NEW YORK, Nov 22 (Reuters) - The U.S. government on Friday sought permission to add a Wells Fargo & Co executive, Kurt Lofrano, as a defendant in its year-old lawsuit accusing the bank of fraud.
In a motion filed in U.S. District Court in Manhattan, the Justice Department said Lofrano played a "critical role" in the bank's alleged failure to report defective home loans to the government.
Wells Fargo, the country's largest mortgage lender and fourth-largest bank, is accused of misleading the U.S. Department of Housing and Urban Development into believing the loans qualified for insurance from the agency's Federal Housing Administration, costing hundreds of millions of dollars in losses. The bank has denied the allegations.
Lofrano's lawyer did not immediately respond to a request for comment.
In Friday's request, the government said Lofrano worked as vice president for quality control at the bank from 2002 to 2010, a position that made him responsible for Wells Fargo's self-reporting policies.
"Lofrano purposely did not report the vast majority of these materially defective loans to HUD," prosecutors wrote to U.S. District Judge Jesse Furman. "This abject failure to self-report occurred even though Lofrano headed up a working group to address this precise issue in April 2004."
The government had signaled its intention to add Lofrano in a filing earlier this month without naming him.
In a statement, a Wells Fargo spokesman said prosecutors had not adequately explained why adding Lofrano as a defendant was warranted more than a year after filing the lawsuit.
"Mr. Lofrano is a well respected team member and a strong leader who has made significant contributions that have helped customers and our industry," the bank said. "We stand by him unequivocally."
Furman denied the bank's bid to dismiss the lawsuit in September.
Lofrano, who remains at the bank as a vice president, is the only individual defendant in the case. He joins a short list of executives who have been sued by federal investigators over actions that contributed to the financial crisis, which has prompted criticism that prosecutors have not held to account those responsible for the meltdown.
Among those defendants was Rebecca Mairone, a former midlevel executive at Bank of America Corp's Countrywide unit, who was found liable along with the bank by a federal jury in Manhattan last month for selling defective mortgages to Fannie Mae and Freddie Mac.
The case is U.S. v. Wells Fargo Bank NA, U.S. District Court, Southern District of New York, No. 12-07527.