SEC Folds on Countrywide Debacle
Well, it turns out that crime does pay after all. Just ask Angelo Mozilo. Not only did he destroy a company and toss a grenade onto the American economy, he profited handsomely for the effort.
Former Countrywide CEO and co-founder Anthony Mozilo cut a deal with the Security and Exchange Commission (SEC), bringing an end to the government’s case against the world-class fraudster. Mozilo has agreed to pay $67.5 million in restitution for his role in the Countrywide meltdown, and the subsequent explosion of the American real estate market.
Countrywide was handing out loans hand over fist to the most unqualified and dubious applicants. Applicants were poorly screened, or in some cases not screened at all, and loans were handed out to those who could not possibly afford a home, even under the best terms. Add adjustable rate mortgages to the mix and you had a formula for implosion. And implode the company did.
Like dominoes loans were being defaulted on and Countrywide was unable to cover their losses. As the meltdown occurred, Mozilo was assuring investors the everything was fine with the company and to just keep investing. Meanwhile he was unloading $139 million of his own stock, because he knew the truth. When all was said and done, investors were devastated and the bailed out Bank of America snapped up Countrywide.
The SEC came after Mozilo and his goons, and the result was the $67.5 million settlement. Lets do some math. Mozilo dumped $139 million in stock before the company crashed. He was fined by the SEC $67.5 million. On my calculator, that leaves $71.5 million in Mozilo’s pocket. But wait, it gets even better. It turns out that Mozilo doesn’t have to pay back anything.
But $25 million of Mozilo’s restitution will come from an escrow fund the company set up to cover shareholder litigation and Mozilo has no obligation to pay the remaining amount, according to the settlement agreement.
That’s right, and Bank of America will pick up the rest. That means that Mozilo destroyed a company, cost numerous job losses, wiped out investors, and helped tank the greatest economy on earth, and he walks away scot free with $139 million in his pocket. Keep in mind that was just the stock he had at the time. That does not included any past profits he made while party was rolling.
How can this be? How can some somebody that committed fraud on a Madoffian scale just walk away? Maybe he had a little help from congress. We know that senator Chris Dodd was getting sweetheart real estate deals from Mozilo. Not the subprime junk that everyone else got, but congressional quality deals. Kent Conrad was a friend of Angelo as well. Now Mozilo walks away from this mess without a scratch. Put 2 and 2 together. There were no consequences for Mozilo, as there were none for his pals Dodd and Conrad. They should all be in jail, yet Mozilo sips champagne on his yacht, and the other two are busy running the country into the ground. Yes, crime does indeed pay, if you know the right people.
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