Freddie Mac Acting CFO Kellermann Found Dead
April 22 (Bloomberg) -- Freddie Mac Acting Chief Financial Officer David Kellermann, 41, was found dead early today in the basement of his home in a Washington suburb, police said.
There were no signs of foul play, and the death is under investigation, Fairfax County, Virginia, Police Officer Shelley Broderick said. She said early reports from others in the department indicated Kellermann’s wife reported a suicide. The medical examiner’s office said it’s conducting an autopsy, and the results may be released as soon as today.
“He was a hard worker, good guy and had a positive attitude,” said David Stevens, a former Freddie mortgage executive who left in 2005 and was recently nominated to run the Federal Housing Administration. “It’s a tragedy.”
The Securities and Exchange Commission and the Justice Department have been questioning executives about Freddie’s accounting practices, according to company filings. McLean, Virginia-based Freddie and Washington-based Fannie Mae, the mortgage-finance companies seized last year by U.S. regulators, reported in September that they were under investigation.
“Freddie Mac knows of no connection between this terrible personal tragedy and the ongoing regulatory inquiries discussed in our SEC filings,” said Doug Duvall, a company spokesman.
Medical Examiner
Police said they found Kellermann at about 4:48 a.m. local time at his home in Vienna, Virginia. Police won’t be able to determine the cause of death until this afternoon at the earliest, said Nancy Bull, a regional administrator for Virginia’s Office of the Chief Medical Examiner.
Kellermann had one daughter, according to Roger Beatty, who lives across the street and knew the family since Kellermann bought his house about 10 years ago. His wife was in the house at the time of death, according to Fairfax County police.
“He was a good father,” Beatty said. “He was the kind of man you want as a neighbor.”
John Koskinen, Freddie’s interim chief executive officer, visited the home today, according to police. In a written statement, Koskinen said he was saddened by the news and lauded Kellermann’s “extraordinary work ethic and integrity.”
Freddie held a town hall meeting at 11 a.m. at company headquarters and a Webcast for regional offices.
“Koskinen talked about David’s spectacular contributions he made to Freddie Mac and encouraged employees to support each other in this difficult time,” Duvall said.
Bonus, Stock
Kellermann, who joined Freddie in 1992, was promoted from controller to acting CFO after the government takeover in September, which was prompted by record losses amid the worst housing slump since the Great Depression. As controller, Kellermann was the principal accounting officer, dealing with financial statements and disclosures, according to Freddie’s Web site.
He was awarded an $850,000 retention bonus to stay with the company after the government takeover, according to a Sept. 30 securities filing. The company paid $170,000 of that in December, with the rest scheduled to be paid out in three more installments through March 2009, the filing shows.
Kellermann owned 38,861 Freddie shares as of April 11 valued at $33,420, according to data compiled by Bloomberg. Freddie’s market value has slumped from $22 billion at the beginning of 2008 to about $2.6 billion. The shares, which have been trading at less than $1 since December, were worth more than $30 each in March 2008.
‘Standout’ in Accounting
Jim Vogel, the head of agency debt research at FTN Financial in Memphis, Tennessee, wrote in a note to clients today that Kellermann had been “a standout” in Freddie’s accounting group prior to his appointment as CFO.
In 2003, Freddie restated three years of profit higher by $5 billion after fixing improper accounting the company used to reduce earnings volatility and make earnings growth more predictable. The restatement ending a yearlong review that led to the ouster of two chief executives, the president and CFO.
Kellermann wasn’t mentioned in a July 2003 report on the accounting issues by Baker Botts LLP, a law firm hired by Freddie’s board. Kellermann also wasn’t included in a December 2003 report by the company’s regulator that placed blame for the accounting misstatements on senior executives and directors.
Kellermann was promoted to oversee Freddie’s accounting policies in October 2006 as the company recovered from the accounting restatement. He stayed on after the government takeover in 2008, which led to the ouster of top executives including CEO Richard Syron. New CEO David Moffett left Freddie last month after six months on the job. The company has been run on an interim basis by Koskinen, who had been chairman.
Kellermann received a master’s degree in finance from George Washington University, after graduating from the University of Michigan. He was a volunteer board member with the D.C. Coalition for the Homeless, according to the Web site.
Fairfax County property records show Kellermann purchased the Vienna house in 1999. Its assessed value for 2009 was $898,440, the records show.
