US District Court of the Western District of Washington

FDIC Sues Former Washington Mutual Executives and Their Wives

On March 16, 2011, the FDIC filed a complaint against former Washington Mutual CEO, Kerry K. Killinger and his spouse, former COO Stephen J. Rotella and his spouse, and former home loans president David C. Schneider in the US District Court of the Western District of Washington. The complaint alleges that Killinger, Rotella, and Schneider profited by recklessly increasing the risk profile in WaMu’s held-for-investment loan portfolio. The complaint further alleged that these executives were responsible for WaMu’s higher risk home lending program that eventually caused the demise of the bank. In addition to the claims against Killinger, Rotella and Schneider for gross negligence, ordinary negligence and breach of fiduciary duty, the FDIC also asserted claims against Killinger’s and Rotella’s wives, alleging that Killinger and Rotella fraudulently conveyed valuable assets to their wives in order to hinder, delay, or defraud their creditors. Complaint.