Wells Fargo Ordered to Pay for Committing Trustee Fraud, Elder Law Attorney, Woodstock, GA

When creating a large trust, especially one for a minor child, it is often a good idea to use the services of a professional trustee. Many banks, both large and small, offer the service. However, there is no guarantee that professional trustees will behave appropriately.

When she was 7-years-old, Angela Militello’s parents passed away in Midland, Texas. They were not without means and left behind a sizeable trust for her. The trust was under the management of Wells Fargo bank. For many years all was well. However, when Militello obtained a divorce in 2006, she needed money for a house she and her children could live in. She asked the trustee how she could obtain $200,000. Wells Fargo delivered the money and asked Militello to sign some paperwork approving the sale of one-third of the trust’s assets. The remainder of the trust assets were sold over the next few weeks.

In and of itself, this is not an unusual story. A beneficiary of a trust needs cash for a particular purpose and to obtain the cash, trust assets need to be sold.

The unusual aspect here is that Militello later sued Wells Fargo for fraud. She claimed that the bank conspired with a third-party to sell the trust assets at below market value. After a trial a Texas judge agreed with Militello and ordered Wells Fargo to pay $8 million in damages. The Dallas Morning News reported this story in “Judge: Wells Fargo to pay $8M for fraud tied to trust set up when Dallas woman was orphan.”

The lesson here is that even when using the services of a professional trustee, such as a bank, trust beneficiaries should always pay attention and make sure the trustee is not acting for its own benefit.

Reference: Dallas Morning News (July 10, 2015) “Judge: Wells Fargo to pay $8M for fraud tied to trust set up when Dallas woman was orphan.”

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