Michael Nagle/Bloomberg

Carrie Tolstedt, a former head of retail banking at Wells Fargo, will have to serve 365 days in jail for intentionally withholding from regulators details about the financial institution’s phony-accounts scandal, prosecutors stated.

In a brand new court docket submitting — filed two weeks forward of Tolstedt’s sentencing listening to — legal professionals on the U.S. Division of Justice argued that serving 365 days in jail, adopted by means of 365 days of probation, is an acceptable punishment. Tolstedt, who retired from Wells Fargo seven years in the past, pleaded accountable previous this yr to a legal price of obstructing a financial institution exam.

The beneficial 12-month sentence, which used to be reported previous by means of Bloomberg Information, is harsher than the advice of the U.S. Probation Place of job, which advises federal courts in accordance with U.S. Sentencing Fee pointers. The Probation Place of job urged that Tolstedt will have to serve 3 years of probation.

Imprisonment for 365 days is a better choice as it displays the seriousness of the crime, prosecutors argued of their Sept. 1 sentencing memo. Additionally they contended that incarceration would deter different would-be white-collar criminals and advertise admire for the regulation.

“The belief that white-collar criminals, in particular well-paid, well-educated executives … frequently get not more than a ‘slap at the wrist’ is corrosive to the gadget’s legitimacy,” the prosecutors’ memo stated. A yr of jail time “would ship the message that extremely compensated company executives … are held in command of their movements up to another member of society.”

Tolstedt is scheduled to be sentenced in Los Angeles on Sept. 15 by means of U.S. District Pass judgement on Josephine Staton. Lawyers for Tolstedt submitted their very own sentencing advice on Friday, however the record used to be filed below seal.

Matthew Umhofer, an lawyer for Tolstedt, didn’t reply Tuesday to American Banker’s request for remark.

The deal that Tolstedt reached with the Justice Division in March, wherein she agreed to plead accountable to a unmarried prison price of obstructing a financial institution exam, referred to as for a jail sentence of as much as 16 months. Tolstedt additionally agreed to a ban from the banking trade, plus civil cash consequences of greater than $21 million, to unravel positive civil fees she used to be going through.

Prior to Tolstedt left Wells Fargo, she oversaw the banking massive’s retail department. As a part of that function, she used to be accountable for gross sales targets for department workers.

Some workers felt so careworn to satisfy their gross sales targets that they cheated by means of opening pretend buyer accounts. As employees sought to sport the gadget, hundreds of thousands of frequently unused accounts had been opened over the process a few years, in step with prosecutors.

The Division of Justice alleges that Tolstedt downplayed the extent and severity of workers’ misconduct in communications with the Place of job of the Comptroller of the Forex. She additionally withheld details about what number of financial institution workers had been fired or resigned pending investigation for sales-related misconduct, in step with prosecutors.

“As head of the neighborhood financial institution, [Tolstedt] used to be uniquely located to permit the OCC to do its task,” prosecutors wrote within the sentencing memo. “She did the other. [Tolstedt] minimized the scope of the misconduct, falsely characterizing it because the remoted misbehavior of a couple of dangerous apples.”

As to the Probation Place of job’s advice, the Justice Division stated that 3 years of probation is not sufficient.

“This type of sentence might replicate the truth that [Tolstedt] poses no additional risk to society, but it surely does now not account for the opposite statutory sentencing elements,” the memo stated. “A one-year custodial sentence moves the suitable steadiness.”

Tolstedt is the one former Wells Fargo government to be charged criminally in reference to the phony-accounts scandal.