The management company wanted me to give them full financial control of the property, which included them paying the mortgage, property taxes, insurance, utilities, maintenance and repair costs etc... from the more than ample income generated by the building as a HUD Affordable Housing complex.
The management company also wanted me to give them permission to open business checking accounts in my name, so they could pay the bills and deposit the rents.
At the time we executed our contract, the management company gave me a Wells Fargo Bank - Account Authorization and an Account Application to sign, which had already been pre-signed by three officers of the management company.
The building generated more than $100,000 per year, and because I didn't know these people, or have a prior relationship with them, I was more than a little uncomfortable with the idea of giving them unrestricted access to that much money.
I told the management company that I wanted to investigate alternative banking and bill pay methods, and I left their offices with the Wells Fargo Account Application and Authorization forms they had given me, but I never signed them.
I still have those unsigned documents today and they have never been out of my possession since the management company gave them to me. (below)
A few weeks later, I received a Wells Fargo ATM card in the mail. Surprised, I contacted Wells Fargo Customer Service to ask them why they had sent me the card and what it was for. The customer service rep told me that the card was associated with accounts that I had recently opened in Utah. I told the customer service rep that I had not opened any accounts in Utah, but she insisted that I had, and then put me in contact with the branch office where the accounts had been opened.
The Business Accounts Manager at the branch told me that it was actually the management company who had opened the accounts, and he reassured me that no account fraud had occurred. He lied.
I told the Business Accounts Manager that I had not authorized the management company or anyone else to open bank accounts for me. I also told him that the management company had asked me to sign an Account Authorization and Application so they could open accounts, but I was not comfortable with that arrangement and never signed those documents.
Once more, the Business Accounts Manager assured me that the accounts had been opened legitimately, and that no account fraud had occurred. Again, he was lying.
He also told me that the bank had obtained all of the required supporting documentation and necessary items, including a signature card, my identification, and proof of a DBA filing, at the time the accounts were opened, which would have been impossible, given that on the date the accounts were opened, I had not been in Utah for over a month. I did not sign any bank documents while I was there, nor did I give anyone copies of my identification, or authorize anyone to open bank accounts.
Nevertheless, the Business Account's Manager continued to insist that the bank had received everything that was required to open business bank accounts, and led me to believe that I had somehow signed another set of bank documents, and the management company used them to open the accounts.
For the next 4 years, the management company repeatedly told me that everything was going great and that the building was running smoothly, and aside from exceedingly high maintenance and repair fees, I had no reason not to believe them....until they notified me that a woman had been brutally murdered on the property. I also learned that just weeks earlier, another woman had been violently raped at gunpoint inside her apartment.
I made the decision to hire another management company to take the building over. I traveled to Utah over the Thanksgiving holiday to make the change, but before I could get there, the management company had written three checks to themselves on the building's accounts, totaling nearly $7,000 and cashed them at Wells Fargo Bank, effectively draining the accounts of any available funds.
The check numbers matched gaps that had been maintained in the check numbering sequence, which Wells Fargo immediately identified, noting that their risk models show that when gaps are maintained in the check numbers, it enables someone to write a check that appears to have been written on an earlier date, and that the presence of such gaps, are often an indicator of check fraud. The checks were also for uncharacteristically high dollar amounts, yet Wells Fargo cashed them anyways, despite these glaring red flags, without even bothering to investigate.
When I arrived at the building, I barely recognized it. The building had become a run down dilapidated tenement. The management company failed to maintain the property by any known standard of care, yet they had spent every last dime (over $400,000) that the building had generated over four years, and they wanted more.
Because the management company continued to write checks on the building's accounts after the termination of our contract, I went into the Wells Fargo branch where the accounts had been opened, advised them of the situation, and asked them to close the existing accounts and open replacement accounts with different account numbers.
The Wells Fargo Branch Manager closed the existing accounts, but he refused to open the replacements, stating that none of the federally required supporting documentation for the accounts was on file with the bank. No proof of a DBA filing with the state. No signature cards on file, no account application or account authorization. Nothing.
Wells Fargo was literally holding the accounts open with nothing more than HOPE... (Hope that I wouldn't find out what they had done... but I did)
When I asked the branch manager how the accounts could have been opened in the absence of these items, he said that the bank would not have opened them, but they did. He also added that if the accounts had somehow been opened without the required supporting documentation, the bank's computers would have red flagged the accounts and the bank would have closed them after 30-days... but somehow that never happened, because the management company's contact at the bank was making sure that it didn't.
The fact is that, not only did Wells Fargo knowingly open the accounts in violation of Federal banking requirements, they also failed to close them after 30-days, and went well out of their way to cover up what they had done for years, while the management company ran my building into the ground and apparently used the accounts as their own private little piggy bank.
When I asked Wells Fargo for a written explanation as to how and why they opened two business checking accounts in my name, in my absence, without my signature, identification, or proof of a DBA filing with the state, and why they allowed those accounts to remain open for four years without ever notifying me as the primary account holder that the accounts were not in good standing, they refused to answer or cooperate with me further.
When I asked the management company to turn over all of the banking materials associated with the accounts, they told me that there were no checks in existence and that all deposit slip books and records had been conveniently shredded.
That's when I turned to the CFPB - The Consumer Financial Protection Bureau and the OCC - The Office of the Comptroller of the Currency, for help.