Angelo Mozilo, former CEO of Countrywide Financial and the “poster child” of what went wrong with mortgage lending was fined last year for mortgage fraud, but his fate was not shared by all the Countrywide execs. Mozilo, as well as two others, were charged hefty fines:
The deal with the Securities and Exchange Commission requires Mozilo, the highest-profile figure to be accused of wrongdoing in the mortgage meltdown, to personally pay a $22.5-million fine. The government said it would be the largest penalty ever paid by a senior executive of a public company in an SEC settlement.
Mozilo, 71, also agreed to pay $45 million in “ill-gotten gains” to former Countrywide Financial Corp. shareholders, who lost billions when the company’s stock price plunged as defaults on home loans surged. But Bank of America Corp., which bought Countrywide in 2008, and Countrywide’s insurers will pay that amount under terms of Mozilo’s employment contract.
Countrywide’s former president, David Sambol, agreed to pay $520,000 in fines and $5 million in restitution. Bank of America will reimburse him for the latter. Eric P. Sieracki, former Countrywide chief financial officer, agreed to pay $130,000 in fines.
The deal allowed Mozilo, Sambol and Sieracki to avoid going to trial next week [Oct 2010] on allegations that they misled investors about the risky loan portfolio and deteriorating financial condition of the Calabasas company, once the nation’s top originator of home loans.
Two Countrywide Bank co-founders with as much as $1 billion in private equity power behind them are laying plans to launch a new bank based in Westlake Village.
James Furash, the former CEO of Countrywide Bank, and Mark Suter, the former chief strategy officer at the defunct subprime bank, are now the names behind Aris Bank. The firm hasn’t yet received a bank charter or regulatory approval for its new enterprise, but the team behind it is quietly laying plans and raising capital.
“We think there are a lot of dislocation opportunities out there in the market,” said Julianne Fries, a spokeswoman for the company. Regulatory restrictions mean she can’t discuss specific plans for Aris Bank, she said, including the approval timeline or the firm’s business model. The bank will probably be able to discuss its future plans in more detail by the second quarter of the year, she said.
James Furash left Countrwide in April 2007 quietly and without explanation from Countrwide. Suter also left and along with other Countrwide Execs, started a competing mortgage lender in 2008. Perhaps they left because they didn’t agree with Mozilo’s policies. It’s hard to believe that only Mozilo and two associates were involved in the fraud at Countrwide though. Maybe Furash and Suter weren’t involved and didn’t know about that fraud. That does make you wonder who did know and was involved, and why they aren’t being prosecuted.