A federal judge has dismissed a defamation lawsuit filed by 61 former Fannie Mae (OTCQB: FNMA) employees against Bill Pulte, director of the Federal Housing Finance Agency (FHFA), who claimed without producing evidence that they were fired for making fraudulent donations to charity.
The Washington Post reports Pulte announced the firing of the employees last year, shortly after he was appointed to run the FHFA. “They were making donations to the charity, and then they were getting kickbacks,” Pulte said in a Fox News interview. “So, we’ve just scratched the surface. But this is all part of this fraud, waste and abuse.”
Pulte has yet to publicly produce evidence that the former employees received kickbacks. All of the fired workers are of Indian national origin, and some stated they made donations to Indian ethnic charities through an online portal run by Fannie Mae, with the government-sponsored enterprise providing up to $5,000 per year in matching contributions.
Each plaintiff sought more than $2 million in damages from Pulte and his agency. However, but US District Judge Leonie M. Brinkema, a Clinton appointee, ruled that the FHFA director was immune from a defamation lawsuit under the Westfall Act, which provides legal immunity to federal employees performing their official duties. While the Westfall Act has traditionally been used to prevent members of Congress, military commanders and rank-and-file government workers from defamation claims, it is unprecedented for the law to be applied to a federal agency director.
In her ruling, Brinkema said she was “not unsympathetic” to the former Fannie Mae workers and acknowledged that Pulte might not have possessed proof of fraud. But, she added, his “comments about what happens in Fannie Mae are clearly within the scope of his employment,” and “the government has not waived sovereign immunity for defamation cases.”
“It does appear to be quite cruel to terminate the plaintiffs in the way they were here,” the judge added.
The attorney for the fired workers said they are considering whether to appeal Brinkema’s ruling
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