Angelo Mozilo Will Not Face U.S. Charges for Mortgage Fraud

After dropping a criminal investigation of Mr. Mozilo earlier, federal prosecutors recently decided against filing a civil fraud case against him, his lawyer, David Siegel, confirmed on Friday.

...

The decision by federal prosecutors to not proceed with a civil fraud case under the Financial Institutions Reform, Recovery and Enforcement Act is not too surprising, given the length of the review process.

The possibility of the Justice Department filing a so-called Firrea lawsuit against Mr. Mozilo came to light when Bank of America reached a $16.65 billion settlement of its own Firrea case in August 2014. The inquiry by the Justice Department of Mr. Mozilo was seen by some legal critics as a way for prosecutors to address complaints that little had been done to hold individuals accountable for the financial crisis.

Bank of America acquired Countrywide and assumed its liabilities in 2008, as the financial crisis erupted.

But lawyers for Mr. Mozilo argued a civil fraud case would duplicate the efforts of the Securities and Exchange Commission, which sued Mr. Mozilo and two other former Countrywide executives in 2009. On the eve of the trial in 2010, Mr. Mozilo and the other defendants reached a settlement that required the mortgage financier to pay $67.5 million in fines and restitution.

Over the last few years, federal prosecutors used the threat of a Firrea civil fraud lawsuit to extract tens of billions of dollars in settlements from other big banks. The law proved to a be a useful tool for prosecutors because of its 10-year statute of limitations for bringing a case -- much longer than the standard three- or five-year statute of limitations for most civil fraud lawsuits.