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USAA Whistleblower Report Leads to $225M in Combined Civil Penalties

USAA Whistleblower Report Leads to $225M in Combined Civil Penalties

A former compliance officer turned whistleblower accused United Services Auto Association Federal Savings Bank (“USAA Bank”) of “actively lying to regulators for years” about significant compliance violations, according to a May 6, 2022, Compliance Week report. The report notes the whistleblower stated the $225M in combined civil penalties levied against USAA Bank is “just the tip of the iceberg.”

Lenn Ferrer was initially hired as a compliance officer at USAA Bank in 2019 before making reports of financial crimes in March 2020 to the Office of the Comptroller of the Currency (“OCC”) and the Financial Crimes Enforcement Network (“FinCEN”). OCC and FinCEN are branches of the United States Department of the Treasury. As is often the case when a whistleblower comes forward, Ferrer was terminated for allegedly creating a hostile work environment. Ferrer’s allegations against USAA Bank were violations of the Military Lending Act and compliance control violations. Ferrer’s allegations directly led to the combined $225M in civil fines and penalties levied on USAA Bank by the US Government, reported by Compliance Week.

USAA advocates on behalf of the US Armed Forces and claims devotion to principles of service, loyalty, honesty, and integrity. The Compliance Week article notes that USAA remains one of the United States’ “most admired companies.” Given the affiliation with the US Military and the significant goodwill USAA holds with military families, there is a lot at risk for the organization. At a minimum, the substantial fines and allegations stain the reputation of USAA as a whole, given its holding of USAA Bank as a subsidiary corporation. If accusations of unauthorized financial transactions and violations of the Electronic Fund Transfer Act go more profound than what has been discovered, all USAA Bank’s customers would be in jeopardy. Suppose Ferrer’s claims are valid, and there is no reason to doubt they are not given the government’s hefty fines already handed down. In that case, USAA Bank defrauded the military families it claims to represent.

Brave enough to come forward with allegations against the bank, Ferrer immediately suffered adverse employment action due to speaking up against the organization. Now USAA’s long-standing reputation among the military community and the greater United States is in significant jeopardy. Stories like the one published in Compliance Week paint the grim picture of the depths organizations can go to both commit and cover up compliance errors. Such can be the fate when organizations choose to eliminate the source of complaints rather than listen to them and take action immediately.

Syntrio understands the value of organizational reputation and has developed a program to educate managers on listening and taking action when complaints are heard. The program also is dedicated to empowering employees to speak up when they experience or witness something that does not seem right and make them comfortable that they will not suffer retaliation for raising their concerns. Such programs aim to improve workplace culture and reduce incidents leading to reputational damage. In addition, providing employees education and confidence their complaints will be taken seriously is suitable for everyone involved.

We invite you to contact a staff member to learn how Syntrio’s speak up and listen up courses and communication materials can help your organization improve at receiving and handling complaints. Additionally, we provide anonymous hotline services to organizations. We have a bundle of workplace materials that can help you comply with laws and recommendations from federal, state, and local governments and significantly improve your culture, increasing the attraction of top candidates and staff retention. We welcome the opportunity to partner with your organization to improve its culture.

Since 2007, Jonathan has practiced labor and employment law on behalf of management. Jonathan focuses his practice on advising employers on the prevention of harassment and discrimination issues, with an emphasis on providing in-person harassment training programs to companies of all sizes. Jonathan is licensed in California, Illinois, and Wisconsin, and maintains a national advice practice.

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