83.9 F
San Fernando
Monday, Apr 22, 2024

Mozilo Agrees to Pay $67.5 Million to Settle Lawsuit

In one of the most notorious federal cases stemming from the 2008 meltdown of the nation’s financial markets, the former chief executive of Countrywide Financial Corp., Angelo R. Mozilo, agreed to pay $67.5 million in financial penalties to settle a federal investor fraud and insider-trading lawsuit filed against him. The Securities and Exchange Commission accused Mozilo as well as former Countrywide President David Sambol and former Chief Financial Officer Eric Sieracki of hiding from the public growing problems in Countrywide’s portfolio of risky loans. Those problems eventually led to the sale of Calabasas-based Countrywide, once the nation’s top originator of home loans, to Bank of America Corp. in 2008. The SEC also accused Mozilo of insider trading regarding his sale of nearly $140 million of Countrywide stock. All three men have consistently denied wrongdoing at Countrywide. The deal requires Mozilo, the highest-profile figure to be accused of wrongdoing in the mortgage meltdown, to personally pay a $22.5-million fine. The government said it would be the largest penalty ever paid by a senior executive of a public company in an SEC settlement. Mozilo, 71, also agreed to pay $45 million in “ill-gotten gains” to former Countrywide Financial Corp. shareholders, who lost billions when the company’s stock price plunged as defaults on home loans surged. Sambol and Sieracki also reached settlements with the SEC. Sambol agreed to pay approximately $5.5 million in penalties while Sieracki agreed to pay $130,000. The settlements were disclosed at a court hearing Friday Oct. 15 before Judge John Walter, who was presiding over the case. As part of the agreement, Mozilo was banned from ever serving as an officer or a director of a public company. Sambol agreed to a three-year ban. The deal allowed the three men to avoid going to trial this month. The three former executives still face a federal criminal probe into Countrywide by the U.S. Attorney’s office. — Andrea Alegria

Featured Articles

Related Articles