$50M TOXIC AVENGER - New York Post
BAILED-OUT BOFA FOOTING MOZILO'S LEGAL BILLS
By PAUL THARP and MATTHEW SCANLAN
Last updated: 3:53 am
June 10, 2009
Posted: 2:14 am
June 10, 2009
Taxpayers could be unknowingly footing a $50 million legal defense to get toxic-mortgage kingpin Angelo Mozilo off the hook in his unfolding fraud prosecution.
That's because Bank of America, which has received $45 billion in federal bailout cash under the Troubled Asset Relief Program, is responsible for covering Mozilo's legal fees as a result of the bank last year acquiring the mortgage mill that he founded, Countrywide Financial.
As part of that merger, BofA agreed for six years after the merger to continue Countrywide's coverage of legal bills incurred by directors, officers and employees.
Mozilo, 70, last week was sued by the Securities and Exchange Commission for allegedly cashing out Countrywide stock and pocketing more than $140 million just ahead of the company's collapse.
Investors are estimated to have lost $50 billion in the Countrywide fiasco, and many hold Mozilo responsible for the start of the housing collapse.
Yet as Mozilo seeks to clear his name, it will be the government-aided BofA that will be footing the bill.
Mozilo's two top executives at Countrywide -- former president David Sambol and former CFO Eric Sieracki -- also were sued by the SEC and are riding the legal gravy train involving taxpayer dollars.
BofA is expected to pay upfront a team of at least 19 high-priced lawyers who will defend the Countrywide executives in the SEC case and other related litigation.
The bank said it had no choice because of the clause in the BofA-Countrywide merger. Legal experts said the tab could exceed $50 million over just a couple of years.
"If Mozilo is convicted of fraud, Bank of America would have the right to recover the legal costs it's paid out" and go after Mozilo's $140 million fortune, said Jim Toothman of the Devil's Advocate, which tracks insurance industry legal fees.