As a result of the recently issued order from the federal District Court of the District of Columbia, Freddie Mac today announced that it has begun the process of unfreezing compensation and paying amounts due to the company’s former Chairman and CEO, Leland C. Brendsel.
Since June 2003, Freddie Mac has complied with letters issued by Office of Federal Housing Enterprise Oversight (OFHEO) that directed Freddie Mac to freeze the payment of nearly $55 million in compensation to Brendsel arising from his prior employment with the company during which accounting problems at the mortgage giant came to light.
OFHEO fined Freddie Mac $125 million last year over the accounting shenanigans. The regulator said the company disregarded accounting rules, internal controls, disclosure standards and the public trust in the pursuit of steady earnings growth.
In December, the company announced it had understated its earnings by $5 billion cumulatively in 2000, 2001 and 2002. That came to light after a yearlong intensive re-audit that executives said cost the mortgage giant at least $100 million.
While the Justice Department has appealed the District Court’s order to the Court of Appeals, it has not obtained a stay of that order pending a resolution of the appeal.
Administrative proceedings regarding OFHEO’s demand to change Brendsel’s termination status, its request for reimbursement of past bonuses from Brendsel, and its request for penalties against him are still pending.
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