Mozilo Settles Countrywide Case With SEC
Mozilo reached a last-minute deal with the Securities and Exchange Commission (SEC) before the start of his trial on civil fraud charges on Tuesday.
The settlement with Mozilo and two other Countrywide executives was announced in Los Angeles federal court. The defendants, accused of hiding risks about Countrywide's loan portfolio as the real estate market soured, were not present.
Countrywide, once a titan in the mortgage industry, is now part of Bank of America Corp.
Mozilo will pay a $22.5 million civil penalty, plus $45 million in disgorgement, according to U.S. District Court Judge John Walter. The disgorgement relates to proceeds of Mozilo's sales of Countrywide stock. Mozilo was once one of the best-paid corporate executives in the country.
"In my view the proposed settlement is very reasonable in light of the significant hurdles that both sides would have faced in proving their case at trial," the judge said.
All three defendants settled without admitting or denying any wrongdoing.
David Sambol, former Countrywide president, also agreed to settle the case, the judge said, as did former Chief Financial Officer Eric Sieracki.
The SEC brought the fraud case in June 2009. The former executives were accused of failing to disclose the true state of Countrywide's deteriorating mortgage portfolio. Regulators also contend Mozilo made nearly $140 million by dumping Countrywide stock before the truth emerged.
Bank of America bought Countrywide in 2008 for $2.5 billion, less than 10 percent of what the company was worth in early 2007. Ten months later, Bank of America scrapped the Countrywide name.
The SEC had no immediate comment on the settlement. (Reuters)