Former Countrywide executive Angelo Mozilo, the man who almost singlehandedly built the subprime lending industry and made himself a mega-millionaire as it collapsed, wreaking havoc on world markets, will now spend many of those millions defending himself from federal regulators, who have charged him with civil fraud. The Securities and Exchange Commission also accuses Mozilo in its civil lawsuit of engaging in insider trading for dumping his Countrywide stock for nearly $140 million in profits when it was clear the lending firm's risk lending practices were going to tear the company apart at the seams.
According to Robert Khuzami, director of the SEC's Division of Enforcement: "This is the tale of two companies. Countrywide portrayed itself as underwriting mainly prime quality mortgages using high underwriting standards. But concealed from shareholders was the true Countrywide, an increasingly reckless lender assuming greater and greater risk."
Mozilo, 70, and former Countrywide CFO David Sambol, 49, and ex-CFO Eric Sierackie, 52, are accused by the SEC of "deliberately" misleading Countrywide's shareholders. Investors were told that Countrywide was writing mostly prime mortgages and used fiscally sound underwriting standards, when in fact it was pioneering the the creation of the very risky lending practices that made Countrywide executives obscenely wealthy, even while costing the U.S. economy tens of thousands of jobs and sending shock waves through financial markets worldwide.
Countrywide was founded in 1969 as a lender of FHA and veteran's mortgages in Southern California by Angelo Mozilo and his partner, underwrite David Loeb, who died in 2003. Mozilo and Loeb went on to found IndyMac in 1985, which specialized in the risky Alt-A loans. IndyMac was taken over by the FDIC in July 2008 and sold to an investor group that includes former Goldman Sachs executive Steve Mnuchin, computer entrepreneur Michael Dell, banking investor J. Christopher Flowers and hedge fund manager John Paulson; the IndyMac website now redirects to a bank called OneWest Bank.
The FDIC estimates that the IndyMac failure will cost the FDIC between $8.5 billion and $9.4 billion.
Wikipedia quotes CNN in its entry for Angelo Mozilo as one of the "Ten Most Wanted: Culprits" of the 2008 financial collapse in the United States.
Having attended seminars by U.S. Attorneys sponsored by the Association of Certified Fraud Examiners, who described their prosecutions of Enron executives Kenneth Lay, Andrew Fastow and Jeffrey Skilling, I believe that federal prosecutors will eventually successfully bookmark a page in history to Angelo Mozilo for his prominent role in creating the U.S. mortgage bubble and the resultant collapse as the securitized mortgages Countrywide bundled and sold to institutional investors around the world became worthless paper.
For more info:
California Real Estate Fraud Report
Comments
Just wait'll the FBI gets hold of him. He'll never see the sun again. Frankly, in my opinion, undermining a nations' economy in time of war is Treason.
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