Countrywide's Mozilo accused of fraud
The U.S. Securities and Exchange Commission has filed civil fraud charges against former Countrywide CEO Angelo Mozilo as well as company president David Sambol and Eric Sieracki.
Mozilo, who founded Countrywide in 1969, is separately charged with engaging in insider trading of Countrywide stock when he set up his highly controversial executive stock sale plans in the fourth quarter of 2006. The SEC charged that Mozilo knew of Countrywide’s exposure to increased credit risk and expected poor performance of its loan portfolio when he set into place plans to sell nearly $140 million in stock acquired through stock options.
Mozilo has denied any wrongdoing, saying that he set up the stock sales because of his anticipated retirement.
The SEC filing, made in Los Angeles, cites emails from Mozilo stating that he was concerned about of huge potential losses from high-risk “pay-option” loans and SEC charges that Mozilo, Sambol and Sieracki “hid these risks from the investing public.”
Countrywide, formerly based in Calabasas, had large mortgage processing and banking operations in Thousand Oaks and Simi Valley.
After the home mortgage market collapsed, Countrywide was acquired by Bank of America. The company’s name disappeared this spring.
Although the Countrywide workforce was reduced substantially prior to the sale, most of the mortgage processing operations remain intact under the Bank of America banner.