According to a recent article, the United States Justice Department has decided to drop the civil fraud case against Angelo Mozilo. The lawyer for Mozilo claims that the Justice Department has told him the investigation has been closed.
Mozilo was the CEO of Countrywide, the nation’s largest mortgage lender. The company collapsed following mass foreclosures on subprime home loans, leading to unprecedented strain on the U.S. banking system and the worst financial crisis since the Great Depression. After the collapse, a number of fingers were pointed at Mozilo.
Part of the reason for the blame was that Mozilo sold stocks in the company just before the collapse, earning him several hundred million dollars. As a result, the Securities and Exchange Commission charged him with insider training.
The fraud case began roughly two years ago when the Justice Department started putting together their evidence. During this time, there were numerous accusations of fraud in the mortgage industry, but when no arrests were made and no senior banking executives were held accountable, the Justice Department began build a case against Mozilo.
Now, it has been determined that the evidence was not sufficient enough to make a case against Mozilo, but some did not agree with the dropping of the case. Mozilo’s defense was that he and his company did nothing wrong and claimed that it was the decline in prices for homes that led to the collapse.
In 2010, Mozilo was ordered to pay $67.5 million by the SEC in a fraud case. In this case, Mozilo did not admit or deny any wrongdoing.