EXHIBIT 1
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
BALTIMORE DIVISION
MAYOR AND CITY COUNCIL
OF BALTIMORE,
Plaintiff,
v.
WELLS FARGO BANK, N.A.
and
WELLS FARGO FINANCIAL
LEASING, INC.,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
No.1
:08-cv-00062-BEL
1.
I,
Tony Paschal, hereby attest that I am over the age
of
18
years
and that I am competent to testify with respect to the matter below.
2. Between September, 1997 and September, 2007, during two separate
periods
of
employment and for a total
of
eight years, I worked as a home mortgage
consultant, or loan officer, in the Annandale, Virginia office
of
Wells Fargo Home
Mortgage ("Wells Fargo").
3.
My first period
of
employment with Wells Fargo was from September,
1997 to June, 1999. I was initially hired
by
Norwest Mortgage which merged with Wells
Fargo in the middle
of
1998. As a loan officer in Wells Fargo's Sales and Marketing
section, my duties included contacting existing Wells Fargo borrowers in forty-eight (48)
states to solicit them to refinance their home mortgage loan. Other Wells Fargo loan
officers also referred to
me
mortgage loan applicants that they were unable to qualify for
"prime" loans because the applicants had blemished credit. I worked with these
applicants to see
ifthey
would qualify for a prime conventional loan or a Federal
Housing Administration ("FHA") loan. As loans insured
by
the federal government,
FHA
loans have interest rates that are a little higher than the prime rate, but are
significantly less expensive than subprime loans.
4. I also worked during much
of
this period as a Community Development
Representative. In this capacity, I contacted and worked with community groups with the
goal
of
expanding Wells
Fargo's
business, particularly in minority communities. I am
African American.
5.
In June, 1999, I left Wells Fargo to take a position with Ardent
Communication, a telecommunications business. I left Wells Fargo for two reasons.
First, I was uncomfortable with how Wells Fargo treated its minority employees and
customers. Wells Fargo's managers were almost entirely White and there was little to no
opportunity for advancement for minorities. Wells Fargo also discriminated against
minority loan applicants
by
advising them that the interest rate on their loan was
"locked", when in fact, Wells Fargo had the ability to lower the interest rate for the
applicant
if
the market rates dropped prior to the loan closing. I believe this was
deceptive and discriminatory, particularly since Wells Fargo loan officers lowered
interest rates for White loan applicants when market rates dropped after the application
but prior to a loan closing. Even though I complained about this differential treatment
of
minorities to the branch manager, Jennifer Bowman, Wells Fargo did nothing to change
2
the practice. I also left Wells Fargo because Ardent Communications offered me a
higher salary and more opportunities
as
a minority employee for advancement.
6.
After Ardent Communications went out
of
business, in November 2001, I
returned to work as a loan officer in the Sales and Marketing section
of
Wells Fargo's
Annandale, Virginia office. Although I still had concerns about Wells Fargo's treatment
of
minority employees and customers, I thought that because there was a new branch
manager, Dave Margeson, in the Annandale office, the working environment may have
improved.
7.
By
the time I returned to Wells Fargo, the company was targeting existing
customers for refinance loans to a much greater extent than it had during
my
first period
of
employment. As during
my
first period
of
employment, I contacted existing Wells
Fargo borrowers nationally to solicit them to refinance their loans into a prime or FHA
loan. When the borrower did not qualify for those loans, I would refer the borrower to
the Mortgage Resource division, which is known
by
the acronym MORE and exclusively
originates higher interest rate subprime loans. The employees working for MORE were
located on the same floor as I was and I communicated with them every day.
8.
In addition to taking referrals from other loan officers, MORE employees
in the Annandale office targeted minority consumers for both purchase and refinance
subprime loans. The MORE division targeted zip codes in Washington, D.C. east
ofthe
Anacostia River, Prince George's County, Maryland and the City
of
Baltimore with
predominantly African-American populations. I heard employees in the MORE division
comment that Howard County was not good for subprime loans because it has a
predominantly White population. I also heard MORE employees on several occasions
3
mimic and make fun
of
their minority customers
by
using racial slurs.
They
referred to
subprime loans made in minority communities as "ghetto loans" and minority customers
as "those people have
bad
credit," "those people
don't
pay
their bills," and
"mud
people."
9. In 2002, Dave Johnson, a former colleague with whom I
had
worked at
Wells Fargo in 1997 and 1998, asked
me
if!
could help him return to Wells Fargo. Mr.
Johnson left Wells Fargo in 1998 to work at another mortgage lender. I spoke with Dave
Margeson,
my
branch manager, and suggested that
he
hire Dave Johnson. Wells Fargo
hired Mr. Johnson as a manager in the
MORE
division. Although I
had
also applied for a
management position, Wells Fargo hired Mr. Johnson, who is White, instead
of
promoting me. I believe that Wells Fargo did not promote
me
for two reasons. First,
Wells
Fargo's
management culture was White. Mr. Margeson is White and so
is
his
immediate supervisor, area manager John Goulding. Indeed, I know
of
only
one
Wells
Fargo African-American manager. Second, Wells Fargo management
knew
that I treated
Wells Fargo customers well
by
offering to refinance them to prime and
FHA
loans when
they qualified for those products. Wells Fargo management did not believe that I
was
doing enough to promote the subprime business, which was far more profitable because
ofthe
higher interest rates and fees. John Goulding told
me
that I
was
not doing enough
to promote subprime loans and managers told
me
and others in the Sales and Marketing
section that
if
we
could not initially qualify a borrower for an FHA loan,
we
should refer
them to the
MORE
division for a subprime loan even
if
with additional time
or
assistance
the borrowerwould qualify a prime
or
an
FHA
loan.
10. Wells Fargo promoted its subprime business
by
targeting subprime loans
to minorities.
It
did so in two ways, first,
by
sending marketing materials to minority
4
#-
~'
//!
;\
v':/
communities; second,
by
using minority subprime loan officers to solicit loans in those
same communities. Wells Fargo targeted marketing materials to zip codes with
predominantly minority populations. Wells Fargo's Annandale office targeted African
American zip codes in Washington, D.C., Prince George's Country and Baltimore.
11. Wells Fargo even had software to generate marketing materials to
minorities.
For
example,
if
a Wells Fargo loan officer anywhere in the United States
wanted to send a flyer to consumers
in
an African-American neighborhood soliciting
subprime loans,
he
could access software
on
his computer that would print out a flyer to
persons speaking the language
of
"African American." I discovered this practice and
attach a screen shot from
my
computer as an illustration
of
how a Wells Fargo employee
could generate a flyer targeting African Americans. The document attached as Exhibit A
is a true and accurate copy
of
the screen shot I printed
on
January
17,2006.
Only after I
complained about this practice, did Wells Fargo agree to remove the African American
option from the menu
of
languages.
12. Wells Fargo also marketed subprime loans to minorities
by
hiring minority
employees to solicit these higher cost loans. Wells Fargo hired African-American loan
officers exclusively from other subprime lenders. In the Annandale office, all the MORE
loan officers were African-American, even though their two managers were White. In
Silver Spring, Maryland, Wells Fargo had an "Affinity Group Marketing" section which
consisted entirely
of
African-American employees. The Affinity Group targeted African-
American churches and their members for loans. The Affinity Group Marketing section
also hired an African-American employee specifically for the purpose
oftargeting
African-American churches. Because the MORE group only had authority to make
5
----------------------------------------------
subprime loans, they regularly originated subprime loans to African Americans and other
minority borrowers who could have qualified for a lower cost prime loan
or
FHA loan. I
had access to Wells Fargo customers' loan records and application files for
my
work in
the Sales and Marketing division and regularly saw minority customers who had good
credit scores and credit characteristics
in
subprime loans who should have qualified for
prime or FHA loans.
13.
Because Wells Fargo made a higher profit on subprime loans, the
company put "bounties" on minority borrowers.
By
this I mean that loan officers
received cash incentives to aggressively market subprime loans
in
minority communities.
If
a loan officer referred a borrower who should have qualified for a prime loan to a
subprime loan, the loan officer would receive a bonus. Loan officers were able to do this
because they had the discretion to decide which loan products to offer and to determine
the interest rate and fees charged to the borrower. Since loan officers made more money
when they charged higher interest rates and fees to borrowers, there was a great financial
incentive to put as many minority borrowers as possible into subprime loans and to
charge these borrowers higher rates and fees. I knew many loan officers who made more
than $600,000 a year and a few who made more than $ 1 million.
14. Wells Fargo discriminated against minority loan applicants
by
not offering
them its better or newer products which had lower fixed interest rates and fees. Instead,
Wells Fargo offered its higher cost loan products, including its adjustable rate mortgage
(ARM) loans to minority applicants. Wells Fargo's loan officers also discriminated
against minority refinance applicants
by
encouraging them to take out more cash from
their home equity.
By
taking out more cash, the borrower would unwittingly increase the
6
commission the loan officer received
on
the loan, while at the same time eliminating his
ability to qualify for a prime
or
FHA
loan.
By
encouraging the borrower to take out more
cash, the loan officer knowingly increased the borrower's risk
of
foreclosure because
of
the higher loan amount.
15. In trainings, Wells Fargo loan officers were encouraged to omit pertinent
information about a subprime loan in talks with applicants because discussing loan terms
could cost a loan officer a sale.
For
example, it was implied in trainings that Wells Fargo
loan officers should not mention that subprime loans included a prepayment penalty
if
the
borrower paid
off
or
refinanced his loan before the prepayment penalty period ended
or
that the monthly payments
on
ARM
loans would substantially increase. When an
applicant asked a loan officer about prepayment penalties
or
monthly payment increases,
the loan officer would tell the applicant not to worry because Wells Fargo would later
be
able to refinance
him
into a prime
or
an
FHA
loan.
16. Wells
Fargo's
management also tolerated a culture
of
discrimination. In
addition to being almost entirely White, the company promoted at least one manager
who
used racial slurs. Dave Zoldak, who succeeded Dave Margeson as
my
branch manager
in
2005, used the word "nigger" at the office. Although Wells Fargo knew Mr. Zoldak used
racial slurs, it promoted
him
to area manager after I complained about his discriminatory
comments.
On
October
21,2005,
I complained
by
email to Mr. Zoldak directly about
his use
of
the word "nigger" and speaking about
how
African Americans lived in
'''hoods''
and "slums." Mr. Zoldak replied that
he
had used the slurs in a humorous way,
just
as the African-American comedian Dave Chapelle did
on
television and thought that
I would find the use
of
these terms humorous. I attach as Exhibit B a true and accurate
7
----------------------------------------------------------
copy
of
my
October 21, 2005 email to Mr. Zoldak and his response later the same day.
On
December 9, 2005, I complained
by
email to Joe Rogers, an Executive Vice
President, and two Human relations employees at Wells Fargo about the use
ofthe
word
"nigger" and other slurs
by
Wells Fargo employees. I also verbally informed Mr.
Rogers's
ofMr.
Zoldak's racial slurs, including the use
ofthe
word
"nigger." Although
Mr. Rogers agreed with
me
by
email that racial epithets were unacceptable, he questioned
why
I was raising the issue with him. I attach as Exhibit C a true and accurate copy
of
my
December
9,2005
email to Mr. Rogers and others, and his December 12, 2005
response. Despite these complaints, Wells Fargo promoted Mr. Zoldak.
17. Even the underwriting
of
subprime loans fostered their discriminatory
impact
on
minorities. The subprime underwriting group
was
located in a different city
than the prime underwriting group. The subprime underwriters were located initially in
Baton Rouge, Louisiana and later Ft. Mill, South Carolina. Subprime loan officers with
MORE
and elsewhere within Wells Fargo pressured underwriters to approve subprime
loans.
18. In late 2004 and early 2005, in response to the complaints
of
discrimination
by
such groups as
ACORN
(the Association
of
Community Organizations
for Reform Now) and the Center for Responsible Lending, Wells Fargo implemented so-
called "filters" in their lending programs that purportedly would discourage loan officers
from steering minorities to subprime loans. Wells Fargo implemented these filters for
public consumption only and not to actually restrict discriminatory practices. The filters
were ineffective because they did not have any "teeth" (no punishment for violating) and
because they were easy for loan officers to circumvent. I do not believe these filters had
8
any impact on steering because subprime loan officers continued to receive large
financial incentives for making subprime loans to minority borrowers and were
encouraged
by
their managers to do so because these loans were profitable. These filters
also did not have an impact on steering because, notwithstanding any written rules, loan
officers had discretion to make decisions about products and pricing.
19. Wells Fargo ultimately fired me in September, 2007 asserting that
my
loan
production was low.
My
loan production was lower than many other loan officers
because I tried to do the right thing
by
Wells Fargo customers
by
putting them in loans
they could afford.
If
a customer did not qualify for a loan
or
could not afford an
estimated monthly payment, I did not originate the loan. I was verbally reprimanded
by
John Goulding,
my
indirect supervisor, for placing too many customers in
FHA
loans,
when the company wanted me to refer them to a subprime loan officer, for example in the
MORE group, so that the company could make a greater profit on the loan.
I hereby declare under penalty
of
peljury that the foregoing is true and correct to
the best
of
my
knowledge and belief.
ED STATES ON: April
9,
2009
Tony Paschal
9
Exhibit A
-
Item Search Criteria
Page 1
ofl
Search
for
Items
Standard
Search
(*
You
must
at
least
select
a
Type
of
Item
or
enter
a
Subject)
• What Type
Of
Item Are You Looking For?
I~ast
Flyer.
__
J£I
• WhatSubje<:tAre You Looking For?
Personalized
Strategy
Language
Item Size
Item Color
Audience
Product I Program I Feature
High TrustSales and Marketing
SALE
ITEMS
I
'(es~Perso~"I~e~..
_ •
•.
jf)
[~pe"ial
prog!a~~
__
•
j]
l,o.triea
n
.
Arnari~n
_
~_.
a
[-:~~()~f'.-:
__
._
~
1
s"I"."t
(Jn
El
::..
i'iJ
l
se'Elct(;ine::-_.d
l2lelactOne-:.._.G
H;e,ect.
On~_
3
l..-salectOns-:-
_
_::::'J
4.-
Searching Hints
Here are some helpful searching hints
tl
you find tile items you're looking for.
=-
For tha fastest results,
if
you
know the
number, enter
it
in
the Quick Search
sec1
" For best results using Standard Searct
minimum, select a Type ofItem
AND
a St
such as "FAST
Flyer.
Consumer"
and"F
Homebuyer".
" For moretargeted resUlts, also Include
search criteria as appropriate, such as
Sl
language. etc.
At
a minimum, you
must
f
either a Type
of
Item
or
enter
a Subject.
Quick
Search
(Use
This
When
You
Know
the
Item
10)
Item
10
(do
not
Include NMFL#, etc.)
L.
411,,4.
Custom
Requests
For custom design requests, click on the button below. Please note
that
custom requests are not tracked
as
orders through Easy
01
should contact
Ad
Services directly at 515-213-4000
or
by
email at [email protected] for questions regarding custom req,
Custom
Re'luestsJReVleWS
http://easyorder.wellsfargo.comlUIIItemSearchCriteria.asp
1/17/2006
Exhibit
B
Paschal. Tony
From:
Sent:
To:
SUbject:
Zoldak, David
Friday, October
21,20058:47
AM
Paschal, Tony
RE: Workflow
I'm only trying to provide you options to help lessen an obviously frustrating situation. I would rather suggest
as
many
resources I know of to help you be proactive with your loans instead
of
making excuses to letthese loans go to the
wayside.
As
far.as the rest
of
your comments are concemed, I believe
you
are referring to
our
many rehashings
of
the
Dave Shappel(spelling} show...which, I assumed you enjoyed.
If
something I said had ever offended you, I'm sorry. They
next time I say something that you feel is offensive to you or anyone, I would encourage you
to
address it
at
that lime. I
would like you to focus on working
With
me and our team
in
Ohio to resolve your loan problems instead
of
wasting your
time and energy in some other direction.
David
J.
Zoldak
Branch Manager
Wells Fargo Home Mortgage
MAC M8602-031
7620
lillie
River Tumpike, Ste. 300
Annandale,
VA
22003
703.333.5555 Tel
866.333.5540 ext. 5555 Toll Free
703.333.5590 Fax
For
your protection,
we
remind
you
that
this is
an
unsecured email service,
which
is
not
intended
for sending confidential or sensitive information.
Please
do
not include your social security number, account number, or any otherpersonal
or
financial information in the content
of
the email. To see
our privacy policy regarding how we use and protect customer information, please select the following link:
http://www.welisfargo.comlprivacylprivacy.jhlml.
To
discontinue
receiving
all
emails containing solicitalion materials from Wells
Fargo
Bank
N.A.,
including Wells Fargo
Home
Mortgage,
please
send
an
email
to
your
name
and
email address.
Wells Fargo
Home
Mortgage
is a division orWelis Fargo
Bank,
N.A.
©
2005
Wells
Fargo
Bank.
All rights
reserved.
Equal
Housing
Lender.
Wells
Fargo
Home
Mortgage-2701
Wells Fargo Way-Minn.apolis,
MN
55467-8000
From: Paschal,
Tony
Sent:
Friday, October 21, 2005 6:49
AM
To:
Zoldak, David
Subject:
Workflow
Importance:
High
As soon
as
my
email functionality is restored I
will
forward lihe email I sent
to
Ms. Noble over a week ago informing
her
about
my
computer situation. If I were able to access the information she has been requesting in
her
email, (cell phone
numbers, work numbers, etc) I would have used loan status not LIS to getlihat information. Since neiliher
of
those systems
has been available on a consistent basis for lihe past two weeks, and since loans
in
apptaker are reciprocally linked to loan
status, getting back to Ms. Noble has been difficult
at
best. I feel her
emaHs
have been returned in a timely fashion,
however
if
this situation is being approached as Shirley Temple and Bill (Bojangles) Robinson
we
have a problem.
Speaking of problems, since you were comfortable enough to use a quote in front
of
me several months ago using the
word "nigger"
YOU'll
understand when I say that I am nobody's "nigger" and I do not live in anyone's "hood" and I am not
from anyone's siums. If you have any questions feel free
to
contact me. Thank's
Tony
Paschal
Home Mortgage Consultant
Wells Fargo Home Mortgage
M8602-031
7620 Little River Tumpike Suite 300
Annandale, Virginia 22003
703.333.5549 Office
866.333.5540 ext.5549 Toll Free
Exhibit
C
Paschal, Tony
From:
Rogers, Joe
Sent
Monday, December 12, 200510:34 AM
To: Paschal, Tony
Cc: White, Julie
M.
- HR; Williams, Mark S (HR)
Subject:
RE:
Tony,
I believe all on this chain would agree with you. My question
is
one
of
context. What prompts
you to ask that question at this time. While I would want to send an across the board agreement,
questions like yours below, could be an example
of
the use
of
this word. In other words,
indicating a totally unacceptable practice.
Joe
Rogers
Ph:
(410)
872-1935
--Original
Message-----
From: Paschal, Tony
Sent: Friday, December
09,20054:03
PM
To:
Rogers, Joe
Cc: White, Julie
M,
- HR; Wilnams, Mark 5 (HR)
Subject:
Importance:
High
Is there any time when it is appropriate to use the word "Nigger"
in
the workplace? Is
it
ever appropriate to reference where an African American employee and his family
live as the "slums" or the "hood"? This word is
so
vile and filthy that our email
system will not allow it
to
leave our own network. After reading every employee
handbook since Wells Fargo Home Mortgage was Norwest Mortgage, I cannot find
any instance where any racial epithet is allowed at Wells Fargo. At least that what the
handbook says.
Tony Paschal
Home Mortgage Consultant
Wells Fargo Home Mortgage
M8602-Q31
7620 Little River Turnpike Suite 300
Annandale, Virginia 22003
703.333.5549 Office
866.333.5540 ext. 5549 Toll Free
703.333.5590 Fax
tony,[email protected]
For your protection,
we
nemind you that this is an unsecured email selVioe, which is
not
intended for sending
confidential or sensitive information. Please do not include your social security number, account number,
or
any
other personal or financiel information in the content
of
the
emaR.
To
see our privacy
pORCy
regarding how we
use
and protect customer information. please select the following link: htlp:llwww.wellsfa
r
go.comJprivacylprivacy.ihtml.
To
discontinue receiving alt emails containing solicitation materials from Wells Fargo Bank N.A
.•
including Wells
Fargo
Home
Mortgage, please send an email
to
[email protected] your name and email
address.
Wells Fargo Home Mortgage
is.
division
of
Wells Fargo Bank,
N,A.
©
2005
Wells
Fargo Bank.
An
rights reselVed.
Equal Housing Lender.
Wells Fargo Home Mortgage-2701 Weils Fargo Way-Minneapolis,
MN
55467·8000
