Federal regulators on Thursday charged former Countrywide Financial Corp. chief executive Angelo Mozilo and two other former executives with civil fraud for failing to disclose to shareholders the deteriorating state of the mortgage lender? business shortly before the housing bust.
The civil lawsuit, which the Securities and Exchange Commission filed in federal district court in Los Angeles, alleges that Mozilo, former chief operating officer David Sambol and former chief financial officer Eric Sieracki reassured shareholders as the company became more heavily involved in risky mortgage loans between 2005 and 2007.
?ngelo Mozilo had access to detailed and alarming information about Countrywide? operations,?Rosalind Tyson, director of the SEC? L.A. regional office, said in a statement. ?e knew that Countrywide was gambling with increasingly risky mortgages and he kept those details from investors while he was actively taking his own chips off the table.?p>The SEC also accused Mozilo of insider trading related to a pre-arranged stock sales in late 2006 that netted him nearly $140 million while he knew, but failed to disclose, that Countrywide? credit risk was rising.
Countrywide, once the nation? largest independent mortgage lender, popularized subprime and other risky mortgage loans that became toxic once the housing market collapsed in 2007. The Calabasas company, founded by Mozilo in 1969, suffered huge losses and was sold at a fire-sale price last year to Bank of America Corp.
