Ex-Countrywide execs, SEC settle

LOS ANGELES – Angelo R. Mozilo, who presided over the spectacular rise and devastating fall of Countrywide Financial Corp., struck a deal Friday to avoid going to trial next week on accusations of investor fraud and insider trading.

The 71-year-old Mozilo and two former top Countrywide executives settled a civil lawsuit brought by the Securities and Exchange Commission over the demise of the Calabasas, Calif., company, once the nation’s top originator of home loans.

Mozilo agreed to pay $22.5 million in fines to the SEC and to turn over $45 million to former shareholders who have sued him.

Countrywide’s former president, David Sambol, agreed to pay $520,000 in fines and $5 million in restitution, and Eric P. Sieracki, former chief financial officer, agreed to pay $130,000 in fines.

Mozilo and Sambol also are barred from ever serving as officers or directors of public companies. The defendants, who neither admitted nor denied liability, were not in U.S. District Court in Los Angeles for the hearing where the settlement was disclosed.

Judge John F. Walter approved the settlement, saying it was “fair, adequate and reasonable.”

The SEC’s lawsuit, filed in June 2009, also accuses Sambol and Sieracki of securities fraud.

Securities fraud expert John Coffee, a professor at Columbia Law School, said a settlement could help Mozilo in fighting other civil cases arising out of the Countrywide collapse. “Any verdict in favor of the SEC would permit private plaintiffs to free-ride on it and utilize those findings in their cases,” Coffee said.

A settlement, on the other hand, could allow Mozilo to “deny everything in other litigation,” Coffee said.