Former Freddie Mac chief executive Leland Brendsel will return or waive rights to more than $15 million in compensation, according to terms of a settlement related to accounting fraud at the company between 1998 and 2002.
The settlement reached with the Office of Federal Housing Enterprise Oversight covers charges made in 2003 by the government watchdog that Brendsel established a corporate culture that allowed improper earnings management to develop, failed to ensure that adequate internal controls were put in place and permitted the accounting function to operate without adequate resources.
Brendsel wil pay $2.5 million to the U.S. government. He will return $10.5 million in previously paid salary to Freddie Mac. He will also waive claims of further compensation valued at $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, Brendsel's attorney, Kevin Downey, said in a statement.
The funds returned to Freddie Mac will be used to support initiatives and programs to help distressed homeowners, OFHEO said.