Legal News

Goings-On in Repo-ed SoCal Beach House Raising Eyebrows

By Ashby Jones

It’s a good gig for a bank worker: Take over swanky foreclosed beachfront properties and, before selling them, take them for a spin. Maybe you’ll spend a few weekends there, laying out by the pool. Or maybe you’ll invite over some friends, knock back a few Mike’s Hard Pomegranate Punches, grill up some salmon filets, crank up the John Mayer.

According to this LA Times article, it’s happening at a $12 million beach house in a fancy SoCal enclave called Malibu Colony.

The backstory all traces back to — who else? — one Bernie Madoff. One couple — residents of Malibu Colony — got killed by the Madoff fraud and had to give up their oceanfront home to Wells Fargo Bank.

Recently, however, according to the LAT article, some neighbors started seeing one of the bank’s top executives spending weekends at the property and “hosting eye-catching parties” there. In the meantime, according to a real estate agent quoted by the Times, Wells Fargo spurned offers to show the property to possible buyers.

Residents identified the house’s occupant as Cheronda Guyton, a Wells Fargo senior vice president who is responsible for foreclosed commercial properties.

Guyton was not reached by the LAT at her Los Angeles office. Wells Fargo declined to discuss Guyton, saying in a statement that representatives “don’t discuss specific team member situations/issues for privacy reasons.” But the bank said it would “conduct a thorough investigation of the allegations” by neighbors.

So let’s ask a dumb question: Is such behavior ethical? No, said W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley University in Waltham, Mass., to the LAT.

“For a business to allow this to happen in today’s ethically charged climate is quite suicidal,” he said. And because Madoff’s fraud was the root cause of the situation, he added, “it’s like rubbing salt into the wounds of a national tragedy.”

Full post as published by Law Blog - WSJ.com on September 11, 2009 (boomark / email).