MURRIETA, Calif., Feb. 26 /PRNewswire/ -- If you're looking for an example of how banks are abusing the Troubled Asset Relief Program, consider Wells Fargo Bank, which has received $25 billion in federal aid.
Since last week, the San Francisco-based bank has inexplicably withheld tens of thousands of dollars in funds from credit cards that clients of a Southern California behavioral healthcare treatment center have used to pay for their treatment.
"It's outrageous what Wells Fargo is doing," said Jerrod Menz, president of Murrieta, Calif.-based A Better Tomorrow Treatment Center, Inc. "Taxpayers have given Wells Fargo billions of dollars in bailout funds, and yet they are refusing to release funds that our clients have paid to us for treatment services."
Menz said A Better Tomorrow has used Wells Fargo's banking and credit card processing services for four years and typically receives about $700,000 a year in credit card payments from clients seeking behavioral healthcare.
But since Thursday of last week, Wells Fargo has withheld tens of thousands of dollars in credit card transactions that A Better Tomorrow's clients have made to pay for their treatment.
Menz said A Better Tomorrow was never notified by anyone at Wells Fargo that a hold was being put on its credit card transactions. He said the company left five messages for Wells Fargo representatives on Tuesday, and none of its calls were returned.
It wasn't until a representative from A Better Tomorrow visited a Wells Fargo office that it learned that the bank had placed a hold on its credit card transactions and that it wasn't going to process any more credit cards for clients seeking treatment at A Better Tomorrow until it built up a reserve of $200,000 in cash.
"We are a small business," Menz said. "We don't have that kind of cash. We have a good track record. But we can't afford to give banks more money when we need money to run our business."
Paul Howarth, A Better Tomorrow's CEO, said he spoke with Dale Benveniste, a senior representative from Wells Fargo's merchant services division on Wednesday. "She told me it's not Wells Fargo's concern if we can't come up with $200,000 cash before they will release funds our clients have already paid for treatment services," Howarth said, adding that she indicated that similar requirements were being imposed on other businesses without notice.
"Wells Fargo is apparently withholding funds from private businesses in an effort to increase their cash on hand as they go through the Treasury Department's 'stress test,'" Howard said. "But they're doing this at the expense of small businesses. We could be forced to lay off one fourth of our staff because Wells Fargo is withholding tens of thousands of dollars that our clients have paid to us through credit card transactions."
Menz said A Better Tomorrow has filed a complaint about Wells Fargo's actions with the Federal Trade Commission because he believes Wells Fargo's actions are both improper and illegal. The clinic is also filing complaints this week with the attorneys general of California and Colorado, where Wells Fargo's credit card processing division is headquartered.
Menz said laying off staff is the only option A Better Tomorrow has to reduce its operating expenses in the wake of Wells Fargo's actions. "I can't cut my rent. I can't reduce my utilities or other fixed operating expenses. Staffing is the only place I can cut," Menz said, adding that he is outraged that Wells Fargo had the audacity to withhold its funds without contacting the clinic to explain what it was doing or to suggest alternative arrangements for processing of credit card transactions.
Menz and Howarth said they hoped members of the House Financial Services Committee and the Senate Banking Committee will take a closer look at what Wells Fargo is doing with federal bailout funds and how its credit card division is handling the processing of funds owed to businesses across the country.
Based in Murrieta, Calif., A Better Tomorrow is accredited by the Commission on Accreditation of Rehabilitation Facilities (CARF), placing it in the top 5 percent of drug and alcohol treatment centers in California. For more information about A Better Tomorrow, please contact Jerrod Menz at (800) 757-9867. Additional information is available on the clinic's website at http://www.abttc.com/
Jerrod Menz (800) 757-9867 email@example.com
|SOURCE A Better Tomorrow|
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