Wells Fargo & Co. (NYSE: WFC) has suspended two executives in the midst of a federal investigation into the bank's purchase of low-income housing tax credits, according to a Tuesday report from Bloomberg.
Rick Davis, a senior vice president and regional equity manager, and Robert Klixbull, a vice president based in the Charlotte region, both of whom worked in Wells Fargo's community lending and investment division, were suspended in light of an investigation conducted by the U.S. Department of Justice into the bank's purchases, or negotiated purchases, of low-income housing tax credits, or LIHTC.
Investigators are looking into whether Wells Fargo and other banks conspired with real estate developers to lower bids on the tax credits — which would, in turn, increase the return on the banks' investment. Companies typically purchase those particular credits to help lower their bill for federal income taxes. The developers who sell them can then put that money toward the construction of housing in low-income developments.
Both Davis and Klixbull reported to Michael Lavine, a Charlotte-based executive vice president and head of low-income tax credit equity at Wells Fargo.
Bloomberg attributes these suspension claims to "people familiar with the matter."
Wells Fargo acknowledged the investigation in an August regulatory filing, which says federal agencies "have undertaken formal or informal inquiries or investigations" into the matter. No other details were provided.
"Wells Fargo is committed to providing financial solutions to support the development and rehabilitation of affordable multifamily housing in areas where there are the biggest needs. Our investment in affordable housing has helped improve access to housing in cities across the country, and we remain committed to the affordable housing industry, including LIHTC projects," spokeswoman Beth Richek says in a statement obtained by the Charlotte Business Journal.
"Wells Fargo is fully cooperating with the government in its investigation, and will continue to do so moving forward. Wells Fargo is not in a position to make any additional statements beyond what has already been provided in Wells Fargo’s Q2 2018 10-Q (filing)," Richek continues.