The Center for Public Integrity’s Michael Hudson, who’s done as much as any journalist—both before and after the crash—to expose how fraud was endemic to the mortgage industry, has a big investigation out today reporting on how Countrywide attacked internal whistleblowers to keep its fraud machine humming.

Last week, Hudson got the scoop on the Department of Labor ruling saying that Bank of America (which bought Countrywide in 2008) had illegally fired its head of mortgage-fraud investigations, Eileen Foster, as retailation against her whistleblowing on BofA/Countrywide’s systematic mistreatment of whistleblowers.

The story’s top is damning, reporting how Foster’s team found bins full of documents in Boston headed for the shredder—papers that were fraudulent on their face, with Wite-Out and tape used to change critical details on loans, including appraisals. The fraud was so bad that Countrywide had to shut down six Boston offices. Here’s how Countrywide reacted, and note that this was the summer of 2007, a year after the housing bubble had burst:

She began to get pushback, she claims, from company officials who were unhappy with the investigation.

One executive, Foster says, sent an email to dozens of workers in the Boston region, warning them the fraud unit was on the case and not to put anything in their emails or instant messages that might be used against them. Another, she says, called her and growled into the phone: “I’m g—d—-ed sick and tired of these witch hunts.”

Her team was not allowed to interview a senior manager who oversaw the branches. Instead, she says, Countrywide’s Employee Relations Department did the interview and then let the manager’s boss vet the transcript before it was provided to Foster and the fraud unit…

By early 2008, she claims, she’d concluded that many in Countrywide’s chain of command were working to cover up massive fraud within the company — outing and then firing whistleblowers who tried to report forgery and other misconduct. People who spoke up, she says, were “taken out.”

This isn’t just some disgruntled ex-employee. Foster was head of Countrywide’s mortgage-fraud investigations unit, and the Labor Department awarded her nearly a million bucks for wrongful termination. Here’s what she says about the culture at Countrywide (it’s worth noting that she basically exhonerates Mozilo, saying that she always saw him want fraudsters fired):

Only later — after she took over the mortgage fraud investigation unit — did she realize, she says, that cover ups were part of the culture of Countrywide, and that efforts to paper over problems had less to do with bureaucratic infighting and more to do with hiding something darker within the company’s culture.

“What I came to find out,” she says, “was that it was all by design.”

But if you don’t believe Foster the former Countrywide executive, maybe you’ll believe some of the other thirty people Hudson finds who say that “Countrywide executives encouraged or condoned fraud.”

Eighteen of these ex-employees, including Foster, claim they were demoted or fired for questioning fraud. They say sales managers, personnel executives and other company officials used intimidation and firings to silence whistleblowers.

Here are some examples Hudson pulls from lawsuits:

Some ex-employees say they went high up Countrywide’s chain of command to raise red flags about fraud. Mark Bonjean, a former operations unit manager in Arizona, complained to a divisional vice president, according to a lawsuit in state court in Maricopa County. Within two hours of sending the VP an email about what he believed were violations of the state’s organized crime and fraud statutes, the suit said, he was placed on administrative leave. The next day, according to the lawsuit, he was fired.

Another ex-Countrywider, Shahima Shaheem, claimed she took her complaints to the very top. Like Enid Thompson before her, she said she wrote an email directly to Mozilo, the CEO, about fraud and retaliation. She never heard back from Mozilo, according to her lawsuit in Contra Costa Superior Court. Instead, the suit said, she was subjected to a campaign of harassment by company executives and human-resources representatives that forced her to leave her job.

Shaheem’s case was settled out of court, her attorney said.

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