The following is the first of a three-part blog series covering my story about being a Bank of America/Countrywide Financial Corporation whistleblower. Read Part Two and Part Three on GAP’s blog.
I have been called the whistleblower who “conquered Countrywide” by Pulitzer-Prize winning journalist Gretchen Morgenson of the New York Times. I have also been referred to as “Wall-Street’s Greatest Enemy: The Man Who Knows Too Much” in a revelatory article by David Dayen in Salon. However, I do not feel like a conqueror at all. I feel like a victim who has been repeatedly re-victimized by a system that allows legal loopholes, misrepresentations, and fraud on a trial and appellate court.
On May 8, 2014, I was informed that Bank of America (BofA), a $100,000,000,000 company, had placed a lien on my Thousand Oaks home for $96,523.29. This continues the retaliation that I experienced from Countrywide Financial and successor BofA for eight years. My offense? When they defrauded and abused employees, homeowners, shareholders and taxpayers, I stepped up, challenged them vigorously and took them to court. I won a convincing legal victory. Somehow over two years later, the company had my strong jury verdict and court affirmation reversed, and I was recently forced to pay this behemoth’s court costs of over $96,500, including nearly $65,000 for a bond that was ordered by the court, not requested by me.
In this three-part blog series, I’m going to detail the whole twisted, sordid tale: what I saw, why I initially prevailed, and how justice was ultimately stolen from me. If you are a lawyer reading these pieces and can help, I am in need of your assistance to right this wrong.
Part 1: My Time at Countrywide
I recently participated in GAP’s American Whistleblower Tour events at Syracuse University, during which I presented my saga to a number of audiences. Several of my colleagues suggested I share new and old elements of this story, once-forgotten and now-recalled, that change the calculus and make it even more in the public interest.
When I accepted the invitation to relocate my family to work for rapidly growing mortgage company Countrywide in 2005, I was eager for a new opportunity and envisioned years of making a difference. I was excited to help the company become a broadly diversified financial services firm – they told me they wanted my help to build a “Goldman Sachs on the Pacific.” I served as Managing Director and Enterprise Chief Leadership Officer.
In the early going, things were great. Countrywide promised a “green field opportunity” with “open pastures” – a company founded upon the tenets of “People, Passion and Principles.” I was told that the company was highly principled, ethical, well-managed and very supportive of the successful conduct of areas for which I would be responsible. I was further informed that my function had ample support and that significant growth was expected. I accepted the challenge and committed to a career-high performance to bring about necessary change. I recruited talented people from my previous teams at Motorola and Merrill Lynch. They relocated as well.
Fifteen months passed. I was promoted twice. My team and I launched many successful initiatives and were in high demand. Countrywide catapulted from unranked to eighth in a thousand-deep list of international corporations for “Best in Leadership Development” based upon our efforts in under two years as noted by Leadership Excellence Journal. I had strong relationships with the executive staff and worked collaboratively with Executive Managing Director and Chairman of Countrywide Home Loans (owned by Countrywide), David Sambol, who would later become President and Chief Operating Officer of Countrywide. We received thousands of flattering written emails and spoken comments (such as Founder and CEO Angelo Mozilio’s comment to another key executive about our inaugural Executive Development Program that “this is exactly what Countrywide needs” and Countrywide Chief Legal Counsel Sandor Samuel’s videotaped comment that “Michael Winston was just fantastic”).
To be sure, in my team’s early days, we learned of significant problems. We uncovered extremely high employee turnover, low morale, severe skill-set deficiencies and extremely low culture-survey scores. Moreover, I discovered that the corporation had no firm-wide executive development program, succession planning, organization integration activities, or any of the development “machinery” one would expect of a company with revenues in excess of $20 billion. Countrywide brass seemed content to function as 26 separate silos with virtually no horizontal integration and coordination. I attributed this to ignorance rather than greed, corruption or malevolent intent.
My team went to work. We made a strong impact, as our new processes were needed, well received and popular. I was elevated to the highest functional position in the corporation dealing with issues of organization integration, executive succession planning, leadership development and the management of change. I was also charged with creating world-class executive leadership skills and organization development initiatives for Countrywide employees and did so.
In April 2006, the entire slate of Executive, Leadership and Management Development initiatives designed, developed, and created by my newly-assembled team was reviewed, endorsed and budget-approved by the President/Chief Operating Officer and the Chief Human Resources Officer of Countrywide. We launched pilots of four different programs and all received rave reviews. Six more were in the immediate pipeline with another dozen scheduled for later in the year. In May 2006, I met for almost two hours with Angelo Mozilo, Countrywide Founder, Chairman and Chief Executive Officer. In his office, he expressed delight at the breadth and depth of our new development offerings as reflected in our catalog. He gave his wholehearted endorsement. He was so impressed that he informed my boss (the Chief Human Resources Officer) that he wanted me to present our strategy at the next Board of Directors meeting. He was beaming.
In June 2006, the launch of our broad slate of initiatives was personally endorsed – before an audience of over 100 key executives – by Mozilo, President and Chief Operating Officer Sambol, and other key officers. Mr. Mozilo commented to another executive that our programs “were exactly what Countrywide needs.” We were executing flawlessly and getting recognition inside and outside. Our initiatives were praised by Leadership Excellence, Douglas Publications, The Concours Group, and HR.com. I was named as one of the “Top 100 Business Thought-Leaders in the World.” All of this, including endorsements from the top five executives and many others, was video-recorded by Mozilo’s personal videographer. Things couldn’t have been better.
I had no idea I would wind up in a battle that would consume years of my life. I never dreamt the nation’s economy would soon lie in tatters, forcing millions from their jobs and, in record numbers, from their homes as well. I never suspected that my new employer would, in a few years, come to be known as one of the prime players in a global economic crisis of historical proportions – an institution that Senator Charles Schumer referred to as “ground zero of the financial crisis.” The Great American Dream would soon become the Great American Nightmare. But it happened.
With these promotions, I now had the vantage point of a loftier position with more executive interface. Right before my eyes, Countrywide seemed to repeatedly engage in practices that were neither responsible nor sustainable. I also thought they might not be legal. I created strategy after strategy shifting their business model to pursue, encourage and reward quality of loans as opposed to quantity of loans. I urged new metrics measuring customer satisfaction and responsible lending. I submitted each to the President and COO of Countrywide Home Loans in a series of one-on-one meetings. I tried to stop the malfeasance I observed. I had hoped the Board would step in but it was not to be. (It was later revealed that there was a reason the Board did not act. Moody’s Investors Services cited as concerns “Limited large public-company senior executive experience among directors” and “Director pay out of line with peers.” Note that outside Countrywide, directors were paid twice as much as their peer group, according to Moody’s.)
I flat-out refused to misrepresent material facts to Moody’s. Specifically, I was asked to misstate the truth about the company’s succession plan and other governance issues by two executive officers. My eventual, truthful report to Moody’s acknowledged the succession gap – a surprising six-month void when there was no President/COO, clearly noticed by employees and ratings agencies – and attributed it to rapid growth, intense market demand and paucity of skills in this area (which is, in part, why my team and I were hired).
This was the appropriate response. I was not going to outright lie and claim there was no gap in leadership. My refusal to lie is protected by the law.
Beyond the report to Moody’s, I urged company brass to notify investors and the SEC of the departure of Stan Kurland, President and Chief Operating Officer, an action considered vital to shareholders and the United States Securities and Exchange Commission. As early as 2005, well before the mortgage crisis brought the economy to a halt, I informed Countrywide Home Loans President Drew Gissinger that its policy of a loan for everyone was neither responsible nor sustainable. I offered to help them change their business model.
I saw all these problems and tried to correct them. I asked repeated and penetrating questions of executive management to prompt them to alter course of funding all loan applications regardless of creditworthiness. I also alerted Cal/OSHA about the dangerous conditions of our “sick building.” Dozens of people complained of difficulty breathing, headache, stomachache, a metallic taste in their mouths and dizziness. Many sought medical attention for these sudden conditions. I sought mitigation from every level internally before contacting OSHA.
Then, the walls came tumbling down … on us.
The Sarbanes-Oxley Act provides whistleblower protection for employees of publicly traded companies. It states that:
“…no officer, employee, contractor, subcontractor, or other agent of a publicly traded company may fire, demote, suspend, threaten, harass or in any other way discriminate against any employee with respect to job, job duties or benefits because the employee has lawfully provided information either directly or indirectly or assisted in an investigation regarding any conduct which the employee believes to constitute mail, wire, bank, or securities fraud; any violation of rules or regulations of the Securities and Exchange Commission or any federal law concerning fraud to a federal regulatory or law enforcement agency, a member of Congress or congressional committee, or a person with supervisory authority over the employee or another person with authority within the organization.” [emphasis added]
Apparently, Countrywide deemed they were exempt from compliance with this law. They did all these things to me and more. They were certainly not punished for abusing me in this way.
Whistleblower protections are eluding many whistleblowers, including me. My whistleblowing activities, (reporting serious health concerns to Cal-OSHA) and refusal to misrepresent material facts to a securities rating agency (Moody’s), involve fundamental public interests. I was trying to protect the larger population from the effects of these systemic wrongs. These facts were never disputed. Nor was the fact that I had been the subject of a long campaign of retaliation by my employer (Countrywide) after I had engaged in each protected activity.
I worked for a publicly-traded company. I was “fired, demoted, threatened, and harassed” by Countrywide, which broke the law in doing so. I was retaliated against immediately and relentlessly in every way imaginable, and simply didn’t understand why. Why did Countrywide feel this was such a threat? I wondered. Perhaps calling attention to the company would lead to investigations of widespread fraud. Perhaps worse. But the immediacy and ferocity of their retaliation was a clear indication to me that something larger than loan structure and toxins was hidden.
Perhaps it was the ‘securitization’ process in which they commingled prime and sub-prime loans that they were seeking to keep opaque. Having a “renegade” in their midst might potentially remove a cloak of secrecy. The directive came quickly from Founder & CEO Angelo Mozilo … “I want him terminated effective immediately.”
The above was the first in an incredibly long line of retaliatory actions. Over the course of the ensuing two years, I suffered removal of responsibilities, reduction of staff (from nearly 200 to 2), cancellation of all programs created by my team (including those endorsed by the company brass just weeks prior), exclusion from key meetings, denial of promised compensation, and relocation to four different buildings in four geographically disparate cities, amongst many other infractions. Once, when they were clearly out of options, they relocated me to a new building in a new town on a Monday and then relocated me again on Friday of the same week. This was to a second building 100 yards away.
When the retaliation, fraud and market manipulation picked up speed, I decided to sue as a means to hold them accountable. Wrongful termination was only the last of over 80 adverse employment actions.
Look for Michael Winston’s next piece tomorrow on GAP’s blog.