`Ethics messenger' targeted

Data collected by Fannie Mae employee helped expose fraud

May 25, 2006|By JAMIE SMITH HOPKINS | JAMIE SMITH HOPKINS,SUN REPORTER

The bullet hole in the window is a jarring note in Roger L. Barnes' otherwise impeccable sitting room. That, he said, came before two disemboweled deer appeared mysteriously on his well-tended suburban yard but after someone painted curse words in animal feces on his black Chevrolet Camaro. Before his Christmas decorations were destroyed. After a man in a dark sedan followed him seemingly everywhere.

While he has no proof, he can't help but believe that such a series of ominous events has something to do with his whistle-blowing on Fannie Mae - even if some actions were by an angry shareholder or a co-worker. People who have known Barnes for years and who know about the incidents also believe there's a connection.

The Howard County resident doesn't like the term whistle-blower. He calls himself an "ethics messenger." The mortgage financing giant that employed him for 11 years ignored and suppressed his message, according to a report released Tuesday, but the government heard it loud and clear.

The report by the Office of Federal Housing Enterprise Oversight repeatedly cited Barnes as it detailed extensive accounting fraud at Fannie Mae, painting a picture of a corrupt corporate culture where executives routinely fudged numbers to pad their bonuses. On Tuesday, Fannie Mae agreed to pay a collective penalty of $400 million to OFHEO and the Securities and Exchange Commission, though it neither admitted nor denied wrongdoing.

Barnes, whose claims that he was ignored, belittled, harassed and pushed out of his job were backed up by the OFHEO report, said he feels "tremendously vindicated." He's still worried about safety and vandalism, still trying to find a new management job 2 1/2 years after leaving Fannie Mae, but he's not sorry he did what he calls the right thing.

"I was determined I was going to survive all that because there was a story to be told," Barnes, 50, said yesterday at his home on the outskirts of Columbia. "As long as one stands for integrity and honesty, there is power in one."

Though a public company, Fannie Mae is quasi-governmental, chartered by Congress to finance the home mortgage industry. With a phalanx of lobbyists, generous political donations and a carefully crafted image, it is considered one of the most powerful companies in Washington.

OFHEO, in fact, complained that Fannie Mae "sought to interfere" with its report by persuading Congress to request an investigation of the investigators.

This was what Roger Barnes, certified public accountant and midlevel manager, took on.

"He was really exposing profound cultural flaws at Fannie Mae," said Ross Miller, a finance professor at the State University of New York at Albany who runs a financial risk management firm.

Fannie Mae declined to comment beyond a statement issued Tuesday by its chief executive, Daniel H. Mudd: "We have all learned some powerful lessons here about getting things right and about hubris and humility."

In a rare 2 1/2 -hour interview yesterday, Barnes - a husband and father of three with movie-star good looks and the intensity of a preacher in the pulpit - said it all began with innocent questions.

He wanted to know why his employer accounted for its income the way it did. Don't worry about it, he said he was told. As he became worried that something was amiss, he said, his questions drew anger from supervisors.

"As their hostile reactions increased, I knew I was on to something," he said.

He said his goal was to help fix problems from the inside. He didn't want to leave. But after nothing came of an anonymous note he sent in 2002 to then-CEO Franklin Raines detailing his concerns - a note mentioned in the OFHEO report - he resolved to create a paper trail. Then when investigators came in, as he was sure they would, they would see what was really going on. (Raines was forced out in late 2004, after the accounting scandal broke.)

"I will find out if I'm right," Barnes said he told himself in 2002, "and by golly, if I'm right, they're going to be exposed."

He got other managers to answer questions in writing, just so it would be on the record. He took to e-mailing supervisors summaries of meetings, noting - for instance - that he was sorry his suggestions had not been taken. He kept a record of what people said, when they said it. And he "seeded" his name on documents whenever he could to ensure that investigators would call him, even if he was no longer at Fannie Mae.

OFHEO's report is peppered with references to that information. His name came up 177 times, he said - he counted.

But all along, Barnes said, supervisors insisted that he, the graduate of a small state school, was foolish for questioning the financial practices of people who had degrees from Harvard and Yale.

He thinks the only reason he lasted as long as he did was because, he said, he had earlier received excellent performance reviews and he was pictured in the company's literature to show its diversity. His ancestry is African-American and Nottoway Indian.

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