Angelo Gets Wells Notice

by | May 14, 2009 | Fraud | 17 comments

From the WSJ:

The Securities and Exchange Commission staff is readying civil fraud charges against Countrywide Financial Corp. co-founder Angelo Mozilo, in what would be the highest-profile government legal action against a chief executive connected to the financial crisis.

The SEC staff sent a so-called Wells notice to Mr. Mozilo several weeks ago alerting him to the potential charges, people familiar with the matter said. Mr. Mozilo’s lawyers could still persuade the SEC’s commissioners that there isn’t sufficient evidence to bring a case.

David Siegel, a lawyer for the 70-year-old Mr. Mozilo, declined to comment on the investigation and said there is no “fair basis” for any allegations against the former Countrywide chief executive.

The charges the SEC is considering include alleged violations of insider-trading laws and alleged failure to disclose material information to shareholders, according to people familiar with the matter.

Mr. Mozilo sold $130 million of Countrywide stock in the first half of 2007 under an executive sales plan, according to securities filings, compared with $60 million in the year-earlier period. He had modified his prearranged plan in late 2006 to accelerate the sales.

Mr. Siegel said the sales were proper. Talk that Mr. Mozilo “was selling Countrywide stock because he was aware of some supposedly ‘secret’ adverse information about the company is scandalous and inconsistent with even a cursory examination of the facts,” the lawyer said.

A Wells notice is a precursor to a civil lawsuit in an SEC investigation. It outlines to an individual or company what charges might be filed and gives a target a chance to respond. If the SEC’s commissioners approve filing a suit against Mr. Mozilo, it could be announced within the next few weeks, said people familiar with the matter. An SEC spokesman declined to comment.

Suits in Four States

Mr. Mozilo has been named in civil suits by attorneys general in four states. In a recent response to such a suit in Florida, Mr. Siegel, the Mozilo attorney, said, “When the true facts are heard, it will be clear that Mr. Mozilo has no personal liability for alleged improper lending practices in the state of Florida or elsewhere.”

Countrywide is also one of many mortgage companies under criminal investigation by federal prosecutors over possible violations during the boom. It isn’t clear whether these probes will produce charges. Criminal investigations require a higher level of proof than civil suits. Criminal investigators are finding a lot of “greed and stupidity” at lenders, but “greed and stupidity are not criminal acts,” said a person familiar with these investigations.

Mr. Mozilo, born in New York’s Bronx borough, the son of a butcher, went to work at 14 as a messenger for a mortgage company. He and a colleague set up shop in 1969 to form Countrywide.

Good to know the ashes of the economy have the firemen watching over the embers.

17 Comments

  1. sdbri
    sdbri on May 14, 2009 at 8:42 am

    About time. I’ve been calling for this for years. The SEC chooses not to prosecute 99% of its cases, but at least it likes going after famous crooks to set an occasional example.

  2. Rob Dawg
    Rob Dawg on May 14, 2009 at 8:48 am

    Here is Angelo’s trading history:
    Insidercow.

    What jury wouldn’t convict him?

  3. greenlander
    greenlander on May 14, 2009 at 8:49 am

    Goodbye, Mr. Tan Man!

  4. JimB
    JimB on May 14, 2009 at 8:58 am

    It will be interesting to see how hard he’s pushed. Somebody like him might have dirt on other fat cats- the ones who meet in DC.

    I don’t trust the SEC to get anything right. If he’s a fighter this could be interesting.

  5. ArtEclectic
    ArtEclectic on May 14, 2009 at 9:39 am

    What would be really spectacular is if Mozilo would take down all the corrupt politicians who aided and abetted.

    Sing, canary, sing.

  7. m
    m on May 14, 2009 at 12:16 pm

    Also, go after his crony head of IndyMac. Michael Perry.

  8. Jay Jay
    Jay Jay on May 14, 2009 at 12:45 pm

    We need more of this followed by an investigation of the GSE’s and how the government set the stage for the fraud that followed.

  10. shadash
    shadash on May 14, 2009 at 12:50 pm

    I want to know how he got BofA to buy Countrywide. There’s guaranteed to be some dirty back room deals with that one.

  11. Travertin Man
    Travertin Man on May 14, 2009 at 1:13 pm

    @LC Jim

    I know, I have the sense of humor of a 13 year old, but take note of the Riverside policeman: Rusty Stump.

  12. JAP
    JAP on May 14, 2009 at 1:38 pm

    IMO, Mozy probably did not have much to do with that. The FED boyz set up that shotgun marriage and told BofA that they would now be “too big to fail”.

    —————————————
    I want to know how he got BofA to buy Countrywide. There’s guaranteed to be some dirty back room deals with that one.

    shadash | May 14th, 2009 at 12:50 pm

  13. 3clicks from da Beach
    3clicks from da Beach on May 14, 2009 at 2:29 pm

    BofA was a shill for the Fed. Browse opensecrets dot org and you will see how much lobbying is done by what industries to what party.

  14. BGinRB
    BGinRB on May 14, 2009 at 2:54 pm

    Ken Lewis doubled-down with CW’s acquisition. BofA already had a lot of money on the line.

  15. Downturn
    Downturn on May 14, 2009 at 3:31 pm

    How’s he gonna keep up that tan down in the hole?

  16. Consultant
    Consultant on May 14, 2009 at 4:46 pm

    There is a GOD!!!!!!!

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