Justice Department Drops Fraud Case Against Countrywide's Mozilo

The Justice Department has reportedly decided not to pursue a civil fraud case against Angelo Mozilo.

In the aftermath of the worst financial crisis since the Great Depression, a lot of fingers were pointing at Mozilo as someone to blame. That's because he was the CEO of Countrywide: the nation's largest mortgage lender, which collapsed after making massive numbers of bad home loans that resulted in foreclosures and helped send the U.S. banking system into cardiac arrest.

Mozilo also made several hundred million dollars selling his company's stock right before the bottom fell out and Countrywide imploded. That led to charges of insider trading by the SEC. So, with all that, fairly or not, Mozilo became a symbol of corporate greed and wrongdoing in the run-up to the mortgage debacle.

Two years ago the Justice Department started putting together a fraud case against Mozilo. This happened amid criticism that no senior banking executives had gone to jail or been convicted of any serious crimes, despite many accounts of rampant fraud in the mortgage business during the housing bubble.

But according to reports in the Wall Street Journal and Bloomberg, the view has now prevailed at Justice that the evidence isn't so solid against Mozilo that it's worth going after him. The WSJ writes:

"Some Justice officials were interested in moving forward with the case and believed they had documents and other evidence to prove fraud, but others believed the evidence wasn't strong enough to proceed, according to some of the people familiar with the matter."

Mozilo's lawyer David Siegel told Bloomberg, "We are pleased and gratified with the Department of Justice decision" to close the investigation.

Over the years Mozilo has steadfastly maintained that he and his company didn't do anything wrong and that it was the decline in home prices that caught the entire industry by surprise and led to the financial fallout.

Still, in 2010 the SEC ordered Mozilo to pay $67.5 million in a civil fraud case. As is often the case with such SEC settlements, Mozilo neither admitted nor denied wrongdoing.