(Updates losses to PA issuers in third paragraph) Wachovia Bank (now part of Wells Fargo), the dominant bank in Philadelphia and other big metro areas, "rigged at least 58 transactions" to sweeten its profits from $9 billion it helped cities, towns and municipal authorities in 25 states and Puerto Rico borrow through bond issues in 1997-2005, Elaine Greenberg, head of the Securities and Exchange Commission's Philadelphia office, said in this statement today.
Under a series of settlements with Justice, SEC, IRS, Treasury's Office of the Comptroller of the Currency (OCC), and state attorney generals and New York State, Wells Fargo will repay around $185 million in ill-gotten gains and penalties.
The OCC today made public $14 million, or less than 10%, of the bank's total repayments, including $5 million to a Minneapolis hospital, $1.1 million to the Pennsylvania Higher Education Facilities Authority, $584,000 to North Wales borough in Montgomery County, $138,000 to Philadelphia for a "collateralized certificant of deposit" transaction, a total of at least $1.8 million to towns in northern and western Pennsylvania, and $42,000 to Crozer-Chester Medical Center, among others. (Updated with additional information from OCC)
Later, the Pennsylvania Attorney General's Office said the state portion of the investigation has seperately "identified approximately 150 Pennsylvania municipalities and agencies believed to have been victimized as part of the scheme involving Wachovia, including the Pennsylvania Turnpike Commission; numerous county governments; the Philadelphia Parking Authority; several county water, sewer and development authorities; and more than a dozen public school districts.