KPMG claims fraud at Fannie Mae

The Boston Globe reports:

KPMG LLP sued former auditing client Fannie Mae, the biggest source of money for US home loans, for "fraudulent deception" that prevented KPMG from uncovering $6.3 billion in overstated earnings.

Fannie Mae from 1998 until 2004 withheld and distorted its accounting, engaging in "breach of contract, fraudulent misrepresentation, fraudulent inducement" and other wrongdoing, New York-based KPMG said in an April 16 filing with the US District Court in Washington. A Fannie Mae spokesman declined to comment.

KPMG, the fourth-largest US accounting firm by revenue, is countering claims made in court by Washington-based Fannie Mae that it was to blame for the overstated earnings. Fannie Mae in a Dec. 12 court filing alleged KPMG failed to serve its role as an independent watchdog and prevent accounting errors that Fannie Mae says led to $1 billion in costs to restate earnings.

KPMG put the blame back on Fannie Mae, saying the company's misrepresentation caused KPMG to suffer "injury to its reputation, legal costs, exposure to legal liability, costs and expenses of responding to investigations" of Fannie Mae, and other losses.

KPMG takes on Fascist Mae we mean Fannie Mae.Anyways,no word yet from Barnie Frank and other politicians on Fannie's payroll on this one.