Wells Fargo fires executive who partied

Wells Fargo fires executive who partied at repossessed Malibu mansion

US bank sacks vice president for misuse of $12m California beach house lost by victims of the Bernard Madoff fraud

• Andrew Clark
  New York
  
• guardian.co.uk, Tuesday 15 September 2009

A Wells Fargo executive was accused of using this repossessed beach house at the Malibu Colony, California, for private parties. Photograph: Lisa Baertlein/Reuters

For an executive at the US bank Wells Fargo, a repossessed $12m beach house in southern California proved just too tempting. The financial institution has fired a top loans officer for using a luxurious Malibu property for a series of family getaways, culminating in a summer party at which guests arrived by yacht.

The beach house, in an exclusive gated development where neighbours include the Hollywood actor Tom Hanks, fell into the hands of Wells Fargo when its owners lost their savings to the Wall Street fraudster Bernard Madoff, leaving them unable to service loans on the property. But after the bank took ownership, nearby residents became suspicious about activity there, saying a family appeared to be using the house for long weekends.

Concern came to a head in late August, when neighbours say an elaborate party took place at the property, with about 20 people ferried by dinghy from an offshore yacht to join in with the revelry. Meanwhile, a local estate agent told the Los Angeles Times that Wells Fargo was spurning offers to show the house to potential buyers.

Enquiries by fellow residents of the Malibu Colony development established that Cheronda Guyton, a senior vice president of Wells Fargo, had been issued with a homeowner's parking pass for the property. After an investigation, Wells Fargo announced that it had fired an employee, identified by a spokeswoman as Guyton, who was responsible for overseeing commercial foreclosed properties.

In a statement, the San Francisco-based bank said "a single team member" had been responsible for violating company policies and "as a result, employment of this individual has been terminated". The bank continued: "We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members."

The US property market has been engulfed by a wave of foreclosures over the last two years, as falling prices have left homeowners unable to refinance unsustainable mortgages. Foreclosure filings on properties are running at a rate of more than 300,000 per month and the property data firm RealtyTrac recently forecast that 3.4m homes will be subject to proceedings during 2009. California, previously a hotspot with soaring prices, is among the worst affected US states, as home values have fallen with a bump.