LOS ANGELES – Federal prosecutors have ended a criminal investigation of Countrywide Financial Corp. co-founder Angelo Mozilo, a person close to the investigation said Friday.
The federal official told The Associated Press that the probe launched in 2008 into the actions of the former chief executive of the housing giant during the mortgage meltdown has been closed with no indictments. The person spoke on the condition of anonymity because the investigation was never publicly announced, and the Department of Justice as a policy does not announce the closing of investigations.
In October, Mozilo agreed to a $67.5 million settlement to avoid civil trial on fraud and insider trading charges brought by the Securities and Exchange Commission, but prosecutors pursuing the criminal case against him found that his actions did not amount to crimes.
The SEC's charges alleged that the 72-year-old Mozilo and two other former Countrywide executives who also settled profited from doling out risky mortgages while misleading investors about the dangers.
The three men admitted no wrongdoing under the settlement, and it allowed them to avoid the risk of a verdict that could have been used by the prosecutors who would eventually drop the investigation.
Mozilo attorney David Siegel said he could not speak directly to the federal criminal investigation or the SEC charges, but maintained that Mozilo had done no wrong in the cases the former chief executive still faces.
"We continue to litigate various matters in which Mr. Mozilo has maintained his innocence and denied any wrongdoing, and we continue to believe that the facts bear that out," Siegel said.
That litigation includes several civil lawsuits, some filed by investors in Countrywide's mortgage-backed securities.
The shelving of the investigation was first reported by the Los Angeles Times.
The son of a Bronx butcher, Mozilo co-founded Countrywide 41 years ago and watched it grow into the nation's largest home loan originator, writing one in six of the nation's mortgages totaling more than $490 billion by 2006.
But the Calabasas, Calif.-based company spiraled into disaster as investors suddenly realized many homeowners wouldn't be able to repay mortgages that required no proof of income or down payment, and offered adjustable rates that quickly made monthly payments unaffordable.
Bank of America Corp. bought Countrywide and inherited its scores of toxic mortgages in July 2008.
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