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A multibillion-dollar Baltimore-based housing finance company appears to be in trouble. Municipal Mortgage and Equity LLC has seen its stock price drop by 80 percent over the past year or so, and in February the New York Stock Exchange delisted the stock. Shares now trade on the "pink sheets" over-the-counter market. Several class-action lawsuits have been filed against the company by shareholders, claiming securities fraud.

Although little known even in Baltimore, MuniMae, as it calls itself, boasts some high-powered executive officers and board members. Chief among these is Richard O. Berndt, a partner in the Gallagher Evelius and Jones law firm and a key adviser to the Roman Catholic Archdiocese of Baltimore. Berndt and his wife, Rita, who is a professor of neurology at the University of Maryland, have given state and local candidates more than $38,000 since 1999, according to state campaign finance records. That includes $11,000 to Gov. Martin O'Malley, $3,250 to Mayor Sheila Dixon, and $5,500 to City Council President Stephanie Rawlings-Blake.

Another prominent board member is Eddie C. Brown, who founded Brown Capital Management and serves on the board of Mercantile Bancshares and the East Baltimore Development Corp.

MuniMae's CEO, Michael L. Falcone, with his wife has contributed more than $13,000 to state and local politicians. Falcone serves on the Boards of the Baltimore Development Corporation and The Greater Baltimore Alliance.

MuniMae founding partner and board chairman Mark K. Joseph also served as the president and managing general partner of the SCA Tax-Exempt Fund Limited Partnership, MuniMae's predecessor, from 1986 through '96. Joseph serves on the boards of directors of the Greater Baltimore Committee and Provident BankShares Corp., which recently swung to a $15 million quarterly loss, and says it anticipates further write-downs in its investment portfolio.

According to an October 2007 investors prospectus available on its web site, MuniMae is a "publicly traded real estate and renewable energy finance company . . . with an equity market capitalization of approximately $1 billion." The company arranges debt and equity financing for real-estate developers and clean-energy projects and provides investment services to "institutional investors primarily through direct advisory agreements" and MuniMae-sponsored funds. The company also says it invests its own capital in affordable housing and renewable energy. The specific investments it has made are not immediately discernible.

Founded in 1996, MuniMae bought other finance companies and claims more than $20 billion in assets under management. Much like a Real Estate Investment Trust, MuniMae has prided itself on its increasing dividend payments to its investors, which surpassed $2 per share in 2006. Its investors also receive a tax exemption on some of their investment income.

Since 2006, however, the company has not filed a comprehensive financial statement.

On Jan. 28 the company announced a dividend of 33 cents per share, a reduction of more than 36 percent from its last quarterly dividend. The reduced dividend was attributed to costs of ongoing audits and restatements of the company's balance sheet.

In the same Jan. 28 announcement, MuniMae also said it would not be able to file its restated, audited financial statements for 2004, '05, and '06 by its previously announced March 3 goal. The company added, however, that "based on work to date" it did not believe that the restatements would change its previously recorded cash balances.

The next day, MuniMae led the Wall Street Journal's list of largest one-day stock decreases. MuniMae's failure to file timely financial statements caused the New York Stock Exchange to delist the company's stock.

MuniMae said in its announcement that it "will be able to apply for relisting on the NYSE when all its filings with the SEC are current," adding that it now expects to file unaudited financial statements "no later than mid-March." Its annual report for 2006, however--the audited one that investors rely on--is not likely to be filed before the end of May.

Calls to the company's investment relations coordinator, and to Berndt at his law office, were not immediately returned.

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