Fraud charges against ‘face of housing crisis’ overturned

by Ryan Smith31 May 2016
When an appeals court overturned a $1.27 billion judgment against Bank of America last week, it also took an action that didn’t get much press – it voided fraud charges and tossed a penalty against the executive the New York Times once called “the face of the housing crisis.”

Rebecca Mairone – who not goes by her maiden name, Steele – is the former chief operating officer at a division of Countrywide. She was prosecuted on federal fraud charges in 2013, found liable and slapped with a $1 million fine – making her one of the few executives who faced legal trouble over the 2008 financial meltdown. Steele, along with Countrywide, was accused of defrauding Fannie Mae and Freddie Mac by knowingly selling them toxic mortgages.

But that trouble seems to have gone away. According to a HousingWire report, the U.S. Court of Appeals for the Second Circuit has overturned the charges, ruling that the government did not prove that Countrywide committed fraud.

“On appeal, Defendants argue that the evidence at trial shows at most an intentional breach of contract – i.e., that they sold mortgages that they knew were not of the quality promised in their contracts – and is insufficient as a matter of law to find fraud,” the court wrote in its decision. “We agree, concluding that the trial evidence fails to demonstrate the contemporaneous fraudulent intent necessary to prove a scheme to defraud through contractual promises.”

The Wall Street Journal reported that the reversal of charges against Steele leaves just four bank employees against whom the government has won a contested case stemming from the financial crisis.


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