The finance chief of troubled U.S. mortgage giant Freddie Mac, David Kellermann, was found dead on Wednesday after apparently committing suicide, a police source said.
Kellermann, who was promoted to acting chief financial officer last September after the government seized the company and its sibling mortgage agency Fannie Mae, was found hanging in the basement of his home in an affluent Washington suburb at around 5 a.m.
There was no indication what drove 41-year-old Kellermann, who was married and had a young daughter, to kill himself.
Kellermann, a 16-year veteran of the firm, had played a key role in helping it navigate past accounting scandals and answer questions from regulators and investors who put the company under intense scrutiny as a five-year U.S. housing market boom ended in 2006.
Last year's government take-over came as Freddie Mac and Fannie Mae, known as government-sponsored agencies, faced deep losses and the effects of the U.S. housing market crash engulfed other financial institutions.
In March, Freddie Mac said that it was cooperating with the Securities and Exchange Commission in a probe and that employees had been interviewed by investigators. A law enforcement source said there was no sign that federal investigators had any recent contacts with Kellermann.
Freddie Mac knows of no connections between this terrible personal tragedy and the ongoing regulatory inquiries discussed in our SEC filings, said David Palombi, Freddie Mac's executive communications officer.
There have been several high-profile suicides of business executives around the world in the last six months as the financial crisis took hold. But one former colleague said that Kellermann was not the type to buckle under stress.
The accounting team has been under incredible pressure for years and there are those you might worry about how they are dealing with the stress, but he was not one of them, said a former Freddie Mac executive who worked with Kellermann.
Freddie Mac said that in light of Kellermann's death it delayed for at least one day the routine sale of new notes.
FOUL PLAY NOT SUSPECTED
Fairfax County police officials would not confirm the death as a suicide, but said police were called to Kellermann's home in Reston before dawn and found him dead in the basement.
We do not suspect foul play, said Fairfax County Police spokesman Eddy Azcarate.
The New York Times said that according to neighbors and company officials, Kellermann had received a bonus of about $800,000 since the government take-over. Such bonuses -- which totaled $210 million for executives at Freddie Mac and Fannie Mae -- prompted scrutiny from lawmakers who have questioned bonuses for executives of firms receiving government bailouts.
The Times said that Kellermann hired a private security firm after reporters came to his house to ask about his bonus.
Freddie Mac and Fannie Mae had a hand in about half of the entire U.S. mortgage market and were taken over in an effort to ward off further damage to the U.S. housing market.
While Freddie Mac has seen its executive ranks churn since accounting improprieties first emerged in 2003 and as it has booked multi-billion dollar losses in recent quarters, those who knew Kellermann spoke of his good character and dedication to the job.
For many years, we have known David as a person of the utmost ethical standards who was hardworking and knowledgeable in his field, the Federal Housing Finance Board, Freddie Mac's chief regulator, said in a statement.
U.S. Attorney General Eric Holder, asked about the death, said it was obviously tragic. He replied no idea when asked if it might be related to any probe of Freddie Mac.
'SMART GUY' WHO ROSE FAST
Kellermann had been closely involved in many key accounting and financial issues since 2003 when regulators found that Freddie Mac had improperly booked years of losses.
Colleagues and former co-workers were shocked at the news of Kellermann's death.
He was a smart guy who had risen fast. And people liked being around him. That's not something you could say about everyone there, the former executive said.
Before taking over as acting CFO, Kellermann served as senior vice president, corporate controller and principal accounting officer.
He volunteered in the community with a charity for the homeless. He was married with a girl neighbors said is aged about 5 or 6.
They were the last people in the world you'd think this would happen to, said Susan Unger, who lives across the street from the Kellermanns in the quiet Hunter Mills Estates. She described the couple as very wonderful neighbors.
Unger and her husband said the Kellermanns were known on the street for having the fanciest Christmas decorations. They even decorated their sprawling brick house for Halloween and with hearts for Valentine's Day.
Kellermann's family left the home on Wednesday afternoon in a dark car, with the passengers ducking to avoid a row of waiting news cameras as the car sped away.
Kellermann's death followed several high-profile suicides in the global financial crisis.
German billionaire businessman Adolf Merckle threw himself in front of a train in January after heavy losses on the stock market.
Merckle's business empire included major cement and drug companies but was hobbled by debt and effectively controlled by the banks that lent it money after a series of wrong-way bets on stock investments.
Frenchman Thierry Magon de la Villehuchet, 65, co-founder of money manager Access International, was found dead in a New York office building in December, reportedly distraught over losing up to $1.4 billion in client money to Bernard Madoff's
fraud. He slit his wrists with boxcutters.
(Additional reporting by Patrick Rucker in Washington and Walden Siew in New York; Editing by Frances Kerry)