Posted on Thursday, October 21, 2010
In the end, Angelo Mozilo settled for pennies on the dollar.
The former Countrywide Financial Corp. chief agreed Friday to a settlement that requires him to pay 16 cents out of his own pocket for every dollar federal authorities claimed he had taken out of the company in ill-gotten personal gains.
Let's do the math:
¦ The government alleged that he added $141.7 million (before taxes) to his personal fortune through corporate misconduct.
¦ Mozillo agreed to personally pay a $22.5 million fine -- 16 percent of the alleged ill-gotten gains.
¦ In addition, Mozillo agreed to turn over another $45 million to former Countrywide shareholders, who lost billions when the company's stock price plummeted as loan defaults soared. But the $45 million won't come out of Mozilo's pocket. Under the terms of his employment contract, it will be paid instead by Countrywide's insurers and by Bank of America, which bought Countrywide in 2008.
The government settled the civil fraud and insider trading allegations against Mozilo for less than it wanted because, one legal analyst said, it would have been a challenge to prove its case. "This is not a slam dunk," Duke University law professor James D. Cox told The New York Times. "It's a risky case and it's got a lot of complexities to it." Mozilo admitted no wrongdoing, and his lawyers were sure to have mounted a ferocious defense.
The Securities and Exchange Commission said the $22.5 million fine will be the largest penalty ever paid by a senior executive of a public company in an SEC settlement.
But some observers wonder whether Mozilo got off easy.
David Callahan, author of the book, The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead