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Tuesday, April 29, 2008

Wachovia Bank under fraud and money laundering probe

Wachovia Corporation, the Charlotte-based bank is having some serious trouble this April. On April 14 the bank announced it had lost $350 million or $0.20 per share during the first quarter of 2008. The losses were due essentially to problems in the mortgage markets. At the same time the Office of the Comptroller of the Currency is investigating claims that the bank, over an approximate period of June 2003 to December 2006, had ties with telemarketing and payment processing companies that marketed identity-theft certificates, discount travel vouchers, and other products or services, targeting seniors and/or low-income clients. The telemarketers obtained bank account information from respondents and used it to draw up a "remotely created check" which doesn't require a signature. These remotely created checks would then be deposited into the telemarketing companies' Wachovia accounts and the bank would withdraw the funds from the consumers' bank accounts without their knowledge. The news about the telemarketing probe came after The Wall Street Journal published a report that the company was allegedly under scrutiny for its involvement in a drug money laundering scheme.

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