U.S. Said to End Criminal Investigation of Mozilo
The U.S. Justice Department has ended a criminal investigation of former Countrywide Financial Corp. Chief Executive Officer Angelo Mozilo and won’t bring charges, a person familiar with the investigation said.
The person asked not to be identified because the investigation hadn’t been made public.
The Federal Bureau of Investigation started a probe of possible securities fraud at the mortgage lender in 2008, people familiar with the case said at the time. Mozilo, 72, last year agreed to pay $67.5 million to settle a U.S. Securities and Exchange Commission lawsuit accusing him of misleading investors.
Brendan Sullivan, a lawyer for Mozilo, didn’t immediately return a call to his office outside regular business hours.
The SEC sued Mozilo and two other former Countrywide executives in June 2009. The agency said the three publicly reassured investors about the quality of Countrywide’s loans while knowing that the lender was fueling its growth at least since the beginning of 2005 by letting its underwriting guidelines deteriorate, and by originating an increasing number of risky subprime loans.
Mozilo’s penalty was the biggest ever to be paid by a senior executive of a publicly traded company in an SEC settlement, the agency said last year.
The SEC alleged that Mozilo sold $140 million in Countrywide shares from November 2006 through October 2007 at an inflated price because he hadn’t disclosed the increasing risk he knew the company faced from defaulting mortgages.
Mozilo, along with former Countrywide Chief Operating Officer David Sambol, also agreed to a $6.5 million settlement to resolve a predatory lending lawsuit filed by California, state Attorney General Kamala Harris said Feb. 2 in a statement.
Money from the California settlement would be used for a relief fund to aid foreclosures and mortgage delinquencies, Harris said in the statement. Mozilo denied in court and continues to deny the allegations in that case, his lawyer, David Siegel, said in an e-mailed statement at the time. Siegel said the settlement would be paid by Countrywide and required no payment from Mozilo.
Mozilo was the most prominent executive targeted by U.S. regulators examining the subprime mortgage crisis. He co-founded Countrywide in 1969 and built it into the nation’s biggest mortgage lender. Mounting loan defaults made it impossible for the lender to raise funds to issue new mortgages, prompting its sale to Bank of America Corp. in 2008.
The Los Angeles Times reported on the end to the investigation yesterday.
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