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Tommy D

Countrywide's Mozilo accused of fraud

SEC: Countrywide founder and 2 others misled investors about mortgage lender's health. Mozilo pocketed $140 million from insider trades.

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By Tami Luhby, CNNMoney.com senior writer


angelo_mozilo.gi.03.jpg
Angelo Mozilo, seen here appearing at a House hearing in March 2008, was charged Thursday with fraud.

NEW YORK (CNNMoney.com) -- The Securities and Exchange Commission on Thursday filed securities fraud charges against former Countrywide Chief Executive Angelo Mozilo and two other former executives.

The trio is being charged with deliberately misleading investors about the significant credit risk Countrywide took to build and maintain its market share.

Mozilo was also charged with insider trading for selling his Countrywide stock for nearly $140 million in profits while knowing that Countrywide's business model was deteriorating.

The SEC alleges that Mozilo, along with former COO and President David Sambol and former CFO Eric Sieracki, misled the market by falsely assuring investors that Countrywide was primarily a prime-quality mortgage lender.

"This is the tale of two companies," said Robert Khuzami, director of the SEC's Division of Enforcement. "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."

From 2005 to 2007, Countrywide engaged in an unprecedented expansion of its underwriting guidelines and was writing riskier and riskier loans, according to the SEC. The senior executives knew that defaults and delinquencies would rise.

0:00 /00:58Mozilo slapped with fraud charge

"Angelo Mozilo privately described one Countrywide product as 'toxic,' and said another's performance was so uncertain that Countrywide was 'flying blind,' " Khuzami said.

An attorney for Mozilo called the SEC's allegations "baseless."

"Mr. Mozilo acted properly and lawfully at all times as the CEO of Countrywide," said David Siegel. "Those sales were entirely lawful, complied with applicable laws and regulations, and were made under the terms of a series of written sales plans which were reviewed and approved by responsible professionals."

Siegel said it is "demonstrably false" that Mozilo knew about risky lending practices at Countrywide and refused to disclose them. "The mix and risks of Countrywide's loan portfolio and its underwriting standards were well disclosed to and understood by the marketplace."

Countrywide acquired by Bank of America

Mozilo, who founded the company in a New York apartment, built Countrywide into the nation's largest mortgage lender. But Countrywide buckled during the housing meltdown and was acquired last year by Bank of America (BAC, Fortune 500).

BofA came under heavy fire for originally naming Sambol to lead the combined company's mortgage operations. A few months later, the bank reversed course before the acquisition was completed, saying Sambol would retire and appointing a BofA veteran to the top mortgage post instead.

"Current economic and business conditions have highlighted the need for strong and focused executive leadership with a deep understanding of the Bank of America culture and operating model," said BofA Chief Executive Lewis said at the time.

Bank of America referred comment to Siegel, saying the Countrywide executives were not employed at the company following the acquisition.

Mozilo became a poster boy for the subprime crisis. He reportedly stood to collect a windfall of $115 million in the $4 billion sale to BofA. But after facing heavy criticism from lawmakers, Mozilo said he would forfeit $37.5 million in payments tied to the deal.

CNN Senior Producer Scott Spoerry contributed to this report. To top of page

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Stephen

Music to my ears.  Now, wait till the FBi gets ahold of him.

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MozilloComplaint

Text: S.E.C. Complaint (Findlaw.com)
http://news.findlaw.com/nytimes/docs/sec/sec-mozilo-countrywide60409cmp.html
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This is from the SEC website re: emails where Countrywide knew subprime loans were "toxic":

Excerpts of E-Mails From Angelo Mozilo

Sept. 26, 2006 — following up a meeting with Sambol the previous day about the Pay-Option ARM loan portfolio:

We have no way, with any reasonable certainty, to assess the real risk of holding these loans on our balance sheet. The only history we can look to is that of World Savings however their portfolio was fundamentally different than ours in that their focus was equity and our focus is fico. In my judgement [sic], as a long time lender, I would always trade off fico for equity. The bottom line is that we are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales.

… pay options are currently mispriced in the secondary market, and that spread could disappear quickly if there is an foreseen [sic] headline event such as another lender getting into deep trouble with this product or because of negative investor occurance [sic].

"timing is right" … to … "sell all newly originated pay options and begin rolling off the bank balance sheet, in an orderly manner, pay options currently in their port[folio]."

April 17, 2006 — to Sambol concerning Countrywide's subprime 80/20 loans:

In all my years in the business I have never seen a more toxic prduct [sic]. It's not only subordinated to the first, but the first is subprime. In addition, the FICOs are below 600, below 500 and some below 400[.] With real estate values coming down…the product will become increasingly worse. There has [sic] to be major changes in this program, including substantial increases in the minimum FICO. … Whether you consider the business milk or not, I am prepared to go without milk irrespective of the consequences to our production.

April 13, 2006 — to Sambol, Sieracki, and others to address issues relating to the 100 percent subprime second business in light of the losses associated with the HSBC buyback:

Loans had been originated … "through our channels with disregard for process [and] compliance with guidelines."

He "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 versus the pricing of those loan [sic]."

"[i]n my conversations with Sambol he calls the 100% sub prime seconds as the 'milk' of the business. Frankly, I consider that product line to be the poison of ours."

On March 28, 2006 — to Sambol and others:

Directed them to implement a series of corrective measures to "avoid the errors of both judgment and protocol that have led to the issues that we face today caused by the buybacks mandated by HSBC."

… The 100% loan-to-value subprime product is "the most dangerous product in existence and there can be nothing more toxic and therefore requires that no deviation from guidelines be permitted irrespective of the circumstances."

 

http://www.sec.gov/news/press/2009/2009-129-email.htm

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Stephen

He'll die of syphilis in prison, just like Capone.

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4 Justice Now

If given the opportunity, he may simply stage his own "false" death and go into hiding like so many other scumbags before him.

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InMates
Credit on Mozilo story
 

Too bad the Daily Journal is still so hard to access without a subscription because the newsroom will often come up with strong pieces that get very little attention. Case in point is yesterday's news, first posted by the WSJ, about the SEC's staff recommending that civil charges be brought against former Countrywide CEO Angelo Mozilo. But the Daily Journal's Gabe Friedman had a similar story back in early March. Here's how he begins (no link available):

Former Countrywide Financial Corp. CEO Angelo Mozilo and possibly other high-ranking former executives with the mortgage giant likely will face civil fraud charges from the Securities and Exchange Commission, according to attorneys familiar with the case. The sources, who spoke on condition of anonymity, said SEC lawyers in Los Angeles are developing a case asserting the company's executives, including Mozilo, misled shareholders about the true condition of its credit risks. Central to the investigation are Countrywide's allegedly relaxed lending standards, beginning in late 2006, which many analysts say exposed the company to unwieldy risks, the sources said.

That piece barely made it onto the local wires (a chronic frustration for small publications before the Internet began leveling the playing field). While we're on the subject of giving credit, it's worth remembering that the LAT's Kathy Kristof questioned Mozilo's stock dealing in September of 2007. The Times has done some fine work on the mortgage meltdown, going back to early 2005 when Mike Hudson and Scott Reckard laid out some of the shenanigans going on at Ameriquest. CJR's Dean Starkman mentions that story to illustrate how some business reporters were indeed following the money.

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4 Justice Now
InMates,

What's even more telling is the fact that this scumbag and his company, like so many others, were allowed to pedal millions of predatory/fraudulent loans which clearly had no other intent than to victimize the public, yet absolutely nothing was done until a few very wealthy investors started getting burnt.

This simply goes to show that these criminals control a whole lot more than just the media. 

My Opinion.

4J
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George Soroka got the ball rolling with the Ameriquest investigation and provided much of the evidence.
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4 Justice Now
Just as was the case of Arnall and his beloved Ameriquest.

Quote:

On May 9th, SHMAIS.com (Lubavitch News Website) reported that Chabad of California was to be the beneficiary of an $18,000,000.00 donation from the estate of Roland Arnall. According to their source, before his passing, he made arrangements for Rabbi Shlomo Cunin to receive the donation, and a short while later sent in a down payment of $180,000.00


One would think that our Government would seize every dime and use it to repay the some of the millions of victims. Also, one would assume that any honorable organization would be too ashamed to accept money that was obtained through such obvious theft and fraud.

My Opinion.

4J
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h gosh
4 Justice.  You would be shocked, dismayed and disgusted if you knew the extent that our own government went to to protect various entities from exposure as far back as 2003.  Our own government aided and abetted clear violations of set in stone laws because they, for some reason, believed that the survival of corrupt businesses was more important than the protection of the common man.
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4 Justice Now

H gosh,

 

Actually, I meant it as sarcasm. At this point, I think the only thing that might surprise me, is if our government starting doing the job it was created to do... protecting the public from the very criminals it has so far gleefully embraced.  

 

I'm afraid we have regrettably permitted it to become far too corrupt to change on its own, at least, not until we are finally able to rid our system of the perpetual corrupting influence brought to bear by the entire assemblage of self-interested, greedy, lobbyist. 

 

BTW: I do appreciate and value you comments. 

 

R,

 

4J

 




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4 Justice Now
George Soroka:
 
If you happen to be out there... I truly wish to thank-you very much for all your efforts in bringing forward the much needed and overdue attention to all the worthless, honor-less, greedy scoundrels who were responsible for the criminal, shameful enterprise once known as Ameriquest.  It's just too bad that the one most responsible won't have the opportunity to experience life from the inside of a prison cell.
 
V/r,
 
4J
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Yes Thanks!

4 Justice Now wrote:
George Soroka:
 
If you happen to be out there... I truly wish to thank-you very much for all your efforts in bringing forward the much needed and overdue attention to all the worthless, honor-less, greedy scoundrels who were responsible for the criminal, shameful enterprise once known as Ameriquest.  It's just too bad that the one most responsible won't have the opportunity to experience life from the inside of a prison cell.
 
V/r,
 
4J



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h gosh

4 Justice said:


H gosh, Actually, I meant it as sarcasm. At this point, I think the only thing that might surprise me, is if our government starting doing the job it was created to do... protecting the public from the very criminals it has so far gleefully embraced.   I'm afraid we have regrettably permitted it to become far too corrupt to change on its own, at least, not until we are finally able to rid our system of the perpetual corrupting influence brought to bear by the entire assemblage of self-interested, greedy, lobbyist.  BTW: I do appreciate and value you comments. 


I knew you were being sarcastic.  However, after all these years, I'm still uncovering information that makes my head swim and my blood boil, and I guess I was just venting to no one in particular.  Let me say that the government (notice I did not capitalize that word) is more concerned about the health and wealth of corporate America that it is about the necessity of shelter for its citizens; more concerned about corporate America than the fact that corporate America readily admitted committing fraud and stealing from the citizens, and all the government could think about was "well how to we fix this so you can continue?"
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NotSmilingNow ;-(

Not Even A Couple Of Freebies At Hollywood Tans Can Get Angelo Mozilo To Smile These Days

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TwoDown

Click image for larger version - Name: Ameriquest-mugsLRG.jpg, Views: 184, Size: 12.75 KB
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4 Justice Now
H. Gosh,

I continue to be amazed at just how little the average American knows about, or is willing to accept regarding what their own government (I too share your sentiment) has done and continues to do. This Country's Founding Fathers have got to be turning in their graves.

I believe that, we as Americans must make it very clear that we will no longer accept the continued use of lobbies in Washington, as well as, any of their many bought and paid for political/judicial whores, before we can ever expect even a bit of honor, ethics, trust, to return to any part of our government or its officials/representatives.

My opinion.

R.

4J
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justice dept.

keep a close eye on EKONOMIDES   , he might take flight to escape prosecution . as the case builds against him , anybody with involvement with EKONOMIDES  should proceed with caution . anybody looking to pursue and hire counsel , EKONIMIDES  ranks up there with the hard core criminals . theft being the name of his game .  go with caution .

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"Friends of Angelo."
Lawmakers Tussle Over Mozilo Probe - WSJ.com

Lawmakers Tussle Over Mozilo Probe

Lawmakers on a congressional oversight panel are struggling with whether to ramp up a probe into a controversial home-loan program at Countrywide Financial Corp. that involved former Chief Executive Angelo Mozilo.Rep. Darrell Issa, a Southern California Republican and the ranking minority member on the House Committee on Oversight and Government Reform, wants to subpoena records of the program known as "Friends of Angelo." The program provided home loans on attractive terms to some people, including elected officials.

Mr. Issa said he believes the names of many favored Countrywide borrowers still aren't known. "We want to know the size and scope of influence" of the program, he said.

[Angelo Mozilo]

Angelo Mozilo

The move comes on the heels of a civil fraud suit filed against Mr. Mozilo by the Securities and Exchange Commission.

But the committee chairman, New York Democrat Edolphus Towns, declined to co-sign a letter Mr. Issa sent earlier this month to Bank of America Corp., which purchased Countrywide last year, requesting records of the Friends of Angelo program.

A spokeswoman for Mr. Towns said the Friends of Angelo program wasn't on the chairman's priority list, which includes oversight of the nation's financial crisis, the financial bailout of banks and the giant federal financial stimulus package.

In a written response last week to Mr. Issa's letter, Bank of America's lawyers said that while the bank "routinely cooperates with law enforcement and investigating committees," it could "provide confidential customer information only pursuant to a subpoena."

Only the full committee could issue such a subpoena. Late last week, Mr. Issa said he met with Mr. Towns and obtained the chairman's support for issuing a subpoena.

Asked about Mr. Issa's statement, the Towns spokeswoman said Friday she couldn't confirm that a subpoena would be issued but would check with the congressman. She declined to comment Tuesday about the possible subpoena.

Mr. Issa said he understands there is some resistance within the committee to issuing a subpoena, but he still hopes one will go out.

The Friends of Angelo program has proved embarrassing for some loan recipients, whose ranks included two U.S. senators, Democrat Christopher Dodd of Connecticut and Democrat Kent Conrad of North Dakota. Both men, subjects of a Senate Ethics Committee investigation, have denied wrongdoing and said they didn't do any favors to Countrywide.

Mr. Dodd has said his mortgage was at a market rate. Both senators, who also have said they weren't aware of receiving special treatment, are cooperating with the ethics probe. The ethics committee didn't return a call for comment.

Mr. Issa says investigations have shown that loans also went to influential Republicans. "This is a bipartisan problem," he says.

Mr. Mozilo has denied the fraud and insider-trading charges related to claims by the SEC that he helped mislead the public about the growing riskiness of the home loans being made by Countrywide, at one time the nation's biggest mortgage lender. Many of the loans were made in the so-called subprime market to less-creditworthy borrowers.

The SEC suit quoted internal Countrywide emails from Mr. Mozilo in which the executive described some of the company's loans as "toxic" and "poison." On one major mortgage product Mr. Mozilo wrote that the company was "flying blind" and had "no way" to predict how it would perform.

Robert Mintz, a former federal prosecutor who is now at partner at the McCarter & English law firm in Newark, N.J., and isn't involved in the case, said the SEC complaint contains "only a handful" of emails out of possibly thousands written by Mr. Mozilo, but added that they "do seem to contrast sharply with his public statements." That could provide support for filing a criminal case, Mr. Mintz said.

Mr. Mozilo's attorneys have said they don't believe there is any basis for civil or criminal charges when all of his statements and actions are taken into account. At the time of the SEC lawsuit filed earlier this month, an attorney for Mr. Mozilo said the complaint "does not tell the whole story of either internal communications or the public disclosures."

Justice Department officials didn't return calls seeking comment.

Write to John R. Emshwiller at john.emshwiller@wsj.com and Kara Scannell at kara.scannell@wsj.com

Printed in The Wall Street Journal, page A24

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More In Politics
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arkygirl
Quote:
But the committee chairman, New York Democrat Edolphus Towns, declined to co-sign a letter Mr. Issa sent earlier this month to Bank of America Corp., which purchased Countrywide last year, requesting records of the Friends of Angelo program.


I think that New York Democrats are entirely too close to Connecticut Democrats, and I don't mean just geographically.

Chris Dodd was elected in 1980. Edolphus Towns was elected to Congress in 1982. These donkeyheads have been braying together in the hallowed halls for too long and have created such a buddy system (I'll watch your back and you watch mine) that all they worry about is their political "career".

Clean House (and Senate), America, or be prepared to always be at the bottom of the priority list. These clowns need to go!
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4 Justice Now

I say we give them all a good healthy flush... just to be sure!

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e-mail trails

Countrywide fraud case hinges on disclosures to investors

Los Angeles Times - Scott Reckard - ?Jul 3, 2009?
With a trail of damaging e-mails  and big-money stock sales, the federal government's fraud case against Angelo Mozilo and two other ...
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