Leland C. Brendsel, the former chairman and CEO of Freddie Mac, will pay $2.5 million in fines as part of a $16.4 million settlement with the Office of Federal Housing Enterprise Oversight over the accounting scandal that caused his ouster in 2003.
Brendsel will also relinquish his 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. The funds will be used to support initiatives and programs to keep distressed homeowners in their homes.
Brendsel reached the settlement with OFHEO after the regulatory agency filed an administrative action against the ex-head of the mortgage finance company in December 2003, accusing him of establishing a corporate culture that allowed improper earnings management, failed to ensure that adequate internal controls were put in place and permitted the accounting function to operate without adequate resources.
Freddie Mac, like Fannie Mae, the other government-sponsored mortgage finance concern overseen by OFHEO, has run into accounting problems in recent years that have led to the ouster of its senior executives.
OFHEO previously entered into a consent order with Freddie Mac that forced a restructuring, major remediation of controls, extensive changes in accounting policies and corporate governance, construction of a new information technology infrastructure, and a $125 million civil money penalty.
OFHEO also has entered into consent orders with former Freddie Mac president and COO David Glenn and former CFO Vaughn Clarke. Both of those settlements included a civil penalty of $125,000.
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