Countrywide CEO Mozilo charged with fraud

[samh32]

WASHINGTON – Federal regulators on Thursday charged Angelo Mozilo, the former chief executive of mortgage lender Countrywide Financial Corp., and two other company executives with civil fraud.

The Securities and Exchange Commission's civil lawsuit, filed in federal district court in Los Angeles, also accuses Mozilo of illegal insider trading.

Countrywide was a major player in the subprime mortgage market, the collapse of which in 2007 touched off the financial crisis that has gripped the U.S. and global economies.

Mozilo, 70, is the most high-profile individual to face formal charges from the federal government in the aftermath of the crisis. He has denied any wrongdoing and Mozilo's attorney on Thursday called the SEC's allegations "baseless."

Civil fraud charges also were filed against Countrywide's former chief operating officer David Sambol, 49, and ex-chief financial officer Eric Sieracki, 52.

http://news.yahoo.com/s/ap/20090604/ap_on_bi_ge/us_sec_mozilo

 

[Lamarr]

its about time

 

[thoughtone]

One down and many more to go. Hopefully this will lead to a conviction.

 

[muckraker10021]

Long Overdue Indictment of Mozilo

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<font size="2" color="#FF0000"><i><b>information below originally posted on this board on May 20, 2008</i></b></font>

Both democratically controlled congressional oversight committees, the US HOUSE FINANCIAL SERVICES and the US SENATE BANKING HOUSING & URBAN AFFAIRS both have introduced and/ or passed legislation the specifically addresses the <b>“predatory practice known as “steering."</b>
Legislation proposed and/ or passed would create criminal penalties <b>FOR FUTURE VIOLATIONS.</B>

For fucking <b><i> Future Violations</b></i>!!! Wow!!

Have you comprehended the unqualified truth that <b><i>"future violations" </b></i> means, to the millions of mortgage borrowers, 70% + who were Black & Brown, <B>who were deliberately and willfully given ‘sub-prime’ mortgage rates at usurious rates</B>

Did the “bush crime family" have any intention of prosecuting the Banks & Mortgage companies who violated State & Federal laws when they ‘steered’ millions of predominately Black & Brown Americans, conniving them into loan-shark rate mortgages like a coldblooded Mafia Don, all in the name of unfettered free-market capitalism??

What would the “bush crime family" do if ethical career government employees at the US Department of Justice, responding to numerous complaints about the mortgage banks ‘steering’ & loan sharking decided to prosecute & convict these firms???

Would the “bush crime family" political appointees really step in and PREVENT the criminal prosecution and conviction of felonious financial institutions???

Of course they would and did!!!!!

You didn’t here about this story in the majority of the ‘corporate media’ , particularly TV media, did you??

<blockquote>
"In one case I have been studying for some time, the Bush Justice Department had ramped up to begin a large-scale prosecution of two financial-services companies involved in what prosecutors concluded was a serious swindle. Suspicious financial deals had produced enormous losses for policyholders and state oversight authorities. In addition to jail time for a group of executives, the complaint, which was prepared and ready to file, sought $400,000,000 in damages for the alleged misconduct. One of the targets, knowing it was in the crosshairs, put a settlement deal worth “a nine-figure sum" (so at least $100,000,000) on the table, together with a monitored compliance program. Career prosecutors rejected it as too little.

<span style="background-color: #FFFF7B"><b>Then strange things started happening. Control over the case passed entirely to Bush political appointees in Washington, Criminal Division head Alice Fisher and her seniormost subordinates. The prosecutor was told that his boss “was concerned about his health." He was dropped from the case. And the team learned from his greenhorn replacement that the whole prosecution was over. It was being dropped."</b></span>
</blockquote>

READ : Justice Tackles the Corporate Offenders, Or Perhaps Not

READ : In Justice Shift, Corporate Deals Replace Trials

Now who were the beneficiaries of this latest corporate crime rampage; pillaging the meager assets of ‘hard working Americans’ with the sanction and blessing and LEGAL PROTECTION of the ‘bush crime family’.

<img src="http://media3.washingtonpost.com/wp-dyn/content/photo/2008/01/11/PH2008011104155.jpg">
Angelo Mozilo

One of the chief culprits and pirates in this criminal conspiracy was Angelo Mozilo, CEO of the nation’s largest predatory lender CountryWide Financial. Angelo Mozilo’s sub-prime mortgage machine, which ‘steered’ people QUALIFIED FOR TOP-TIER MORTGAGES INTO SUB-PRIME JUNK enabled him to stack more than $470 Million dollars for himself, as millions of duped homeowners go to foreclosure & bankruptcy.

READ : CountryWide Lawsuit Moves Forward

READ : Inside the Countrywide Lending Spree
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[muckraker10021]

During the last “greed-is-good” , ‘Capitalist Pigs’ induced, real estate crash of the 1980’s (the Savings & Loan crash) over 1,000 men went to jail for financial fraud.

The 1980’s financial fraud was 1/40th the size of today’s financial cataclysm.

Here we are 20+ years later witnessing the largest financial fraud in US history, resulting in over 20+ Trillion dollars $$$$$$$$$$$$$$$$$$ of bailouts & US government loan guarantees ( the US gov. owns 35% of Citibank) and……………NO ONE HAS GONE TO JAIL!!!

Angelo R. Mozilo, the former CEO of CountyWide was the most rapacious retail mortgage bankster in the United States. Mozilo’s CountyWide engaged in “steering” – steering is the practice of selling higher interest rate mortgages (subprime) & I.O. (interest only) quarterly reset mortgages specifically to a certain group…..DESPITE the fact that their credit score qualifies them for a standard mortgage. Who was the ‘certain group’ Mozilo’s CountyWide, and Wells Fargo & others targeted? Blacks and Hispanics.

<blockquote>
As former Wells Fargo loan officer Beth Jacobson told The New York Times in June 2009, Wells Fargo singled out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages. Jacobson and another former Wells Fargo loan officer said in an affidavit that the bank's employees referred to blacks as "mud people" and to subprime lending as "ghetto loans."

"We just went right after them," Jacobson, who is white, told The Times. "Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans."

COUNTRYWIDE

Countrywide Sued by Illinois A.G. For Discriminating Against Black And Latino Mortgage Buyers

The lawsuit claims that even when black and Latino borrowers qualified for higher quality loans they were steered towards subprime mortgages by Countrywide more often than Caucasian borrowers who had the same qualifications.

It also alleges that Latinos and Blacks were charged higher fees and interest rates than similarly qualified white borrowers.

Attorney General Lisa Madigan said, "It's disturbingly clear that if you were an African American or Latino borrower who walked into a Countrywide store, you likely paid more for your mortgage than a white borrower," Madigan said in a statement. "Countrywide effectively imposed a surcharge on mortgage loans based on race and ethnicity."

Bankster Angelo R. Mozilo was called ‘The Sun God,’ both for how his employees seemed to worship him as well as for his deep, permanent tan. Mozilo drove several Rolls-Royces, often in shades of gold, and paid his executives hundreds of thousands of dollars. Mozilo’s shiny white teeth, pinstriped suits, and bravado helped him both stand out and send a message: He was going to shake up the staid industry.
</blockquote>

Yesterday, October 15, 2010 bankster Angelo R. Mozilo got slapped on the wrist by the Securities Exchange Commission. He agreed to give back $68 million of the $500 million he stacked. Meanwhile in 2006 two men go to jail for six months for ‘stealing??’ food from a trash can.



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Lending Magnate Settles Fraud Case

October 15, 2010

by Gretchen Morgenson

http://www.nytimes.com/2010/10/16/business/16countrywide.html

Angelo R. Mozilo, the former chief executive of Countrywide Financial, once the nation’s largest mortgage lender, agreed to pay $67.5 million on Friday to settle a civil fraud case brought by the Securities and Exchange Commission last year.

Countrywide itself is paying $20 million of Mr. Mozilo’s $67.5 million payment as part of an indemnification agreement he has with the company.

As part of the settlement, Mr. Mozilo, 71, also agreed to be permanently banned from serving as an officer or a director at any public company.

Federal authorities have been criticized for ineffectively policing Wall Street in the years leading up to the financial crisis and the settlement with Mr. Mozilo represents a significant milestone for the government.

Earlier this year, Goldman Sachs paid a $550 million fine to settle securities fraud charges. Securities regulators are also investigating former senior executives at Merrill Lynch for possible securities fraud.

While securities fraud cases are complex and often difficult to win, analysts have taken the government to task at times for not moving even more aggressively against Wall Street in the wake of the credit debacle.

Still, the settlement by Mr. Mozilo is the first time that a prominent executive has been penalized personally for financial excesses linked to a mortgage boom that, when it went bust, threatened to topple the economy and led to an unprecedented wave of foreclosures.

The deal came just four days before a jury trial was scheduled to begin in Los Angeles. David Sambol, the former president of Countrywide, and Eric Sieracki, the former chief financial officer, were also sued by the S.E.C. Both men settled their cases Friday as well; Mr. Sambol agreed to pay $5.52 million and Mr. Sieracki consented to $130,000. Mr. Sambol also is barred for three years from serving at a public company.

Mr. Mozilo’s agreement with the government is a humbling moment for one of the country’s most audacious and flamboyant financiers.

For years, Mr. Mozilo was among the highest-paid executives in America and his S.E.C. fine is a fraction of the vast wealth he amassed running Countrywide. In one eight-year period, from 2000 until he left the company in 2008, Mr. Mozilo received total compensation of $521.5 million, according to Equilar, a compensation research firm.

The son of a Bronx butcher, Mr. Mozilo started Countrywide in 1969 with David Loeb, who died in 2003; together the men built the company into a mortgage lending behemoth with $11.4 billion in revenue at its peak in 2006.

But Countrywide’s foray into subprime lending and other risky loans led to its downfall, and in early 2008, hobbled by mounting losses on loans, the company was purchased by Bank of America in a fire sale.

When the S.E.C. sued Mr. Mozilo, Mr. Sambol and Mr. Sieracki in June 2009, it accused the men of hiding growing risks in Countrywide’s operations from investors.

The complaint also contended that Mr. Mozilo and Mr. Sambol improperly generated profits on insider stock sales even though they were aware of Countrywide’s deepening financial woes. Mr. Mozilo generated $140 million in gains on stock that he sold from November 2006 through October 2007, the S.E.C. said.

Mr. Mozilo’s lawyers declined to comment on the settlement.

In its complaint, the S.E.C. cited a series of e-mails written by Mr. Mozilo starting in 2006 that decried some of Countrywide’s lending practices even as the company’s executives publicly boasted about its high-quality loans.

“In all my years in the business, I have never seen a more toxic product,” Mr. Mozilo wrote in an April 17, 2006, e-mail to Mr. Sambol, referring to loans that allowed borrowers with poor credit histories to buy homes without putting any money down.

Mr. Mozilo also warned his colleagues about the dangers of a popular type of adjustable-rate mortgage that let borrowers pay a fraction of the typical monthly charge. In an April 2006 e-mail, Mr. Mozilo wrote that he had “personally observed a serious lack of compliance within our origination system as it relates to documentation and generally a deterioration in the quality of loans originated.”

In another April 2006 e-mail, Mr. Mozilo noted that his colleague Mr. Sambol considered the company’s subprime second mortgages “the ‘milk’ of the business. Frankly, I consider that product line to be the poison of ours,” he said.

Mr. Mozilo and his colleagues neither admitted nor denied the government’s charges. The payment by Mr. Mozilo will consist of $22.5 million in civil penalties and $45 million in disgorged stock profits. Mr. Sambol agreed to pay $520,000 in penalties and $5 million in disgorgement. Countrywide is paying for all of Mr. Sambol’s disgorged funds; Bank of America has been paying Mr. Mozilo’s legal fees, and the $20 million Countrywide is paying on his behalf applies to stock profits he was forced to give up.

James D. Cox, professor of corporate and securities law at Duke University, said the settlement was on the high end for an individual corporate officer. “We’re used to seeing $100 million settlements when it’s against Goldman Sachs or after-hours trading of mutual funds,” he said, “but we don’t usually see eight-figure settlements with individuals.”

The settlement was also good for the government, Mr. Cox said. “This is not a slam dunk; it’s a risky case and it’s got a lot of complexities to it.”

Robert Khuzami, director of enforcement at the S.E.C., said in a statement: “Mozilo’s record penalty is the fitting outcome for a corporate executive who deliberately disregarded his duties to investors by concealing what he saw from inside the executive suite — a looming disaster in which Countrywide was buckling under the weight of increasing risky mortgage underwriting, mounting defaults and delinquencies and a deteriorating business model.”

Mr. Mozilo’s trial had been widely anticipated because it represented one of the few public prosecutions of a major participant in the mortgage crisis. Both the defense and the prosecution faced big risks if they lost at trial, legal experts said, and this may have led them to reach a settlement.

The terms of the settlements were approved by John F. Walter, the federal judge overseeing the case in California’s central district court. After reading the details of the settlement, Mr. Walter said, “I would have been interested to see what a jury would have decided. Because of the settlement, as is often the case, we’ll never know.”

None of the defendants attended the hearing in the Los Angeles courtroom Friday. Both Mr. Sambol and Mr. Sieracki had two lawyers there to represent them; Mr. Mozilo was represented by five lawyers.

The outcome of the trial would have had enormous consequences for both sides. Had the S.E.C. won, it would have helped the agency re-establish its reputation as an investor advocate.

A win would also have been crucial for Mr. Mozilo, legal experts say, because a criminal prosecution might have followed a loss in the civil case.

Walter F. Brown Jr., a lawyer for Mr. Sambol, said, “Mr. Sambol has agreed to settle the S.E.C. lawsuit and put the matter behind him for the benefit of his family and loved ones.”

Shirli Fabbri Weiss, Mr. Sieracki’s lawyer, noted that the S.E.C. did not pursue any fraud claims against her client and that he, unlike Mr. Mozilo and Mr. Sambol, was not being barred from serving at a public company.



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[QueEx]

<font size="5"><center>
Financial crisis panel urges
prosecutions of industry figures</font size></center>



McClatchy Newspapers
By Greg Gordon
Tuesday, January 25, 2011


WASHINGTON — The congressional panel examining the root causes of the nation's financial crisis voted to refer to state and federal prosecutors a wide range of potential criminal wrongdoing by financial industry figures and corporations, people involved in the deliberations said Tuesday.

The politically divided Financial Crisis Inquiry Commission is likely to detail the referrals on Thursday in releasing its final report, based on testimony from more than 700 people in coast-to-coast hearings and a review of millions of pages of documents.

The Huffington Post website first reported on the commission's referrals Monday evening.

It couldn't be learned which financial executives and companies were subject of the referrals to the Justice Department and state attorneys general. The panel investigated the roles of, among others, subprime mortgage brokers and lenders; Wall Street giants that bought, repackaged and resold the loans; bond ratings agencies; and a huge insurer that wrote protection on dicey bonds, enabling a U.S. housing bubble to swell until it burst, crashing the global economy.

Two people who had roles in the deliberations, speaking on condition of anonymity because the report is still confidential, said that the panel voted on a number of the Justice Department referrals months ago.

"And we've done some more," one of these individuals said.

The legislation creating the commission, signed by President Barack Obama on May 20, 2009, charged the 10-member panel to refer to the U.S. attorney general and appropriate state attorneys general "any person that the commission finds may have violated the laws of the United States in relation to (the) crisis."

"We did our duty," said one of the two involved in the process.

However, the other knowledgeable person stressed that the panel's thin investigative staff didn't attempt to compile evidence for solid criminal cases, but rather referred information that raised serious legal issues.

The panel sought to model itself after the hard-hitting Pecora Commission, the Depression-era panel that compiled evidence leading to prosecutions of high officials of some of the nation's biggest banks.

However, the Crisis Inquiry Commission's six Democrats and four Republicans split ideologically in the months after their appointment. The divisions showed up when Republicans chose to release their own findings in December, the original deadline for the final report, and blamed much of the crisis on the "national home ownership strategy" begun under President Bill Clinton and on secondary mortgage giants Fannie Mae and Freddie Mac for jumping into the subprime market.

Commission members and staff signed agreements to keep details of the final report confidential until its release.

However, the New York Times reported late Tuesday that it had obtained a copy of the 576-page report, which it said concluded that the financial disaster was "avoidable" and laid blame on a range of actors from federal regulatory failures to shoddy mortgage lending and reckless risk taking.

Commission spokesman Tucker Warren said the report will be released Thursday and declined to comment further.


(Tish Wells contributed to this article.)


http://www.mcclatchydc.com/2011/01/25/107430/in-report-financial-crisis-panel.html