WASHINGTON (Legal Newsline) - On Tuesday, Ohio Attorney General Mike DeWine testified before the Oversight and Investigations Subcommittee of the House Financial Services Committee concerning Fannie Mae allegedly wasting taxpayer money paying its legal bills.
DeWine represents the lead plaintiffs, the Ohio Public Employees Retirement System and the State Teachers Retirement System, in a class action lawsuit filed six years ago that represents nearly 29 million investors who were allegedly defrauded by Fannie Mae.
The suit was filed against Fannie Mae; Franklin Raines, Tim Howard and Leanne Spencer, its three most senior officers; and KMPG, its accountant.
"Simply put, Fannie Mae and its former executives have been using American taxpayer dollars to pay their highly compensated cadre of lawyers to over-lawyer their indefensible actions," DeWine said. "It is wrong, it is unconscionable and I urge the committee and Congress to bring it to an end."
This suit has not gone to trial or been settled. Typically, 98 percent of securities fraud cases are resolved far quicker, DeWine says. It's believed that approximately $132 million of taxpayer money has been spent on Fannie Mae's legal fees so far.
"Fannie Mae and the executives whom it is indemnifying are using taxpayer resources to lawyer this case to death and delaying justice for those whom they defrauded in the first place more than six years ago, while simultaneously swindling every American taxpayer," DeWine said.
"We don't question the need for Fannie Mae and its executives to defend themselves. However, we do question the over-lawyering that is sticking American taxpayers with the bill."
DeWine cited the deposition of Franklin Raines from April, when the plaintiffs were the only ones asking questions. Although the Fannie Mae defendants had 13 lawyers present, none asked a single question.
DeWine also testified that when the judge has conferences to check on the status of the litigation, Fannie Mae defendants typically bring 35 to 40 attorneys and paralegals, while the plaintiffs normally show up with just three.
"This is bigger than Enron," DeWine said. "It is bigger than Worldcom. It has turned into a feeding frenzy on the part of Fannie Mae and its former officers. The evidence is overwhelming, and it is time to rein them in. Enough is enough."