I have written about Franklin Raines who was head of Fanny Mae and was charged with cooking the books to increase his bonus. He was charged but not convicted but agreed to pay a 3 million dollar fine and give back some stock options valued at 15 million and other pension type benefits valued at 5 million. After giving back some 23 million he walked off with 90 million in excess bonus money. He incurred some 30 million in legal fees which the Fanny Mae insurance policy paid. Since then the case has been drawn out by lawyers who are paid by the government. Since it cost Raines nothing his strategy is to drag out the proceedings with various legal maneuvers. As of today the legal fees are up to 194 million and still rising.
The interesting thing about this is that the agreement that the government would pay his legal fees was drawn up by him after the investigation into his activities started. The government says they don’t want to, “not pay”, his fees because he might sue them but this argument doesn’t hold up because if they don’t pay and he sues all they are liable for is his legal expenses.
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