Former Freddie Mac CEO and Chairman Leland C. Brendsel says he will pay the $13 million in penalties imposed by the Office of Federal Housing Enterprise Oversight. As part of the deal, he will also waive his claim to $3.4 million from Freddie Mac. Payment of the fine would settle the OFHEO’s administrative enforcement action against the former Freddie Mac CEO.
The OFHEO charges, initially filed in December 2003, alleged that Brendsel created a company environment that permitted improper earnings management, allowed accounting to function without the proper resources, and neglected to set up proper controls within the company. As a result of the unsound and unsafe practices, as well as the misconduct, the OFHEO claimed that Freddie Mac sustained financial losses.
The consent order is connected to an accounting scandal that forced the company to restate up to $4.5 billion in earnings.
The OFHEO issued Freddie Mac a number of consent orders that mandated that the company restructure its internal controls, corporate governance, and accounting penalties. Over $100 million in civil penalties were also involved.
As part of paying the penalties, Brendsel has to disgorge $3.4 million in income, including the $10.5 million bonus that had been previously been paid to him by Freddie Mac. He can never work for Freddie Mac again unless the OFHEO grants him permission. Brendsel must pay the remaining $2.5 million to the US government. Disgorged funds will go toward helping distressed homeowners keep their homes.
Other related claims were settled against former Freddie Mac President David Glen, Ex-CFO Vaughn Clark, and two other former company vice-presidents.
Freddie Mac guarantees or owns about 1/5th of the $11.5 trillion residential-mortgage debt in the United States. Freddie Mac has paid OFHEO $125 million related to bogus accounting charges. Last month, the company agreed to pay $50 million to settle claims that it defrauded investors.
If you are an investor who has lost money because of the inappropriate actions of a member of the securities industry contact Shepherd Smith and Edwards right away. We can protect your rights. Our securities fraud lawyers have helped thousands of people recover their losses.
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