Ousted Freddie Mac chief gets day in court

Oct. 11, 2007 at 9:44 AM
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WASHINGTON, Oct. 11 (UPI) -- Leland Brendsel was removed as head of the U.S. mortgage funder Freddie Mac four years ago and charged with elaborate accounting manipulations.

The move resulted in an inquiry that could mean hundreds of millions in potential penalities.

Brendsel finally gets his day in court, starting Monday, in a trial-like proceeding before an administrative law judge in Washington that is expected to run until the end of February.

In addition to seeking vast fines, the government is asking Brendsel to repay Freddie Mac any compensation he received unjustly.

Dozens of witnesses expected to testify include Warren Buffett, the billionaire investor, C.E. Andrews, head of student loan marketer Sallie Mae who helped lead audits of Freddie Mac as a partner at Arthur Andersen, and senior executives who served under Brendsel, the Washington Post said.

Freddie Mac, a government-sponsored mortgage funding powerhouse, revealed in 2003 it had misstated its financial results by billions of dollars. Brendsel was driven to early retirement.

His legal team said the financial stability of Freddie Mac was never compromised and Brendsel was not involved in detailed decisions about the daily operations of Freddie Mac. The government disagreed.

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