Lawsuit Alleges Wachovia Bank Knew of Fraud

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Suit: Wachovia ignored scammers

Consumers claim bank earned fees from accounts associated with fraud.

Wachovia Corp., the fourth-largest U.S. bank and the biggest bank in the Lehigh Valley, was accused in a lawsuit of ignoring fraudulent telemarketers who used the bank to help them steal millions.

E-mails and other documents filed in April in federal court in Philadelphia show Wachovia employees knew of claims the telemarketers were using ''demand drafts,'' or unsigned checks, to steal from their victims, the plaintiffs claim in the suit.

''YIKES!!!!'' a Wachovia employee wrote in a 2005 e-mail warning co-workers of an account that had generated 4,579 complaints in two months. ''ALL their deposits are THIRD PARTY DRAFTS!!! DOUBLE YIKES!!!!''

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The suit claims that unscrupulous telemarketers called on consumers, many of them elderly, offering worthless products, including phony coupons, gift certificates and information about government grants.

The telemarketers then persuaded customers to disclose information about their bank accounts, which the telemarketers used to make fraudulent charges, through payment processors that had accounts at Wachovia, according to the complaint. The payment processors generated ''demand drafts'' with a notice stating ''authorized by drawer'' in place of a signature.

The Morning Call