Ex-Freddie Mac CEO to return millions in settlement
WASHINGTON (Reuters) - Leland Brendsel, the former chief executive of Freddie Mac (FRE.N), will forego or return over $15 million in compensation in a settlement announced by the mortgage finance company's regulator on Tuesday.
The settlement marks the last dispute that the Office of Federal Housing Enterprise Oversight had with former executives of Freddie Mac related to a multibillion dollar accounting fraud at the company from 1998 through 2002.
OFHEO had first filed charges in 2003 that claimed Brendsel created a culture that allowed the company to misstate millions of dollars in earnings.
Under the settlement, Brendsel will pay $2.5 million to the U.S. government, surrender previously paid salary and bonuses of $10.5 million to Freddie Mac, and waive claims against Freddie Mac for additional compensation valued at more than $3.4 million.
"Although Mr. Brendsel and OFHEO disagree strongly about what happened in the past at Freddie Mac, Mr. Brendsel agreed to a settlement," his attorney, Kevin Downey, said in a statement.
According to the terms of the settlement, the money returned to Freddie Mac will go to aid today's troubled mortgage borrowers who face foreclosure, Downey said.
In mid-October, OFHEO presented its case against Brendsel to a federal adjudicator. The regulator alleged that the former CEO, who spent nearly 20 years at the No. 2 U.S. mortgage finance company and was forced to resign in June 2003, was a key figure in the accounting scandal that rocked Freddie Mac.
"While the consent order today represents a satisfactory conclusion to the enforcement actions arising from matters addressed in OFHEO's special examination of Freddie Mac, we continue to monitor the Enterprise's ongoing remediation," the regulator's director, James Lockhart, said in a statement.
In January 2003, Freddie announced flaws in its accounting and said it would restate the prior three years of earnings. In the years since, the company has resolved many outstanding regulatory and investor issues stemming from that improper accounting.
