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. Among the allegations, Ferrer made 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.

At a minimum, the significant fines and allegations stain the reputation of USAA as a whole, given its holding of USAA Bank as a subsidiary corporation. 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. If allegations of unauthorized financial transactions and violations of the Electronic Fund Transfer Act go more profound than what has been discovered, all of USAA Bank’s customers would be in jeopardy. If Ferrer’s claims are valid, and there is no reason to doubt they are not given the large fines already handed down by the Government, USAA Bank was essentially defrauding the military families it claims to represent.

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. Ferrer, who was brave enough to come forward with allegations against the bank, immediately suffered adverse employment action as a result of speaking up against the organization. Now USAA’s long-standing reputation among both the military community and the greater United States at large is in significant jeopardy. 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 designed to educate managers on listening up 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 are aimed at improving workplace culture and reducing incidents that can lead to reputational damage. In addition, providing employees education and confidence their complaints will be taken seriously is good for everyone involved.

We invite you to contact a member of our staff 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 and have a bundle of workplace materials that can not only help you remain compliant with laws and recommendations from federal, state, and local governments but can also greatly improve your culture, leading to the increased attraction of top candidates and retention of staff. We would welcome the opportunity to partner with your organization on improving its culture.

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