Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Countrywide's Mozilo to pay $67.5 million settlement

angelo_mozilo.gi.top.jpgAngelo Mozilo will pay the largest penalty ever by a senior corporate executive in an SEC settlement. By Blake Ellis, staff reporter

NEW YORK (CNNMoney) -- Angelo Mozilo, the former co-founder of Countrywide Financial, agreed Friday to pay $67.5 million to the SEC to settle fraud charges.

Mozilo will pay $22.5 million in the largest penalty ever on a senior executive of a public company, according to the Securities and Exchange Commission. He will also give up $45 million in "ill-gotten gains," the SEC said.

The whopping fine was announced at a court hearing before U.S. District Judge John Walter in Los Angeles.

"Mozilo's record penalty is the fitting outcome for a corporate executive who deliberately disregarded his duties to investors by concealing what he saw from inside the executive suite," Robert Khuzami, director of the SEC's Division of Enforcement, said in a statement.

What Mozilo kept to himself, said Khuzami, was "a looming disaster in which Countrywide was buckling under the weight of increasing risky mortgage underwriting, mounting defaults and delinquencies, and a deteriorating business model."

Mozilo, who has long been the poster boy of the subprime mortgage meltdown, was slated to appear in the federal courthouse on Tuesday.

By settling the SEC charges, Mozilo will avoid a trial that could have provided fodder for future criminal charges.

Former Countrywide President David Sambol also settled, agreeing to give up $5 million and pay a $520,000 penalty. Ex-Chief Financial Office Eric Sieracki will pay a penalty of $130,000. All fines will be returned to "harmed" investors.

The three former executives were charged last year with defrauding investors by hiding the growing risks of the company's mortgages.

The SEC accused only Mozilo of insider trading, alleging that he sold millions of dollars worth of Countrywide stock after he knew the company was doomed.

The defendants had previously denied the accusations, saying details about Countrywide loans were properly disclosed. In Friday's settlement, they did not admit or deny the charges.

Sambol's attorney, Walter Brown, issued a statement defending his client.

"Bank of America will pay the entire disgorgement amount prescribed in the settlement on Mr. Sambol's behalf," Brown said. "While the agreement with the SEC prevents him from discussing the case, it makes clear that Mr. Sambol does not admit to any of the SEC's assertions."

Bank of America (BAC, Fortune 500), which acquired Countrywide in 2008 for $8 a share after the deteriorating quality of the mortgage lender's portfolio was realized, agreed in August to pay $600 million to settle similar charges.

The plaintiff lawyers on the case called the penalty the largest shareholder settlement since the mortgage meltdown started in 2007.  To top of page

Index Last Change % Change
Dow 16,472.37 200.36 1.23%
Nasdaq 4,707.78 80.69 1.74%
S&P 500 1,951.36 27.54 1.43%
Treasuries 1.99 -0.05 -2.60%
Data as of 8:25pm ET
Company Price Change % Change
Bank of America Corp... 15.38 -0.17 -1.09%
Apple Inc 110.38 0.80 0.73%
Micron Technology In... 15.91 1.14 7.72%
General Electric Co 25.47 0.28 1.11%
Microsoft Corp 45.57 0.96 2.15%
Data as of Oct 2


After years of talks, negotiators for the United States and 11 other nations are trying to hash out final terms of a controversial free-trade agreement. The Trans-Pacific Partnership, or TPP, would make trade easier across many areas of business. More

Smarties, a Halloween candy staple, have been around for 66 years. Three Millennial women are revolutionizing it. More

Spending more than you make is bad for your finances, but other not-so-obvious money habits will hurt your long-term savings. More