This is an article back in 2009 where Fannie Mac CFO committed suicide. It makes me wonder what happened to the probe as well Freddie Mac’s accounting practices and why this case remains unsolved and silent:
WASHINGTON (AP) — The chief financial officer of money-losing mortgage giant Freddie Mac was found dead in his basement early Wednesday morning in what police said was an apparent suicide.
David Kellermann, 41, apparently hanged himself, said a law enforcement official familiar with the investigation. He asked not to be identified because the investigation was ongoing.
Kellermann’s death is the latest in a string of blows to Freddie Mac since it was seized by the government last September. The company, which owns or guarantees about 13 million mortgages, has been criticized for financing risky loans that fueled the real estate bubble and are now defaulting at a record pace.
Freddie Mac lost more than $50 billion last year, and the Treasury Department has pumped in $45 billion to keep the company afloat. Last month, David Moffett, the government-appointed chief executive, resigned in frustration over strict oversight.
Kellermann worked for Freddie Mac more than 16 years, starting out as a financial analyst and auditor. He was named acting chief financial officer last September when the government ousted former CEO Richard Syron and Kellermann’s predecessor Anthony S. “Buddy” Pizsel.
Neighbors said Kellermann had lost a noticeable amount of weight under the strain of the new job. Some neighbors said they suggested to Kellermann should quit to avoid the stress, but Kellermann responded that he wanted to help the company through its problems. The neighbors did not want to be quoted by name because they didn’t want to upset the family.
Thanks to Gawker, FOIA documents revealed that inspector general of TARP was investigating the CFO. Read all the documents here. What you don’t know is that FBI that FBI was looking into the Freddie Mac’s loss thanks to an independent investigator 2008 report. More from Daily Finance article in 2009:
The Journal quotes from a February 2008 confidential report by the investigative firm Kroll that concluded “inappropriate application” of accounting rules “enabled Freddie to defer billions of dollars of losses incurred from 2001 to 2004” on derivative contracts whose value depends on fluctuations in interest rates. FBI investigators obtained a copy of that report, which has not yet been released publicly, and is currently seeking additional information.
Freddie Mac lost a total of about $7.9 billion on derivatives trading as of December 31, 2004, but has only been reporting those losses gradually over the quarters since then. There are still $3.68 billion is looses to be reported over the next decade. Freddie Mac used “hedge accounting” to try smooth out the losses, and in doing so may have violated the rules, found the auditors.
The Justice Department and the SEC continue their own investigations into a range of accounting practices at both Freddie Mac and Fannie Mae.
Interesting enough that the outside investigator went to FHFA in 2008 about Freddie Mac’s accounting practices. From Real Clear Market website:
An outside investigator early last year told regulators that Freddie Mac failed to properly document interest rate bets, but the government didn’t challenge the mortgage finance company’s accounting practices.
FHFA, under Ed deMarco, went as far as filing a motion to not disclose Freddie Mac’s accounting: