U.S. prosecutors have abandoned their case against Angelo Mozilo, a leader in selling the risky subprime mortgages that fueled the financial crisis, after a two-year quest to bring a civil suit against him.
The Justice Department sent a letter informing Mozilo, the co-founder of Countrywide Financial Corp., that it isn’t moving ahead with any action against him, according to people familiar with the matter. That effectively ends nearly a decade of U.S. scrutiny of a man who became a face of risky lending practices and later an emblem of the government’s mixed success in holding individuals accountable.
In recent years, the 77-year-old has been living in a 12,692-square-foot house in Santa Barbara, California, investing in real estate and writing a book about his life so his grandchildren will “know the truth.” Interviewed in late 2014, shortly after news of prosecutors’ civil pursuit became public, he denied any wrongdoing and said the national real-estate collapse, not Countrywide’s lending, was at the root of the crisis.
“Countrywide or Mozilo didn’t cause any of that,” he said at the time.
Justice Department officials in Washington and Los Angeles made the decision not to move forward with civil cases against Mozilo and other Countrywide executives, according to people familiar with the matter.
The Justice Department, through a spokesman, declined to comment.
“We are pleased and gratified with the Department of Justice decision” to close the investigation without any further litigation, said David Siegel, an attorney for Mozilo.
Countrywide, which was bought by Bank of America Corp. in 2008, originated more than $408 billion of worth of loans in 2007, at the height of the housing market. Many of them went to poorly vetted and risky borrowers, the Justice Department has said.
After the 2008 crash in housing — and the accompanying meltdown of complex financial instruments containing nonperforming mortgage loans — the Justice Department opened widespread investigations into industry practices. Prosecutors in the U.S. Attorney’s office in Los Angeles dug deeply into Countrywide’s actions, including Mozilo’s stock sales in the months leading up to the bursting of the mortgage bubble. They brought no criminal case against him.
Lawmakers and public-interest groups complained that executives walked away from the housing bust enriched and mostly unscathed. Mozilo — who earned at least $500 million over a decade leading up to the crisis, according to compensation-research firm Equilar Inc. — paid a $67.5 million penalty to the Securities and Exchange Commission in 2010, without admitting or denying wrongdoing. Bank of America covered a portion of his penalties.