Former Fannie Mae Executive Vice chairman and Chief Financial Officer J. Timothy Howard has been steadfastly vilified by investors in a mortgage fraud case that pits securities class action investors against Fannie Mae and a number of its former and current business executives.
The plaintiffs, which include state pension funds, allege that company officers knowingly and willfully violated federal laws by overstating Fannie Mae’s profits over a several-year period for the purpose of meeting company goals and garnering incentive pay. The period in question is 2001 – 2004, and the plaintiffs’ complaint demands that the investors be paid back for all the money they lost over that period.
Howard doubtlessly feels a strong measure of vindication in the wake of a Washington federal court’s ruling this past Tuesday that drops him from the case. U.S. District Judge Richard Leon granted a summary judgment motion in favor of Howard that exonerates him from wrongdoing and cites an absence of any evidence that he contributed to fraud or investor deception.
In fact, Leon’s ruling stated, there was evidence that Howard acted in good faith over the period during which the plaintiffs allege he had helped Fannie Mae manipulate earnings.
The ruling, which marks a definite blow to investors’ “intent to deceive” claims, is additionally noteworthy for being the second such summary judgment granted in favor to a defendant in the case in less than a month. Leon recently dismissed ex-Fannie Mae Chairman Franklin Raines from the case as well, finding no wrongdoing on his part.
Source: Bloomberg, “Ex-Fannie Mae executive Howard dismissed from fraud suit,” Tom Schoenberg, Oct. 16, 2012