By Zachary A. Goldfarb and Jonathan Mummolo
Washington Post Staff Writers
Friday, April 24, 2009
The day before he was found dead in an apparent suicide, Freddie Mac Acting Chief Financial Officer David B. Kellermann discussed his possible resignation with top executives because of the stresses at work, according to several sources familiar with the matter.
Instead, company officials suggested that Kellermann take the rest of the week off and said that they would have further conversations about his future, two sources said. Kellermann agreed, they said.
It is unclear why Kellermann apparently took his life. Kellermann, 41, who was found by his wife in their Fairfax County home early Wednesday, left no note, law enforcement sources said.
The Securities and Exchange Commission and FBI have opened investigations into the death, which one source described as routine when a chief financial officer of a prominent company dies or resigns.
Kellermann had been strongly considering quitting the company he had served for 16 years, sources said. But a person familiar with the matter said Kellermann was also worried about how resigning would look to the public -- whether it would appear to be another defeat for Freddie Mac, which was seized by the government last fall amid crippling losses.
Sources said he had hardly seen his family, including his young daughter, in recent months. He had been consumed at work by a growing number of challenges, said the sources, who include a law enforcement official and others with first-hand knowledge. They spoke on condition of anonymity because of the sensitivity of Kellermann's death.
The challenges included a disagreement with the company's regulator over disclosing certain information to investors. Kellermann wanted to ensure that the company would properly dis close required financial information, according to a source. He had spent years helping design its internal accounting system after major earnings irregularities earlier this decade.
He also felt the weight of an imminent quarterly filing with the SEC, a source said.
This week, Freddie Mac hired a high-level consultant to help Kellermann with the myriad accounting questions he faced, a person familiar with the matter said.
One source said Kellermann had informed Freddie Mac management on multiple occasions during the past months that he wanted to resign. Other sources familiar with Freddie Mac said that although there were discussions about Kellermann leaving the company, they were not aware of any resignation letters.
Kellermann spoke with Freddie Mac Interim Chief Executive John Koskinen on Tuesday, and Koskinen tried to help him through the pressures he felt, according to a person familiar with the matter. They looked at Kellermann's calendar and decided that he could take time off.
After talking with Koskinen, Kellermann had a conversation with Freddie Mac's senior human relations executive, Paul George. Kellermann then decided to take a week off, and he delegated his responsibilities to two subordinates.
"Our chief human resources executive spoke with David earlier this week and suggested David take some long-deserved time off with his family," said David Palombi, a Freddie Mac spokesman. "At no time was he asked to resign, and at no time was there any suggestion that his duties would be diminished."
Kellermann had worked his way up at Freddie Mac from a young financial analyst to one of the mortgage giant's main points of contact with its government overseers. He became acting chief financial officer last September after the government seized the firm. Kellermann was responsible for the company's financial controls, financial reporting, taxes, capital oversight and compliance with federal requirements.
Kellermann's body was found by his wife, Donna, in the basement of their home in the Hunter Mill Estates subdivision in Vienna, law enforcement sources said. He had hanged himself on a piece of exercise equipment, the sources said. There were no signs of foul play.
An autopsy was completed yesterday, and a spokeswoman for the state medical examiner's office said that "nothing suspicious was revealed." Nancy Bull, regional administrator for the medical examiner, said the cause and manner of death had not been finalized pending lab results, which could take several weeks. But she said there was nothing to contradict a finding of suicide.
Once a high-flying finance company, Freddie Mac has been transformed into a quasi-government agency, carrying out big parts of the Obama administration's housing recovery plan. Employees lost much of their money with the collapse of the company's stock and face uncertain job prospects in the long term.
Separately, the SEC and Justice Department have been investigating Freddie Mac's accounting, disclosure and corporate governance, the company said in an SEC filing. Sources said Kellermann was not a target of the probe by the U.S. attorney's office in Alexandria but was someone it wanted to question.
Staff writer Tom Jackman and staff researcher Meg Smith contributed to this report.