A Whistleblower’s Horror Story

This is the age of the whistleblower. From Chelsea Manning to Edward Snowden to the latest cloak-and-dagger lifter of files, ex-HSBC employee Hervé Falciani, whistleblowers are becoming to this decade what rock stars were to the Sixties — pop culture icons, global countercultural heroes.

But one of America’s ugliest secrets is that our own whistleblowers often don’t do so well after the headlines fade and cameras recede. The ones who don’t end up in jail like Manning, or in exile like Snowden, often still go through years of harassment and financial hardship. And while we wait to see if Loretta Lynch is confirmed as the next Attorney General, it’s worth taking a look at how whistleblowers in America fared under the last regime.

One man’s story in particular highlights just about everything that can go wrong when you give evidence against your bosses in America: former Countrywide/Bank of America whistleblower Michael Winston.

I visited with Michael in California last year and spoke with him over the phone several times in recent weeks. If you think you’ve had a tough year, wait until you hear his story.

Two years ago this month, Winston was being celebrated in the news as a hero. He’d blown the whistle on Countrywide Financial, the bent mortgage lender that one could plausibly argue nearly blew up the global economy in the last decade with its reckless subprime lending practices.

He described Countrywide’s crazy plan to give anyone who could breathe a mortgage in a memorable January, 2013 episode of Frontline called “The Untouchables,” a show that caught the eyes of several influential politicians in Washington. The documentary inspired Senate hearings and even the crafting of new legislation to combat too-big-to-jail corruption in the financial world.

Winston was later featured in the New York Times as the man who “conquered Countrywide.” David Dayen of Salon described Winston as “Wall Street’s greatest enemy.”

But today, Winston is tasting the sometimes-extreme downside of being a whistleblower in modern America.

“Anyone thinking about becoming a whistleblower looks at what happened to whistleblowers before,” says Fleischmann.

He says he’s spent over a million dollars fighting Countrywide (and the firm that acquired it, Bank of America) in court. At first, that fight proved a good gamble, as a jury granted him a multi-million-dollar award for retaliation and wrongful termination.

But after Winston won that case, an appellate judge not only wiped out that jury verdict, but allowed Bank of America to counterattack him with a vengeance.

Last summer, the bank vindictively put a lien on Winston’s house (one he’d bought, ironically, with a Countrywide mortgage). The bank eventually beat him for nearly $98,000 in court costs.

That single transaction means a good guy in the crisis drama, Winston, had by the end of 2014 paid a larger individual penalty than virtually every wrongdoer connected with the financial collapse of 2008.

When Winston protested his preposterous punishment on the grounds that a trillion-dollar company recouping legal fees from an unemployed whistleblower was unreasonable and unnecessary, a California Superior Court judge denied his argument — get this — on the grounds that Winston failed to prove a disparity in resources between himself and Bank of America!

This is from the court’s ruling:

Plaintiff argues that the disparity in the resources between the individual plaintiff and the defendant Bank of America make it unfair to place the cost of the premium on plaintiff. Plaintiff offered no evidence in support of this argument; it is rejected.

“I mean, Carlos Slim, the world’s richest individual, is nothing next to Bank of America,” says Winston today. “I just have to shake my head at all of it.”

An articulate, well-educated family man who speaks with great pride about his two grown children, who’ve stood by him throughout his troubles, Winston’s life has been turned upside down by his experience.

“I’ve never in my life not worked, but I’m unemployable now,” says Winston, a longtime high-level executive at blue-chip corporations like McDonnell-Douglas and Lockheed Martin. Although he spent most of a lifetime scrupulously saving, he says he’s “worried now that there will be a time when I won’t be able to support my family.”

Even worse, while the bank was going after his savings, Winston was diagnosed with laryngeal cancer. He has been undergoing painful treatment ever since and is literally fighting for his life now, on top of everything else.

“It’s been a very difficult year,” he says.

Yet Winston would likely bear all of this more easily were it not for bitterness over the fact that the sacrifices of whistleblowers like himself have too often resulted in dead ends or worse in recent years. 

In the finance sector, many of the biggest cooperators have seen their evidence disappeared into cushy settlement deals that let corporate wrongdoers off the hook with negligible fines.

In fact, many of the companies mentioned in that once-damaging Frontline report have since been allowed to painlessly pay their way out of trouble. The whistleblowers featured back then have been vindicated factually, but many are still waiting for action.

Cozy deals with firms like Citigroup (read on to see who negotiated that deal) and JP Morgan Chase have threatened to reduce the gutsy actions of whistleblowers like Richard Bowen and Alayne Fleischmann to footnotes in an increasingly corrupt grand scheme of things.

This is a serious problem, given that anyone considering coming forward is usually paying at least some attention to how the government has dealt with other cooperators.

“Anyone thinking about becoming a whistleblower looks at what happened to whistleblowers before,” says Fleischmann.

“What I worry about,” says Winston today, “is that someone is going to see wrongdoing, and then see what’s happened to people like me, and decide it’s not worth it.”

Winston joined Countrywide, which was booming financially at the time, in 2005.

Unbeknownst to him, his new firm was at the forefront of a mass movement to pump the global economy full of fraudulent, born-to-lose subprime loans, a movement destined to rapidly overinflate the global economy with debt and cause a catastrophic recession.

In essence, his firm was mass-producing and then selling financial snake oil. Countrywide, Winston says, would give home loans to anyone who could “fog a mirror.”

The firm didn’t really bother to hide what it was up to.