Moving to contain a public relations mess, Wells Fargo & Co. fired a top executive accused of using a bank-owned Malibu beach house to entertain her family and friends.
Cheronda Guyton, a senior vice president responsible for commercial foreclosed properties, broke company rules barring personal use of bank property, Wells Fargo said in a statement Monday.
The Times reported last week that Guyton had been spotted by neighbors spending time at the Malibu Colony home with her family this summer. At a party in August, guests were ferried to the beach house from a yacht, residents of the enclave said.
Guyton did not return phone calls or e-mails requesting comment.
The property's former owners, Lawrence and Linda Elins, were among the victims in Bernard L. Madoff's massive Ponzi scheme. Because of their financial losses, the couple had been forced to sign over the property to Wells Fargo to help satisfy a debt, their former real estate agent said.
As Wells Fargo investigated the employee's alleged improper conduct over the weekend, the reports of lavish frolicking in the wake of the foreclosure crisis drew widespread attention from organizations including the ABC, CNN and Fox television news networks, as well as the overseas wire service Agence France-Presse.
In a statement, Wells Fargo said its internal investigation concluded that "a single team member was responsible for violating our company policies. As a result, employment of this individual has been terminated."
"We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members," the statement added.
Although the statement did not mention the fired employee by name, Wells Fargo spokeswoman Jennifer Langan confirmed that it was Guyton.
Wells Fargo's investigation has concluded, Langan said, adding that "no other Wells Fargo team member was involved."
Wells Fargo's quick action after The Times' report last week reflects the bank's recognition that the case could become a liability, especially in light of its acceptance of federal bailout money, ethics experts said.
Wells Fargo is trying to "cut the story off rather quickly," said Mark Pastin, president of the Council of Ethical Organizations, an Alexandria, Va., nonprofit promoting ethics in business and government. "They might have acted differently if it was a lower-tier employee, but this was a senior vice president."
Rapidly firing Guyton could also have been an attempt by Wells Fargo to present her conduct as the isolated action of an individual, Pastin said. If Wells Fargo let the situation drag on for weeks or months, other employees might have gotten the idea that Guyton's alleged behavior was tolerable. But by firing her, he said, it cuts off the "internal rot" that could have set in.
Malibu Colony residents and real estate agents said they had expected the home to be put on the market after the bank took it over.
The home was valued at $12 million when it was transferred to Wells Fargo in May. Wealthy real estate shoppers who had gotten wind of the house being held by the bank said they were frustrated they could not offer to buy it. Local real estate agents said they began to get calls from eager would-be buyers -- but the house wasn't for sale.
The gated Malibu Colony, whose residents include actor Tom Hanks and former Univision Chairman A. Jerrold Perenchio, stretches for three-quarters of a mile in the heart of Malibu.
"It's a trophy property. They don't come on the market often. People like myself would buy it sight unseen," said Arthur Spector, a Las Vegas resort developer who said he was willing to pay all cash for the house if it was priced close to $12 million.
The three-bedroom house had not been listed for sale until Friday, the day after The Times' story first appeared online. The bank listed it at $21.5 million. According to property records, the home is 3,800 square feet and sits on an 8,700-square-foot lot.
When told of the list price, Spector's interest quickly cooled. "It's going to sit until it comes down to the right price, which is anywhere from $9 million to $14 million," he said.
Irene Dazzan-Palmer, a Malibu agent who had tried to lease the house for the previous owners, said people had called her saying they were interested in buying the house, but Wells did not want to show it. Neighbors also said they knew people who wanted to purchase the property.
The house was built in 1990 and had been owned by clothing designer Nancy Heller.
Guyton's own residence is a one-story cottage home in the Fairfax district. Two private security guards stood watch Monday at the house, which records show was bought in 2004 for $900,000. The guards would not say who hired them or whether the residents were home.