| Page 2 of 2 < |
Fannie Mae Avoids Criminal Charges Over Accounting
In 2004, Fannie Mae chief executive Franklin D. Raines listens to finance chief J. Timothy Howard's testimony on the company's accounting regularities. Now, the Justice Department is investigating whether Raines and Howard committed perjury in their testimony.
(By Susan Biddle -- The Washington Post)
TOOLBOX
   Resize
COMMENT
 Discussion Policy
 CLOSE
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging  |
Georgetown University law professor Donald C. Langevoort said that, if an employee commits a crime in his role as an employee, "the company has committed a crime, too, in the eyes of the law." But the Justice Department exercises discretion.
"When you fine the company, you're fining the company's shareholders," Langevoort said. "You're hurting a lot of innocent people."
"I think generally deterrence really comes from prosecuting individuals and not from indicting and convicting legal entities that don't feel real flesh-and-blood pain," said Columbia University law professor John C. Coffee. "You can't send a corporation to prison."
Shortly after news of the Fannie Mae criminal probe broke two years ago, defense lawyers pointed out that the statute of limitations had expired on one of the chapters that figured most prominently in OFHEO's investigation of the company. In that 1998 episode, Fannie allegedly delayed counting $200 million of expenses, thereby inflating profit and enabling executives to collect millions of dollars in bonuses.
Criminal authorities might have gotten around the five-year limit by arguing a broad, ongoing conspiracy at the company, but it would doubtless have been challenged by defense lawyers.
Lawyers for Raines were traveling yesterday and unavailable for comment, according to their offices. A lawyer for Howard did not return a call seeking comment.
The spokesman for the U.S. attorney declined to say whether any past or current Fannie Mae personnel remain under criminal investigation with respect to the alleged accounting fraud.
The investigation of whether Raines and Howard committed perjury in testimony about the accounting was initiated at the request of Rep. Richard H. Baker (R-La.), chairman of a House subcommittee that oversees Fannie Mae.
Howard "testified truthfully," his attorney Steven Salky said in a June interview.
A Fannie spokeswoman declined to comment on the government's decision not to prosecute the company. In a brief news release, chief executive Daniel H. Mudd said the company "will continue to work closely and cooperatively with our regulators."
