Feds Put Fake-CPA Tax Cheat In Charge Of $1.5 Trillion Of Mortgages

By Published on July 25, 2016

Officials at the Government National Mortgage Association (Ginnie Mae) hired a tax scofflaw with a resume including a false claim to be a certified public accountant (CPA) as chief financial officer (CFO) and put him in charge of a $1.5 trillion loan portfolio.

David Fender shirked his official duties and instead ran a government contracting company out of the government office building. He had just been fired from his previous job for running that contracting firm on company time, and Ginnie Mae officials knew it — and that he lied about it — when they hired him.

Ginnie Mae, an agency in the Department of Housing and Urban Development (HUD), left Fender at the helm from April, 2014, to April, 2015, even though it quickly became clear he was unqualified. He left Ginnie Mae’s finances in such disrepair that HUD’s inspector general said $6.6 billion couldn’t be audited.

Fender got the position of vice president and CFO of the federal government’s mortgage-backing agency not long after volatility in that sector led to a national financial collapse in 2008.

“Fender used his public office for private gain, falsely reported his income … and provided false information on the resume,” the IG said in an April, 2015, report obtained by The Daily Caller News Foundation under the Freedom of Information Act. The IG concluded Fender committed multiple crimes that could bring jail time.

Fender was hired as Ginnie Mae’s CFO despite an undistinguished resume of failed business deals in Japan and jobs with U.S. companies he didn’t keep for long. His pet project was Cold Energy Systems, which sells steel tanks to governments.

The reference check done during Fender’s Ginnie Mae background investigation revealed his penchant for taking and neglecting corporate jobs to pay the bills while he brokered big-dollar side deals.

Fender’s previous boss told Ginnie Mae’s background checkers that Fender “did not sell to meet quota nor was he accountable to his whereabouts. Travel often not approved or not reported. We had a suspicion that he was working for another company while employed by us.” He was not recommended “for a government security clearance or employment.”

On his Ginnie Mae application, he checked a box saying he had not been removed from his previous job. Not long after being hired at Ginnie Mae, Fender was advertising that Cold Energy Systems was based at 550 12th St SW, the same address as Ginnie Mae’s headquarters.

The IG suggested Fender used the address to “give the impression that Cold Energy Systems regularly did business with the federal government.”

Cold Energy Systems is registered with the federal System for Award Management as seeking government contracts. “Government” comes first on the company’s website list of industries it says it serves.

Investigators also found that Fender used his HUD email address “to gain favorable consideration” for money-making ventures, going out of his way to note his government connection in unrelated matters.

When an ethics official asked Fender to clarify why he had left Cold Energy Systems revenue off of his government ethics disclosure even though any income of more than $5,000 must be listed, he “got huffy” and said “Fine. $5,000.” When she observed that he was obviously just saying that to placate her, he said, “Fine. $5,100,” the figure ultimately listed.

Fender, who did not respond to The DCNF’s requests for comment, was paid $179,000 annually by the government, based on his claim of making $170,000 in his previous job.

Fender’s LinkedIn profile claims he has run Cold Energy Systems continuously from 2012 to the present and “Achieved US$ 1 mil in sales and over US$ 250,000 in after-tax profits in Year 1.”

He later said he didn’t list the income on ethics disclosures because the company wasn’t profitable. Public records show he had a series of federal tax debts, including an outstanding federal tax lien for $128,000 in 2014. He signed government forms saying he had no tax debts.

Fender told government investigators he “honestly didn’t know” about his $128,000 tax delinquency, despite serving in a high position in finance. Government auditors looking into why Ginnie Mae’s books were so messy easily determined he was not CPA, a fact that hadn’t been caught by hiring managers.

When it was pointed out to him that falsely claiming to be a CPA is punishable with jail time, Fender claimed he didn’t know he wasn’t a CPA.

A separate January, 2015, HUD IG report found that “Due to deficiencies in Ginnie Mae’s control environment, accounting practices used, and financial systems deployed,” there were “$6.6 billion in total assets that we were unable to audit.”

The IG said Fender “should also be recognized as the underlying causes of problems facing Ginnie Mae” and observed that Ginnie Mae officials seemed hardly to care whether it had anyone keeping an eye on its money.

The IG noted even if Fender’s qualifications as presented were taken at face value, his “resume indicated no federal financial management experience. The Deputy Chief Financial Officer position has remained vacant as of January 2015, more than a year after the former Deputy Chief Financial Officer left; and the announcement for the Controller position was not posted until January 2015, nine months after the former Controller left.

“Ginnie Mae indicated that backfilling the vacancies was deferred temporarily to allow the new Chief Financial Officer an opportunity to assess the organization and overall staffing needs. We question how this could be that executive management would not have already known its staffing skills and needs in such an important office.”

In April, 2015, Fender’s supervisor “said he intended to terminate Fender and that the action had been ‘in the hopper since before Christmas.” Prosecutors “declined to prosecute Fender due to [redacted] and the fact that HUD has initiated the process to terminate.”

Fender’s LinkedIn profile says he left Ginnie Mae in April, 2015, but officials there declined to say whether he was given severance pay or provide other settlement details. Ginnie Mae spokeswoman Gina Screen declined to comment on her agency’s apathy about its financial management or say how taxpayers could be assured such a debacle won’t happen again.


First in a two-part series. Check back Tuesday for the fascinating backstory of Fender’s cons. Follow Luke on Twitter. Send tips to [email protected].

Copyright 2016 The Daily Caller News Foundation

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