WILLIAMS v. FANNIE MAE — Entry #33: MOTION for Summary Judgment by FANNIE MAE, RICHARD LAWCH, GRACE HUERSCHER

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

)
MARIALICE BATHRUS WILLIAMS, )
Plaintiff )
)
Vv. ) Civil Action No.
) Judge
“ANNIE MAE, )
)
and )
)
RICHARD LAWCH, ) C.
» — Subje “Nfideng,
and ) Ong CE fo Pr, ia}
) Cong fect,
GRACE HUEBSCHER ) deng;. te Orgs,
Defendants ) ag

VERIFIED COMPLAINT FOR DAMAGES AND
FOR INJUNCTIVE RELIEF

‘JURISDICTION

The jurisdiction of this Court is founded on Title 28, Section 1331 of the
United States Code (question arising under Federal law). Defendant Fannie Mae is
“an instrumentality of the Federal Government”; and on Sec. 42 U.S.C, 1981(a) denial
of right to contract based on race.

PARTIES

Plaintiff, Williams, Marialice Bathrus Williams (hereafter “Ms. Williams”), an
African-American woman, is a resident of the District of Columbia and was
employed as an attorney from 1989 to 1990, Assistant Director from 1990 to 1993 and
then Director of Capital Markets from 1993 to 1998 in the Multifamily Division of
Defendant Fannic Mae.

Defendant Fannie Mae is an instrumentality of the Federal Government and
its main place of operations is Washington, D.C.

Defendant Richard Lawch (hereafter “Mr. Lawch”), a white male, was Vice-

President for Multifamily and her direct supervisor at Fannie Mae. Mr. Lawch is
now a Senior Vice-President at Fannie Mae in the Multifamily Division.

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Defendant Grace Huebscher, a white female, is a Vice-President in the
Multifamily Division at Fannie Mae.

COUNT I DENTAL OF RIGHT TO CONTRACT BASED ON RACE
— 42 USC 1981(a) “All persons... shall have the same night ... te make and enforce
contracts... as enjoyed by white citizens....”; (b) “make and enforce” defined

“includes the making, performance, modification, and termination of contracts, and

ihe enjoyment of all benefits, privileges, terms, and conditions of the contractual
r¢lationship.”

i, Ms. Williams worked in the Multifamily Division at Fannie Mae from January
of 1990 to June 1998. In June 1998, she left Fannie Mae with the written and oral
ptomise of doing business with Fannie Mae on transactions for which she had
developed the tools that permitted Fannie Mae to carty out those transactions.

é. Ms. Williams was tesponsible for the development of products for Defendant
annie Mae’s customers that could provide cheaper and more cost-effective
sieuctures for selling or securitizing pools of mortgage loans. She established a high
icvel of expertise in these products, a detailed knowledge of the financial institutions
wiuch did business in the secondary mortgage market, and gteat capacity to work
within Fannie Mae and without with its clients in successful product development.

3. Ms. Williams, while at Fannie Mae, developed and put into place products that

opened up the secondary market for Fannie Mae’s mulufamily mortgage-backed

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securities at a moment when change in lending rules would have cost Fannie Mae

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that market, ot a substantial portion thereof That product line was named ACES™
and is now the benchmark on Wall Street for similar asset-backed securities.

4. In 1997, Ms. Williams closed the first mortgage-backed securities transaction in
the country wheteby Fannie Mae was able, for the first time, to transfer all of the risk

of loss (as opposed to insuring the loss) to a third party insurer, AIG, and thus to

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move that tisk from the portfolio and financials of Fannie Mae and to stay in

compliance with the new lending rules.

5. Fannie Mae, Richard Lawch, (her immediate supervisor), and Grace
Huebscher all pacticipated with Ms. Williams in the development of the tisk transfer
mechanism and intimately knew of her talent, her skills, her experience and
effectiveness in developing the tools and in closing mortgage backed securities for
Fannie Mae, which effectively transferred risk off its portfolio and facilitated, in
particular, its remaining in the small mulafamily market, a market of the order of $10
billion a year.

6. On June 30 of 1998, Ms. Williams ended het employment with Fannie Mae.
Defendants Fannie Mac, Richard Lawch, and Grace Huebscher all were aware of
significant prospective opportunities available ta Ms. Williams, by reason of her
cxpettise and experience, and in fact led Ms. Williams to believe that she would be
permitted to participate in these business opportunities, as such opportunities were
normally and customarily afforded by Fannie Mac to former officials who are white
citizens.

7. Ms. Williams, after leaving Fannie Mae, established her own firm to broker and
ptovide services for a portion of that mortgage backed securities market of Fannie
Mae that she had developed. She entered into a joint venture with CAM Financial to
facilitate her business plan.

8. Lou Hoyes, Senior Vice President of Defendant Fannie Mae’s Multifamily
Division where Ms. Williams was employed, prior to her leaving Fannie Mae, gave
his word orally and in writing that Fannie Mae would do business with Ms. Williams.

In fact, Mr. Hoyes assured in writing that Fannie Mae would do at least $1 billion of

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insurance-based business in the next year through her, as a broker, and the years
following of an approximately $10 billion yearly market. Standard brokerage rates
would yield commissions to Ms. Williams on that business of the order of $7 million
annually, totaling $35 million over the five yeats of injury to date.
9. On May 26, 1998, Louis W. Hoyes, Fannie Mae’s Senior Vice-President for Multi-
Family Lending and Investment, explained the business opportunities opened by the
programs developed by Ms. Williams in association with CAM Financial:

Fannie Mae currently has several pending transactions

totaling nearly $1 billion where multifamily credit risk

transfer insurance is the keystone to closing these

transactions.
10. Ms. Williams’ business plan was to use the risk wansfer products that she had
developed during her tenure with Fannie Mae. Richard Lawch and Grace
fuebschet knew and approved of that business plan. Such arrangements are normal
and customary for white citizens who are former high-level officers of Fannie Mae
and who depart from Fannie Mae and continue to conduct business in the area of
theic employment but on a private sector basis with customary payments, fees and
commissions. There was no reason to expect any different conteactual and business
opportunity for Ms. Williams, an African-American citizen, especially given her
talent, experience and demonstrated track record of success at Fannie Mae in
product development.
11. On July 1, 1998, Ms. Williams opened an office at 2600 Virginia Avenue, NW;
Washington, DC 20037, Suite 402. On October 19, 1998, Ms. Williams organized a
District of Columbia limited liability company named, Risk Mitigation Strategists,

LLC (RMS), wholly owned by Ms. Williams.

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12. On November 1, 1998, Ms. Williams obtained an insurance btoker’s license
from the District of Columbia Department of Insurance and Securities Regulation in
order that Ms. Williams, individually, as well as through RMS, could provide
broketage services and receive brokers’ fees generated by her efforts with Fannic
Mae in producing insurance products bought by, on behalf of or for the benefit of
Defendant Fannie Mae and its multifamily leaders, including its DUS and
Aggtegation Program lenders.
13. Following her departure from Fannie Mae, with the sanction of Fannie Mae,
Richard Lawch and Grace Huebscher, Ms Williams proceeded to develop the
business — arranging meetings, attending conferences, and making proposals. She
worked diligently and in good faith te consummate business with Defendants. Ms.
Williams marketed to Fannie Mae and its lender customers a variety of insurance
products,
14. Ms. Williams attended conferences such as those sponsored by the Mortgage
Bankers Association where Ms. Williams made presentations to Fannie Mae
customers regarding pertinent insurance strategies concerning Fannie Mae and its
business.
15. The strategies were designed to facilitate and to address the following:
a.) make it easier and less costly for lenders using the then existing
Fannie Mae executions to swap mortgages fot mortgage-backed

securities or sell various loans and mortgages to Defendant Fannic

Mae;

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b.) .) minimize Defendant Fannie Mac's exposure to real estate, credit,
and market risks associated with its portfolios of mortgages, financial
instruments, derivatives and hedging activities; and
c.) .) shorten transaction time through eliminating a number of
documents and substituting an insurance policy and making follow up
transactions vittually a snap.
16. Defendant Fannie Mae had representatives at meetings in Chicago, San
Francisco, and Orlando, Florida where Ms. Williams made presentations to Fannie
Mae customers, attended parties with Fannie Mae customers, and attended Fannie
Mae parties to discuss marketing results of the conference.
17. In May 2001, another specific proposal was discussed, reflecting the exhaustive
work in refining the product. Ms. Williams, in association with CAM Financial,
having secured the interest of several A+ rated insurance companies, brought the
proposal to Fannie Mae for doing business, relying again on the written and oral
assurances, by Fannie Mae, its officers and agents. 18. While Fannie Mae’s public
discussion continued as stated, privately and secretly, Fannie Mae, was proceeding
to blackball, to deny Ms. Williams business opportunities, and to refuse to do
business with Ms. Williams, an African-American, in favor of a white male, Mr. Craig
Ott.
19. Please note that in response to an email dated May 30, 2001 from Ms. Williams,
Defendant Grace Huebscher and Defendant Richard Lawch on May 31, 2001 had the
following private, written discussion by e-mail:

Richard, Marialice wants to pursue the credit risk

insurance for DUS risk. Do you want to pursue with her?

MY GUT IS NO but if you think it is worth continuing
discussions, I will focus on her questions?

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Richard $. Lawch wrote back by e-mail:
If Ofheo [OFFICE OF FEDERAL HOUSING
ENTERPRISE OVERSIGHT] comes back with bad
RBC [Risk Based Capital] rules we may be interested.
Are these different players than Craig [Ott] is showing
us?

Grace Huebscher replied:

Probably not so if we want to engage Craig [Ott] on this

project, that might be a better choice. If you like that

plan then let’s discuss what we want to ask Craig to find

for us...
Fannic Mac, Richard Lawch and Grace Huebscher never presented Ms. Williams
with theic tue decision, motive and intention, giving one face in public and another
aa cecret, in private. Ms. Williams did not discover the existence of Exhibit A unt!
ihe spring of 2002, which then made the blackball clear.
26. At all imes, from 1998 to the present, Fannie Mac has intentionally, umproperly,
aad willfully refused to do business with Ms. Williams, and had no intention of ever
dowg any business with Ms. Williams. Fannie Mac through its Vice-President
Richard Lawch (now Senior Vice-President) and Vice-President Grace Huebscher of
the Multifamily Division engaged in an intentional and malicious plan to deprive Ms.
Williams of her right to contract based on her Afro-American identity, on the same
terms as are afforded “white citizens.” As officers and directors of Fannie Mae, they
further engaged in a persistent course of conduct designed to interfere with her
prospective economic opportunities. Ms. Williams was blackballed and locked out

by Fannie Mae.

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21. This plan and scheme was made manifest by the May 31, 2001 e-mail from

Huebscher to Lawch, which summatily and explicitly denied Ms. Williams an
opportunity to participate in a pending business opportunity.

22. Further, the line of business for which Ms. Williams was uniquely qualified
was given to a white male citizen — one Craig Ou, with credentials and experience
inferior to that of Ms. Williams. In fact, he was structuring and closing transactions
based upon the business concepts that Ms. Williams had developed at Fannie Mae
and that he had leamed under the tutelage of Ms. Williams.

23. During the above mentioned period, Ms. Williams engaged in such marketing
efforts and made presentations to Defendant Fannie Mae through many of its
employees, officers and agents in such a manner that Defendant, by and through
these employees, officers and agents, had actual knowledge of Ms. Williams's
expectancy of business opportunities.

“A, Defendant Fannie Mae, through its agents and officers Defendants Richard
Lawch and Grace Huebscher, discouraged others and its lenders and customers
icom doing business with Ms. Williams.

25, Defendants and other agents, employces and officers of Fannie Mae discouraged
consultants, brokers, lenders and customers and their representatives from dealing
with Ms. Williams-—and companies associated with her, such as CAM Financial-- in
securing insurance products. They knew, for example, that Ms. Williams, as part of
her business plan, intended to work with CAM Financial, the insurance brokerage
firm that provided insurance coverage for these transactions under an exclusive

agreement with Fannie Mae.

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26. Fannie Mae thereby deprived Ms. Williams from earning commissions through
its co-brokerage agreement with CAM Financial. Their actions are continuing and
ongoing to the present while Fannie Mae is continuing to do business in the small
multifamily housing market using mortgage backed secutities’ products developed
by Ms. Williams, as stated previously above.
27. Defendants blacklisted and blackballed Ms. Williams. These actions drove Ms.
Williams into bankruptcy.
28. Ms. Williams has been damaged as approximate cause of Fannie Mae’s illegal
and tortious actions in an amount in excess of $35,000,000 as a result of lost co-
brokerage commissions with CAM financial commissions attributable to placing
iasurance for her own insurance commission account and insurance consulting fees
with the above referenced customers and prospective customers.
29. This damage is continuing and growing.
30. Defendants’ conduct and actions as set forth induced the breach of prospective
business relationships, contracts and economic expectancies between Ms. Williams,
an African American, and its customers and prospective customers, and encouraged
and promoted the establishment of business relationships, contracts and economic

expectancies with white persons, contrary to the protection offered by 42 USC 1981.

COUNT II TORTIOUS INTERFERENCE WITH PROSPECTIVE ECONOMIC
ADVANTAGE

3L. The allegations set forth in Paragraphs 1-30 are repeated and expressly

incorporated here.
32. Defendants' conduct and actions as set forth constitute a tortious

interference with a business or prospective business relationship or economic

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advantage with Ms. Williams's customers and potential customers, CAM Financial,
and its co-brokerage, commission-sharing relationship with CAM Financial.
Defendants, with knowledge of Ms. Williams's co-brokerage and joint marketing and
sales attangement with CAM Financial and its efforts to market and sell its insurance
products, insurance consulting and general consulting services to Defendant Fannie
Mae's lenders and customers, has intentionally and without justification ot privilege
interfered with such relationships with CAM Financial and Ms. Williams's customers
and potential customers by inducing or causing a breach or termination of such
relationships and expectancy and resultant damage.

COUNT Lf INTENTIONAL INFLICTION OF EMOTIONAL
HARM/OUTRAGEOUS CONDUCT

33. The allegations set forth in Paragraphs 1-30 are repeated and expressly
incorporated here.

34. Defendants blacklisted and blackballed Ms. Williams. Those actions caused her
to file bankruptcy, to leave her office at the Watergate in disgrace and to leave her
home at the Watergate despondent and nearly unable to function. Ms. Williams was
devastated by the shabby and disingenuous way she was treated. All these years Ms.
Williams worked in good faith to attempt to fashion a business relationship with
Fannie Mae based on what she brought to the table. These actions caused her
shock and humiliation when they revealed all her work to have been in vain.
Defendants crushed her in a way that has cost her untold millions in lost business.
Those actions caused her worst nightmare to come true.

35. Those actions were intentional/and or were carried out with reckless disregard

for her as a person and as an African-American. Those actions are outtageous, and

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inflicted on her preat emotional distress, namely, fright, horror, ptief, shame,
humiliation, embarrassment, anger, disappointment and nausea.
COUNT IV - REQUEST FOR INJUCTIVE RELIEF TO ORDER DEFENDANTS
TO CONTRACT WITH MS. WILLIAMS ON THE SAME GROUNDS AS WHITE
CITIZENS, AND TO AFFORD HER THE ECONOMIC OPPORTUNITIES
PREVIOUSLY DENIED.
36. The allegations set forth in Paragraphs 1-30 are repeated and expressly
ttac-@cporated here.

JURY DEMAND

Ms. Williams requests a trial by jury on all issues allowable by law.

REQUEST FOR RELIEF
iL DAMAGES: Based on Counts One, Two, and Three, Ms. Williams demands actual
flamages in the amount of $50,000,000, which includes compensatory damages, lost
remmissions, damage to credit due to bankruptcy, emotional distress and suffering.
Ms. Williams also demands punitive damages in the amount of $100,000,000 for the
malicious, wanton, outcageous conduct of Fannie Mae and its employees.
2, INJUNCTIVE RELIEF: Plaintiff requests this Court to enter injunctive relief
enjoining Faanie Mae and its officers from further interfering with Ms. Williams

business opportunities.

Respectfully submitted,

Harley J. Daniels, Esq.
Bran Lederer, Esq.
Michael W. Beasley, Esq.
Law Offices
3003 Van Ness St, NW, Suite #W228
Washington, D. C. 20008
690 (202) 244-1715
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Verification

Subscribed and sworn before a Notaty Public in Washington, District of Columbia, I,
Marialice Bathrus Williams, Plaintiff, state that I believe that the facts stated in the
Complaint for Damages and for Injunctive Relief are true, to the best of my
knowledge and information.

Marialice Bathrus Williams

Notary Public

My Commission expires:

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