Paul McLinko, Wells Fargo’s former executive audit director, is appealing a $1.5 million fine and accompanying cease-and-desist order from the Office of the Comptroller of the Currency in connection with the bank’s 2016 fake-accounts scandal.
McLinko filed his appeal Wednesday, one day after the OCC penalized him for allegedly failing to plan and manage audit activity that would detect and document sales practices misconduct.
The regulator also alleged that he failed to adequately escalate the misconduct detected in sales practices; and failed to maintain professional independence from the Community Bank, Wells Fargo’s largest business line that housed its retail branches.
McLinko, however, seeks review of the OCC’s enforcement orders on the grounds that they are “arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law within the meaning of the Administrative Procedure Act.”
The OCC’s orders are also “contrary to constitutional rights; are in excess of the constitutional power and statutory authority of the agency; [and] are infected by multiple prejudicial evidentiary and procedural errors,” according to Jenner & Block Partner Matthew Hellman, an attorney representing McLinko in his appeal.
“Mr. McLinko served honorably and diligently as a bank auditor for his entire 40+-year career,” Coblentz Patch Duffy & Bass Partner Rees Morgan, who is also representing McLinko, told Banking Dive via email.
“We have said from the beginning of this case that he will be vindicated once an independent court takes the time to look at the entire record. Now that the Comptroller’s in-house process is finished, this case finally will be heard by judges who don’t work for the agency,” Morgan wrote. “We look forward to presenting Mr. McLinko’s case to the court of appeal, and we remain confident that he will prevail.”
McLinko’s penalties Tuesday came alongside similar measures against Wells’ former community bank group risk officer, Claudia Russ Anderson, and former chief auditor, David Julian. They received $10 million and $7 million penalties, respectively.
The penalties are the last from the OCC against the 11 executives linked to Wells’ fake-accounts scandal. Prior to Tuesday, the agency’s penalties in the case totaled $43.1 million, including a $17.5 million fine and a banking ban for ex-Wells CEO John Stumpf and a $17 million fine against the bank’s former retail banking chief Carrie Tolstedt. Tolstedt pleaded guilty in 2023 to obstructing a bank examination but avoided prison time, agreeing instead to a lifetime ban from working in banking.
A Wells Fargo spokesperson declined to comment Tuesday but directed Banking Dive to a 2020 statement by CEO Charlie Scharf.
“The OCC’s actions are consistent with my belief that we should hold ourselves and individuals accountable,” Scharf said at the time. “They also are consistent with our belief that significant parts of the operating model of our Community Bank were flawed.
“This was inexcusable. Our customers and you all deserved more from the leadership of this Company,” he said.
The OCC did not respond to a request for comment.
