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Executive at Freddie Mac Is Found Dead

By CHARLES DUHIGG and JACK HEALY

The acting chief financial officer of the troubled mortgage giant Freddie Mac was found dead Wednesday morning at his home in Northern Virginia, the police said.
The executive, David B. Kellermann, who had been with Freddie Mac for 16 years, apparently committed suicide by hanging himself, according to people with knowledge of the investigation.
A spokeswoman for the Fairfax County police said there were no signs of foul play. The police would not comment on whether a note was found, but a spokesman did say that no files or anything except the body had been removed from the house.
The police were called to the home at 4:48 a.m., reportedly by Mr. Kellermann’s family. Mr. Kellermann lived at the large red brick house in the suburb of Vienna, about 20 minutes outside Washington, with his wife and daughter.
His body was taken away by the Fairfax Coroner’s Office shortly before 9 a.m. By then, the house was surrounded by eight television trucks and about two dozen reporters. When a neighbor in a car inquired what had happened, and was told of Mr. Kellermann’s death, she began screaming and drove away.
Mr. Kellermann, 41, had been Freddie Mac’s chief financial officer since September. He was named to the position when the federal government seized the company and ousted its top executives last fall. In recent weeks, according to neighbors and company officials, Mr. Kellermann had received approval for bonuses totaling $800,000, paid out over three years. Such bonuses — which totaled $210 million for executives at Freddie Mac and its sibling company Fannie Mae — caused controversy earlier this month, and some lawmakers called for them to be rescinded.
According to neighbors, Mr. Kellermann hired a private security firm after reporters came to his house to ask about his bonus. One neighbor, Karen Layton, said she did not know the family beyond hellos, but had seen a security service parked in front of the house one day last month.
Susan Unger, who lives across the street, said Mr. Kellermann, his wife, Donna, and their 5-year-old daughter, Grace, seemed like the perfect suburban family. She said they attended neighborhood parties on the Fourth of July, worked in the yard and garlanded their home with Christmas lights and Halloween decorations every year.
“They were a great addition to the neighborhood,” said Ms. Unger, who said the Kellermanns moved in about 10 years ago. “This is the last thing we ever would have expected. This is a total shock. It’s just a very, very sad day.”
In 2005, he joined the board of the Washington, D.C., Coalition for the Homeless. He donated personally to the group and also organized a fund-raiser at the Hard Rock Cafe sponsored by Freddie Mac that raised $34,000, said Michael Ferrell, the coalition’s executive director
“He wanted an opportunity to give back to the community and sought the coalition out to fill that personal need, that personal desire,” Mr. Ferrell said.
Some neighbors said Mr. Kellermann had lost a noticeable amount of weight under the strain of the job, and some said they had suggested that he should quit to avoid the stress.
Mr. Kellermann was also involved in recent tense conversations with the company’s federal regulator over its public disclosures, according to people close to those discussions who requested anonymity because they were not authorized to speak to the media. Freddie Mac executives wanted to emphasize to investors that the company was being run for the benefit of the government, rather than shareholders.
The company’s regulator, the Federal Housing Finance Authority, had reportedly pushed to play down that language. Freddie Mac ultimately reported that it made changes to business practices to help the government that “have increased our expenses or caused us to forgo revenue opportunities.”
Mr. Kellermann’s death is the latest blow to the company. The chief executive, David M. Moffett, resigned last month after apparently clashing with the company’s regulator over compensation issues and independence.
In a statement, the interim chief executive of Freddie Mac, John A. Koskinen, said the company was saddened by the news of Mr. Kellermann’s death.
“We extend our deepest condolences to David’s family and loved ones for this terrible personal tragedy,” Mr. Koskinen said, adding that Mr. Kellermann would be “be most remembered for his affability, his personal warmth, his sense of humor and his quick wit.”
In a statement, Treasury Secretary Timothy F. Geithner said that “our deepest sympathies are with his family and his colleagues at Freddie Mac during this difficult time.”
Freddie Mac and Fannie Mae, which together own or back more than half of the home mortgages in the country, have been hobbled by skyrocketing loan defaults and have received about $60 billion in combined federal aid.
Mr. Kellermann, who was responsible for Freddie Mac’s financial reporting, capital oversight, and compliance with federal oversight requirements, reported to the chief executive, according to a profile on the company’s Web site. He also oversaw the annual budgeting and financial planning.
Before becoming chief financial officer, Mr. Kellermann had served as senior vice president, corporate controller and principal accounting officer. He was a graduate of the University of Michigan.
Regulators with the Securities and Exchange Commission and the Justice Department have been interviewing Freddie Mac officials about possible accounting violations and other topics, the company disclosed in March, though it is not known if Mr. Kellermann was one of those interviewed.
The company recently disclosed in a public filing that in September it received a federal grand jury subpoena seeking documents concerning the company’s accounting, disclosure and corporate-governance practices. The investigation is being overseen by the United States attorney’s office for the Eastern District of Virginia, which declined to comment on the case. Freddie Mac has said it was “cooperating fully in these matters.” A spokesman said the company knew of no connection between the death and regulatory inquiries.
Attorney General Eric H. Holder Jr., speaking to reporters at an Earth Day event on Wednesday, said he did not know whether Mr. Kellermann’s death was related to investigations of Freddie Mac.
“It’s obviously tragic, but I don’t know anything more than what I’ve read,” Reuters quoted Mr. Holder as saying.

April 23, 2009

Doug Mills contributed reporting. The New York Times