Wall Street’s Greatest Enemy: The Man Who Knows Too Much

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This post first appeared on Salon.

You may know Michael Winston’s story from a series of articles by Gretchen Morgenson in The New York Times, or from a celebrated Frontline episode, “The Untouchables,” about the lack of prosecutions on Wall Street. He was a Ph.D. who rose to the corporate elite, with stints at Lockheed Martin, McDonnell Douglas, Motorola and Merrill Lynch. He was recruited to mortgage originator Countrywide Financial with the promise that it wanted to become the “Goldman Sachs of the Pacific,” a full-service global financial corporation.

In this June 23, 2011 photo, a Bank of America booth is shown at the Pacific Coast Builders Conference in San Francisco. (AP Photo/Paul Sakuma)

“They talked about the importance of ethics and principles, and they said they heard I was a high-integrity guy,” Winston tells Salon, noting his father had a vanity plate that read “HONOR.” Winston initially succeeded as enterprise chief leadership officer at Countrywide, getting promoted twice in 14 months and building a team of 200 working on corporate strategy.

But he could not ignore the rot at the heart of the company’s profitmaking approach.

So now, a successful high-level executive for 30 years, he has been embroiled in seven years of lawsuits with Countrywide and the company that bought it, Bank of America. His determination to speak out against multiple violations of law at Countrywide earned him retaliation, and eventually, he was frozen out of corporate boardrooms, unable to find a new job. He won a jury verdict in his case, but after two and a half more years of fighting, an appellate court reversed the ruling in highly unusual circumstances.

“I keep hearing about whistleblower protections,” he tells Salon, exasperatedly. “It certainly didn’t happen for me.”

Now, Bank of America wants to gouge Michael Winston one last time, demanding an interest payment on money awarded to him that he never received.

“Thus far, the person who did the right thing got punished, and the person who did the wrong thing got rewarded,” Winston said. The chilling case shows that the greatest enemy for Wall Street is the man or woman who actually tries to expose its secrets.

* * *

The lesson is clear: If you object to the corrupt practices at financial giants like Countrywide and Bank of America, you will be marginalized and financially ruined. And even if you think you’ve won, over time you will lose.
“FUND-EM.” That’s what the license plate read when Winston pulled into Countrywide headquarters at the end of 2005. It was the car of CEO Angelo Mozilo. “What does that mean?” Winston asked a colleague.

“That’s Mozilo’s growth strategy for 2006,” his colleague replied. “We fund all loans.”“What if the borrower has no job?” Winston asked.

“Fund ‘em.”

“What if they have no assets?”

“Fund ‘em.”

“No income?”

“If they can fog a mirror, we’ll give them a loan.”

Winston relayed his fears about this doomed strategy to Drew Gissinger, head of Countrywide Home Loans, offering proposals on how to prioritize customer satisfaction and strong fundamentals over making dicey loans. “I was trying to save Countrywide from itself,” Winston said. These proposals were politely taken and discarded. Later Gissinger would say he never received them.

A separate triggering event had nothing to do with loans, but how Countrywide treated its employees. In addition to selling toxic mortgages, Countrywide also housed its staff in toxic buildings. One in particular, on Tapo Canyon Road in Simi Valley, Calif., was notorious for noxious air, exposed wiring and a generally hideous atmosphere. Winston worked in this building, and he and his team experienced shortness of breath, dizziness and headaches. One female employee, 35 weeks pregnant, said she was afraid to work there. Michael himself was struck by a toxic substance coming from an overhead air vent. “I thought I was being poisoned,” he said. This is at a company that made $2.7 billion in net revenue in 2006.

Countrywide claimed that it did an investigation of the air quality and found nothing wrong, when Winston knew it was still taking air samples in his office. Winston confronted his boss over this, and she replied that she lied to “prevent a panic” at the company. That’s when Winston submitted a complaint to California’s Occupational Safety and Health Administration (Cal-OSHA).

The retaliation was swift. Winston’s team was assigned elsewhere, his budget was cut, and his responsibilities reduced. Winston stayed out of a sense of loyalty to the team he persuaded to join Countrywide. “Everyone I recruited sold their houses in New York and moved to California,” Winston told Salon. “If not for that, I would have been gone at the first sign of trouble. I felt an obligation to them.”

After months of hardship, the president of Countrywide, Dave Sambol, asked him to come to New York and basically lie to the credit rating agency Moody’s about its corporate governance practices. Countrywide had gone without a president and chief operating officer for five months without informing investors, and had delivered top executives outsize compensation. Countrywide wanted Winston to fabricate a story about these practices and deliver it to Moody’s. Winston refused to lie. Three weeks later, the CEO, Angelo Mozilo, demanded Winston’s termination because he wouldn’t break the law. (The termination would not come until 2008, by Bank of America when it bought the company.)

For the next several years, Winston pursued a series of court cases, first against Countrywide and then against its new corporate parent, Bank of America, over the illegal retaliation. Winston and his lawyer, a former prosecutor at the Los Angeles district attorney’s office, saw so many lies from top Countrywide executives at their trial, that they wanted to get criminal charges instituted. Winston’s lawyer actually wrote to then-DA Steve Cooley, but nothing came of it (the DA’s office claimed it was never sent the material).

To use just one of a hundred examples, Mozilo claimed under oath he was “unimpressed” with Winston, despite a large documentary record of praise. “The assumption when someone raises their right hand, you see a check go off in the head of the jury, now we’ll hear the whole truth,” Winston said. “But no part of it was truthful.” In early 2011, after a month-long trial, the jury found in Winston’s favor, awarding him $3.8 million.

Sadly, the story doesn’t end there. First, Bank of America tried to get a “judgment notwithstanding the verdict” in its favor. When a judge tossed that out, the bank “went shopping for justice,” Winston said.  The company would eventually find an appellate court in California to conduct a 29-minute hearing with no transcript made of the proceedings, a highly unusual practice. It didn’t bother to hear from Winston – he was 3,000 miles away at the time of the hearing. The court heard no new information in the case, only the two-year-old trial record, filled with “perjurious content” from Countrywide executives, in Winston’s view.

Though legal precedent requires appellate courts to not reevaluate evidence heard by a jury, in this case they did, creating new evidence requirements that they said Winston did not meet. According to the Government Accountability Project, which presented an amicus brief to Winston in the case, “respect for the jury’s determinations is the rule in California and the federal system.” Nonetheless, the appellate court reversed the jury verdict, rescinding the $3.8 million award. The court claimed that Bank of America could not be held liable for Winston’s travails, despite clear legal precedent that it assumed those liabilities when it bought Countrywide.  “They reversed my verdict and they broke the law to do it,” Winston said.

* * *

Despite Bank of America taking two years to delay and appeal the verdict, Winston has no right to appeal. He sought a rehearing and then an appeal to the California Supreme Court, to no avail. He’s working on an appeal to the U.S. Supreme Court, arguing that his constitutional rights were violated. “The Constitution gives you the right to a trial by jury. It doesn’t say ‘only if the jury finds in favor of Bank of America,’” said Winston.

The insult on top of injury comes from Bank of America retributively seeking monetary damages from him. It filed in Superior Court to recoup roughly $65,000, allegedly the cost of posting a bond that was ordered by the trial judge after the original $3.8 million jury award. But Bank of America never paid the award to Michael Winston. “I never saw a dime and paid $600,000 in legal fees,” Winston said. The egregious demand for restitution – from a multibillion-dollar company – is a symbol of the vindictiveness of a corporate giant lashing out at someone who dared to expose them.

Winston, 62, has not been able to find work since this ordeal, despite a stellar record over three decades. Bank of America even tried to subpoena speaker’s bureaus Winston had signed up with to tell his story on the lecture circuit, causing those organizations to break ties with him. So the $65,000 is not a trivial amount for him. And the principle of having to pay Bank of America after it put him through hell for years is stinging.

The lesson is clear: If you object to the corrupt practices at financial giants like Countrywide and Bank of America, you will be marginalized and financially ruined. And even if you think you’ve won, over time you will lose. “No one who receives a jury verdict can feel safe,” Winston said. His actions – filing a health and safety complaint and refusing to misrepresent material facts for the company – are supposed to be protected by law. None of that mattered. Says Winston, “If I can’t get this case heard, why would any whistleblower speak up?”

David Dayen is a contributing writer for Salon. Follow him on Twitter at @ddayen.
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  • Anonymous

    He ought to run for office. There are enough people who abhor Bank of America that he could actually win. Then he could make a real difference. You can never do that in a corporation.

  • nnyl

    Countrywide use to give mortgages to people who bought in the large condo complex where I lived. They would never consider condo fees in the person’s ability to pay. As a result, we had thousands of dollars in unpaid condo fees from people who couldn’t really afford to live there (and it wasn’t an expensive place). When we tried to recoup our losses, Countrywide tried to block us from doing so. Our complex was huge with several hundred units, we needed everyone paying their share so we could maintain the property.

  • cozmiccowgirl

    Here’s a precedent for this type of lawlessness–direct from Fox News:

  • Anonymous

    These folks are so darn corrupt, I just drives me NUTS

  • Anonymous

    I personally think that Bank of America will do that sort of thing to anyone. They dropped my credit limit on my B of A credit card from $17000 to $500 because I was 10 days late making a $15 payment. This was on a credit card that I have paid completely off previous to the incident on about 95% of the months for several years.

    I had been a customer since 1984, owned a paid off home 1/4 mile from the bank branch I use, No debts of any kind, and as soon as I found out about that the payment was late I not only paid it, but the unbilled purchases on the account that weren’t due until the following month.

    I did not, however, pay the $39 late fee on the account intending to ask them again to waiver it.. In fact, they tried to charge me $91 of fees on fees for the next 3 months, none of which was on any credit card purchase transactions because that part of the account balance was 0.00 .

    Previous to the $39 late fee, I called them up and told them I had paid late and that I would like to ask them to waiver the late fee. They said they couldn’t do that because the fee had not been charged yet…ok that is reasonable…but I asked them to make a note on the account in case the issue came up later, and they said that they would…..but they lied and didn’t put a note on my account.

    Later they wavered everything except first and original $39 dollar late fee, disregarding the fact that it was 260% larger than the original late payment.

  • Anonymous

    And another “insult to injury” kind of realization (in reading your story) is, those are USURY levels at which you were being charged. Ah, so now, with the blessing of the American Govt, BofA has become a loan-shark of sorts, eh? People, this is why it’s important to make our voices heard. The reason these things continue as they do, these unaddressed, unremediated corruptions persist, is because WE ARE NOT DOING OUR PART. Make sure your elected rep & Senator hears about these offenses. Eventually, if enough Americans stand up to the corruption that’s infiltrated our govt & their business cronies, something will give. Silence = consent, you are consenting to what’s being done TO you if you remain silent.

  • Anonymous

    It should drive you to ACTION.

  • Anonymous

    Get online, lookup your Senators & Reps in Congress & TALK. SPEAK. Nothing happens when Americans just chat about it online.

  • Anonymous

    Before Countrywide went “rogue”, as a Realtor I loved them because they were easy to work with. That was back in the 1990s. Countrywide was the bomb. Now look at them ->defunct. In its wake comes BofA, one of the worst banking institutions EVER & it’s a testament to how corrupt our govt really is that BofA is still around to do its dirty work. When my mortgage was sold on the secondary market, Countrywide got it & it was such a pleasure doing business with them because they had a GREAT website. I have a 30+yr grudge against BofA for shorting my bank acct way back when, then charging me fees out the whazoo for three checks I wrote on a deposit they conveniently lost. Am I happy that BofA is now servicing my loan? NO. They are horrible.

  • Anonymous

    GOOGLE ME MY FRIEND you can not get much more involved than I am with out crossing a line. I cut it very close right now, but I am making my STAND SIR The is Why I AM THE CRAZY ONE peace and I hope you enjoy my attempt at being a musician. Peace

  • Anonymous

    ONE more thing I also just went the mortgage deal. 7 years paying more than rent, but in the end I would have been better off renting instead of pretending to be a home owner while paying rent to Wells Fargo. now a bk and forclosure back to renting, and fight a Gov., that is unresponsive the common people any more. But I keep ringing their BELLS I wish the best and agree it takes all of us standing up and saying NO effing MORE thank you to our elected officials. Peace to all at the table in our world some day. Vote them out. NOW

  • Anonymous

    You hit the Nail on the head on that one. I going to have to copy and past this one. Very well Said.