A fired Fannie Mae contract worker pleaded not guilty Friday to a federal charge he planted a virus designed to destroy all the data on the mortgage giant's 4,000 computer servers nationwide.
Had the virus been released as planned on Saturday, the Justice Department said the disruption could have cost millions of dollars and shut down operations for a week at Fannie Mae, the largest U.S. mortgage finance company.
Rajendrasinh B. Makwana, 35, of Glen Allen, Va., pleaded not guilty in U.S. District Court in Baltimore to one count of computer intrusion, the U.S. attorney's office said.
Makwana's federal public defender, Christopher C. Nieto, didn't return calls seeking comment on the case.
The Associated Press was unable to reach Makwana in Glen Allen, Va., a suburb of Richmond. A search of public records found no address or telephone number for him there.
Makwana is an Indian citizen who has lived in the United States since at least 2001, according to public records.
He was fired Oct. 24 from his computer programming job at Fannie Mae's data center in Urbana, about 35 miles from the company's Washington headquarters, where he had worked since 2006, according to the Justice Department. He was fired for erroneously writing programming instructions two weeks earlier that changed the settings on the servers, according to an FBI affidavit.
Fannie Mae did not immediately terminate Makwana's computer access after telling him he was fired early on the afternoon of Oct. 24, the affidavit states. Before surrendering his badge and laptop computer about 3 1/2 hours later, the indictment accused Makwana of "intentionally and without authorization caused and attempted to cause damage to Fannie Mae's computer network by entering malicious code."
As first reported by The (Washington) Examiner, the code "would have resulted in destroying and altering all of the data on Fannie Mae servers," the indictment states.
According to the affidavit signed Jan. 6 by FBI Special Agent Jessica A. Nye, a Fannie Mae engineer discovered the malicious instructions by chance Oct. 29. The virus was removed that day and did no harm, according to the affidavit.
Had the virus been released, "it would have caused millions of dollars of damage and reduced if not shut down operations" for at least a week, Nye wrote.
Fannie Mae may have had to clean out and restore all 4,000 servers, restore and secure the automation of mortgages and restore all data that was erased, the agent said. Fannie Mae declined to comment.
Fannie Mae owns or guarantees about $3 billion in home loans, or one in every five mortgages in the United States. A slowdown would have affected the investors who rely on Fannie Mae to guarantee the timely payment of mortgage interest and principal, said Guy Cecala, publisher of Inside Mortgage Finance.
"To the extent they can't meet those obligations, that's a big problem," Cecala said.
The charge against Makwana carries a maximum sentence of 10 years in prison.
Makwana was arrested Jan. 7 and released on $100,000 bond Jan. 8, according to court records.
The Justice Department didn't disclose the name of the contractor for whom he worked. He was one of 10 to 20 workers with access to the server from which the virus would have launched, according to the FBI affidavit.
Fannie Mae and Freddie Mac, both publicly traded, were created by Congress to inject money into the home-loan market by purchasing mortgages and bundling them into securities for sale to investors. Both were taken over by their government regulator in September after mounting mortgage losses put them in distress
