(Updates with more details about the criminal investigation, background on scandal)
By Sarah N. Lynch
WASHINGTON, Oct 19 (Reuters) - The California Attorney General's Office has launched a criminal investigation into Wells Fargo over allegations it opened millions of unauthorized customer accounts and credit cards, according to a seizure warrant seen by Reuters.
Attorney General Kamala Harris authorized a seizure warrant against the bank that seeks customer records and other documents, saying there is probable cause to believe the bank committed felonies.
The probe marks the latest setback for the bank in a growing scandal that led to the abrupt retirement of its chief executive officer, monetary penalties, compensation clawbacks, lost business and damage to its reputation.
Wells Fargo spokesman Mark Folk did not immediately provide a comment in response to requests from Reuters, but was quoted in the Los Angeles Times as saying the bank is "cooperating in providing the requested information."
A spokeswoman for the California Department of Justice said she could not comment on the probe.
The bank's downward spiral kicked into high gear last month.
The U.S. Consumer Financial Protection Bureau and other regulators ordered the United States' third-largest bank by assets to pay $190 million in fines and restitution to settle civil charges that its branch staff created as many as 2 million accounts without customers' knowledge in order to meet internal sales targets.
The CFPB said that high pressure sales tactics and financial incentives fueled the fraud, which was largely carried out by low-level branch employees. About 5,300 of those employees were fired.
Shortly after the civil settlement was made public, CEO John Stumpf was called to testify before Congress.
Observers have widely criticized his performance, with many saying he appeared ill-prepared to deal with tough questioning by lawmakers including Massachusetts Democratic Senator Elizabeth Warren, who called for his resignation and accused him of him "gutless" leadership.
Last week, Stumpf resigned and was replaced by Chief Operating Officer Tim Sloan.
This is at least the second criminal probe to be opened into Wells Fargo since last month. In September a source told Reuters that federal prosecutors are also looking into the matter.
An affidavit filed by Special Agent Supervisor James Hirt with the California Department of Justice reveals that interviews with possible victims of the fraud have already started.
One victim, identified only as "Ms. B," told the investigator that she had declined a request by a Wells Fargo teller in late 2011 or 2012 to open new accounts.
But sometime in late 2013 or early 2014, she started to receive notices that she and her husband "allegedly owned on three life insurance policies held by the bank," the affidavit says.
She also told the investigator that Wells Fargo often claimed that her accounts had to be closed and reopened because of "problems" that it could never fully explain. The constant changes, she added, sometimes caused her to incur fees because her checks would bounce.
Another alleged victim, identified as "Ms. C," told the investigator she noticed the bank was transferring money from her checking account to her savings account in amounts that grew over time, from $50 to $150.
The bank claimed the transfers were done as overdraft protection, but it refused to provide her bank statements when she asked to see them.
The seizure warrants by the state are seeking a variety of documents from Wells Fargo, including a list of all unauthorized California customer accounts created between May 2011 and July 2015.
It also seeks information about fees, charges and other costs that were incurred and the identity of all Wells Fargo employees that may have opened the accounts.
(Reporting by Sarah N. Lynch; Editing by Chris Reese and Alan Crosby)