropriate insurance charges or questionable dealings involving the refinancing of mortgages issued to veterans. As I read about the bank's practices in the press and consider some of the allegations that were made by Guitron, Whitman, and others, I have to wonder about the extent to which DOL and other regulators were and continue to be complicit in covering up financial industry scandals. How different would things have been if some regulator had traced those first whisps of smoke to the fire. If only the SEC had pursued Harry Markopolos's claims from 2000 that Bernie Madoff was running a Ponzi. If only some state or federal regulator followed up on the warning signs about Allen Stanford. If only some regulator had listened to Johnny Burris when he complained about misconduct at J.P. Morgan . See, "Wall Street Whistleblower Johnny Burris Speaks Truth to Power" (BrokeAndBroker.com Blog, June 30, 2017).

SIDE BAR: Watch April 27, 2017, speeches by Guitron and Burris about their whistleblowing efforts:

Darrell Whitman asserts that he was a victim of retaliation and another casualty in the tawdry politics of federal regulation. In contrast, DOL asserts that he was canned because of his unauthorized release of information and misuse of a transit card and . . . well, you know, he just wasn't a team player and all that.

You ever notice how those at the top of the bureaucratic feeding chain can't run fast enough to appear on television when a government agency scores a high-profile victory but when that same agency comes under scrutiny for dropping the ball, those same big shots can't be found and their consistent excuse is that they didn't know, nobody told me, and I relied upon lower-level supervisors to stay on top of this? How did former White House Communications Director Anthony Scaramucci put it? Oh yeah, I remember: A fish stinks from the head down.

And lest you be too quick to misunderstand, much of the pressure to derail Whitman's work occurred during the Obama Administration, which began in 2009. Similarly, in 2011, the Republicans had control of the House of Representatives and in 2015, the Senate. There's plenty of blame to go around for both parties.

SEC Black Hole of Despair

As I wrote in "SEC Whistleblower Program Is A Black Hole of Despair"(BrokeAndBroker.com Blog,April 9, 2015), I experienced my own horror story when representing an industry whistleblower before the SEC's Office of the Whistleblower ("OWB"). In November 2014, I filed a complaint with the SEC's Officer of Inspector General ("OIG") and requested an investigation of what I deemed OWB's dilatory conduct in processing my client's claim and rendering his eventual award of some $1.6 million. In submitting my complaint, I was required to participate in a substantial telephone interview by the third-party service provider that the SEC retained for such purposes. During that interview, I provided the sum and substance of my complaint. I then awaited some meaningful follow-up. And I waited. And I still wait. Nearly three years later, not a single call from anyone at SEC, OWB, or OIG to follow up on my complaints. I'm sort of wondering if some higher-up at SEC told some lower-down to mark my file "Closed."

Conclusion

It's one thing to write me off as disgruntled if my client's claim was denied but it's quite another thing to marginalize a lawyer whose client provided substantial assistance to the SEC and eventually gained a sizable award. Sadly, there probably wasn't a Darrell Whitman at the SEC looking out for my client or asking questions about my complaints.

Which may explain why Darrell Whitman's story resonated with me.

Which may explain why I go to the mat for my whistleblower clients and will persist in using every weapon at my disposal to ensure that their allegations are investigated. I will always start off politely ringing the doorbell, then I will rap my knuckles on the door, and, thereafter, I will go out and get one of those siege machines and knock down whatever door is closed between me and the self-serving bureaucrats. I'm not apologizing for doing my job on behalf of my clients. They're trying to blow the whistle. They're the ones who have often sacrificed their careers for what they think is a principle worth fighting for. I may be little more than a battering ram but if that's my role, I will continue to do it with abandon.

For the record, I do not presently and never have represented Whitman. We have never even met or spoken. Recently, he sent me a copy of the email reprinted below. I was honored to have been the recipient of such an important communication. Darrell Whitman isn't going down without a fight. I admire his zeal. Give 'em hell, Darrell!

Bill Singer

NOTE: The views expressed in Whitman's August 4, 2017, letter are those of the author and do not necessarily reflect those of BrokeAndBroker.com Blog.

READ the FULL-TEXT Letter in PDF

DARRELL WHITMAN
Oakland, CA 94611
Email: whitmandarrell45@gmail.com

August 4, 2017

Jeff Sessions, Attorney General of the United States
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001

Re: Wells Fargo consumer financial fraud cases

Dear Attorney General Sessions,

The purpose of my letter and declaration below is to alert you to a very serious failing of government to protect the public interest, and ask that you not abandon the Department of Justice (DoJ)'s effort to protect the public interest by holding federal agencies and corporate defendants to account when they threaten the nation's safety, health, and financial security. The public's faith in government is at a historic low, and as a former federal investigator I too have lost faith in the ability of government to produce equal justice under law. Please prove us all wrong.

Recently, I was advised the DoJ is concluding its investigation of Wells Fargo consumer
financial fraud cases without taking action. As a federal investigator involved in three of
those cases, there was every reason to believe the DoJ and its Grand Jury would find
reason to pursue not only the investigation of Wells Fargo, but to expand that
investigation to include the Occupational Safety and Health Administration (OSHA),
whose Whistleblower Protection Program (WBPP) played a significant role in concealing
that fraud for several years. For reasons cited below, I strongly urge the DOJ to
reconsider and reopen the investigation and look more broadly at the critical role federal agencies played in enabling the fraud to continue for years and engulf millions of Wells Fargo customers, and thousands of Wells Fargo employees.

Please consider the remainder of this letter as a Declaration under penalty of perjury,
attesting the following statements are true and correct to the best of my memory and
belief:

From July 17, 2010, to May 5, 2015, I was a Regional Investigator with the Department of Labor/Occupational Safety and Health Administration's Whistleblower Protection Program, I worked in OSHA's Region IX office in San Francisco, and have direct, personal knowledge of OSHA's management of three Wells Fargo consumer fraud complaints filed in 2010 and 2011. These three complaints, filed by Ms. Yesina Guitron, Ms. Judy Klosek, and Ms. Claudia Ponce de Leon, all alleged Wells Fargo was
generating fraudulent customer accounts. At the time I was given the first two Wells
Fargo accounts in November 2010, OSHA had not provided me any training in the
investigation of financial fraud cases filed under whistleblower provisions of the
Sarbanes-Oxley Act (SOX). These investigations required knowledge I didn't have at the time, and I only later discovered the multiple violations of law, policy, and practice by OSHA they represented. As noted below, these included:

Both complaints had been filed with OSHA and docketed for investigation on May 11, 2010, and the complaints were identical, alleging the complainants had been terminated in retaliation for reporting the fraudulent manipulation of customer deposit accounts by Wells Fargo.
Wells Fargo was notified of the complaints shortly thereafter, but no investigator had been assigned to the cases, as was required by OSHA's Whistleblower Investigations Manual (WIM), which provides the policy and practice guidelines for the Program. Rather, the complaints were retained by Region IX's Regional Supervisory Investigator (RSI) for almost six months, until the RSI gave them to me in November 2010 with an order to close the cases.
Prior to transferring the investigations to me, no interview had been conducted with either Ms. Guitron or Ms. Klosek. As I later learned, this was a violation of law as well as a breach of the protocols found in the WIM, which clearly intend that an early interview be conducted with complainants to expedite case management and complete an investigation within 60 days, as required by SOX.
The letter notifying Wells Fargo of the complaints allowed the company the option to file a response within 20 days from the date of receipt. That 20-day window of opportunity ran out in late June 2010 without a response by the company. Yet, OSHA took no further action. As I would later learn, the WIM directed that if a company failed to respond to a complaint, the investigation would be resolved based on evidence provided by the complainants. In this case, if the complainants had been interviewed, that likely would have been a merit finding. If OSHA had made a merit finding, it would have required OSHA to issue an order to Wells Fargo to immediately reinstatement Ms. Guitron and Ms. Klosek, and pay them back pay and benefits, and forward notice to the Securities and Exchange Commission of OSHA's findings of merit.
On July 7, 2010, Timothy N. Grubb, Senior Counsel of Wells Fargo, called and spoke to someone in OSHA Region IX, asking for an extension of time to respond to the complaints. While the phone call was logged, as required by the WIM, there was no report about the substance of the call, which violated WIM protocols. Further, the request was untimely according to WIM protocols, and OSHA by the time of the request already should have been in the process of issuing a merit finding. Even if the request was deemed timely, WIM protocols allowed OSHA only to grant a 10-day extension, which would have expired on July 17, 2010. As Wells Fargo failed to provide any response, WIM protocols should have triggered OSHA to issue a likely merit finding and order for the immediate reinstatement of the complainants before the end of July 2010.
On November 17, 2010, shortly after these two cases were assigned to me, I authored a letter to Mr. Grubb, noting his July 7, 2010, telephone conversation with OSHA and asking for a response within 10 days. Mr. Grubb didn't respond to the letter, but on November 24, 2010, I received a phone call from a Mr. Baldwin J. Lee, a San Francisco attorney who advised me the complaints were being withdrawn in favor of a federal court complaint. Mr. Lee didn't disclose he was representing Wells Fargo, rather than the complainants, and forwarded a legal pleading regarding a federal court case filed by complaints. Based on that conversation and document, I authored withdrawal Final Investigative Reports (FIR) for both complains, and gave them to the Region IX RSI without contacting either Ms. Guitron or Ms. Klosek. I would later learn WIM protocols require an interview with complainants to confirm their desire to withdraw their OSHA complaints, and to advise them that a withdrawal would terminate the OSHA investigation and extinguish their rights to appeal to OSHA.
After submitted my draft FIRs, there was no further discussion of them with the RSI. As I would later learn, the RSI is tasked with reviewing these documents and discussing them with the investigator to ensure they met legal and WIM standards. Then, if the RSI and investigator agreed on the outcome, the RSI and the investigator would sign the FIR's to confirm their agreement. In this case, there was no meeting, I never signed either of the FIRs, and the investigations were closed by the RSI.

The mismanagement of these two Wells Fargo complaints in 2010 was not an isolated
incident. Rather, the pattern of failing to timely assign investigators, interview
complainants, and apply statutory time limits to company responses and completing
investigations repeated itself in many other cases, including a subsequent Wells Fargo
case (Ponce de Leon), which I briefly managed in early 2012. In many cases, OSHA
either failed to interview complainants, or failed to conduct credible investigations. In
some cases, OSHA slow walked investigations for years, apparently for the purpose of
denying a merit finding. In others, OSHA encouraged to investigators to short-circuit
investigations and close cases for the purpose of improving OSHA's statistics. Then,
during a 2014 staff meeting, the Region IX RSI advised investigators entire classes of
complaints should be closed without investigations, including SOX complaints, because
OSHAs national Office of Whistleblower Protection, wanted to clear a backlog of cases.
All of these actions and failures to act involved violations of law, rules, and regulations,
which OSHA apparently doesn't feel itself bound.

This pattern of OSHA mismanagement extends well beyond SOX cases to include other
cases involving major corporations and complaints where preliminary reinstatement of
qualifying whistleblowers is at issue. These cases raise concerns about a broad spectrum of safety, health, and financial security involving: trucking (Surface Transportation Assistance Act), railroads (Federal Railroad Safety Act), sea transport (Seaman's Protection Act), air carriers (Wendell H. Ford Aviation Investment and Reform Act for the 21st Century), pipeline safety and security (Pipeline Safety Improvement Act), transit systems (National Transit Systems Security Act), consumer product safety (Consumer Product Safety Improvement Act), health care (Affordable Care Act), consumer financial protection (Consumer Financial Protection Act of 2010), consumer investment protection (Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010), and food safety (FDA Food Safety Modernization Act). Failing to respect the requirements of the law under any one statute presents a serious risk to the public interest. Failing to respect the law under thirteen statutes covering a full range of safety and health issues is potentially catastrophic.

It's unconscionable that senior Agency bureaucrats are allowed to effectively legislate
away protection for whistleblowers and the public. Ms. Guitron's request to OSHA to
reopen her investigation was denied earlier this year, and hundreds, if not thousands of other Wells Fargo employees who attempted to find justice through OSHA's
Whistleblower Protection Program have been betrayed by indifference, if not outright
hostility to their claims by OSHA managers. This is a denial of fundamental due process
and equal justice under law, and should not be allowed to stand.

In January 2015, I made a formal disclosure of these problems to the Office of Special
Counsel (OSC), which has to date failed to investigate. In April 2016, after being
terminated from OSHA in the context of publicly disclosing a culture of corruption in
OSHA's management of the WBPP, I filed a complaint with the OSC, which to date the
OSC has similarly failed to address. Thus, it appears that the culture of corruption which I first saw in OSHA extends to the OSC, leaving federal whistleblowers no better off than the private sector whistleblowers who receive no protection by OSHA. We cannot have a credible system for protecting the nation's safety, health, and financial security without having a credible system to protect those who report risks, mismanagement and abuse of authority. As the chief law enforcement officer, only you and the DoJ can do that.

Respectfully,

Darrell Whitman, (former) Regional Investigator
August 4, 2017

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Darrell Whitman Petitions Attorney General Sessions About Wells Fargo Investigation

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