American Express has agreed to pay more than $138 million to settle an investigation into sales and marketing.

NEW YORK (AP) — American Express has agreed to pay more than $138 million to settle a wire fraud investigation related to its sales and marketing practices, federal officials announced Thursday.

The New York-based financial giant provided inaccurate tax advice to clients and their customers on wire products sold primarily to small and medium-sized businesses, according to the attorney for the Eastern District of New York. Customers are told, for example, that company fees are tax deductible as a business expense.

Harry Chavis, special agent in charge of the Internal Revenue Service in New York, said the company “misled customers by touting tax breaks that simply didn’t exist.”

Officials said an internal investigation in 2021 led to the layoff of about 200 workers, and the company halted production entirely that year.

“Financial institutions like American Express don’t have an improper tax avoidance scheme to sell products and make a quick profit,” Acting U.S. Attorney for the Eastern District of New York Judy Phillips said in a statement. “This resolution ensures that American Express will be held financially accountable for the unacceptable behavior of its sales staff by misrepresenting the tax benefits of these products.”

American Express said the disputed sales process ended in 2021 or earlier, and that it would pay a total of about $230 million to settle the case.

We have cooperated extensively with these agencies and our regulators and taken significant voluntary steps to address these issues, including discontinuing certain products several years ago, conducting a comprehensive internal review, taking appropriate disciplinary actions, making organizational changes and improving policies, compliance and training programs.” The company said in a statement.

Under the agreement, American Express will pay $77.7 million in criminal penalties and $60.7 million in restitution, according to the United States Attorney’s Office.

The company has separately entered into a multi-million dollar civil settlement with the US Department of Justice.

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This story has been edited to reflect that Phillips is an acting attorney for the office, not an acting US attorney.