Freddie Mac won't face criminal charges in connection with its multibillion-dollar accounting scandal, the mortgage finance giant said Tuesday.
The Justice Department began investigating the accounting at Freddie Mac after the government-sponsored entity disclosed in June 2003 that it had misstated earnings by about $5 billion -- mostly underreported -- for 2000, 2001 and 2002.
The investigation is said to have been inactive for two years. Freddie Mac officials said that the company had not been contacted by the U.S. attorney's office in Alexandria, Va., which had been conducting the inquiry, and that they understood the investigation to be closed.
"We expect no further action in this matter," company spokesman Doug Duvall said in a statement. Jim Rybicki, a spokesman for U.S. Atty. Chuck Rosenberg, declined to comment.
Last month Fannie Mae, Freddie Mac's larger sibling, announced that the criminal investigation against it had ended after two years. Fannie Mae reached a civil settlement in May with the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight, agreeing to pay a $400-million fine after the latter agency found serious accounting problems and earnings manipulation by the company.
It is not known whether the SEC might bring civil charges against Freddie Mac or company executives. The disclosure of accounting irregularities at McLean, Va.-based Freddie Mac brought the ouster of its top executives in 2003, including then-Chief Executive Leland Brendsel. The company paid a $125-million civil fine in December 2003 in a settlement with the federal oversight agency, which blamed management misconduct for the faulty accounting.
Stefanie Mullin, a spokeswoman for the agency, said Tuesday that the agency "is pursuing enforcement actions against former Freddie Mac executives."