Countrywide co-founder off the hook as feds abandon case

U.S. prosecutors have abandoned their case against Angelo Mozilo, who was a pioneer of the risky subprime mortgages that fueled the financial crisis

Countrywide co-founder off the hook as feds abandon case
Prosecutors have dumped their case against the co-founder of Countrywide Financial after two years of trying to bring a civil suit against him.

The Justice Department sent a letter informing Angelo Mozilo, a pioneer of the subprime mortgages that fueled the financial collapse, that it isn’t moving ahead with the case against him, according to a Bloomberg report. The letter signals an end to nearly a decade of legal scrutiny.

Mozilo, 77, currently lives in a 12,692-square-foot house in Santa Barbara, Calif., according to Bloomberg. He’s always denied any wrongdoing and said that the national real-estate collapse, not Countrywide’s lending practices, was the root cause of the crisis.

“Contrywide or Mozilo didn’t cause any of that,” he said.

Countrywide originated more than $408 billion in loans in 2007, according to Bloomberg. The Justice Department claimed that many of those loans went to poorly vetted borrowers. After the crash in 2008, the Justice Department started investigating industry practices. Federal prosecutors began scrutinizing Countrywide’s actions, including Mozilo’s stock sales in the months leading up to the collapse of the mortgage market, Bloomberg reported.

Mozilo earned at least $500 million in the decade leading up to the crisis, according to Bloomberg. In 2010, he paid a $67.5 million penalty to the Securities and Exchange Commission without admitting or denying wrongdoing.

Bank of America, which purchased Countrywide, paid a portion of Mozilo’s penalties.