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Countrywide’s Angelo Mozilo Settles for $67.5 Million

Angelo Mozilo, the co-founder of Countrywide Financial, up on civil fraud and insider trading charges for bilking investors in the subprime lending company, has settled out of court with the SEC for $45 million in profit give-backs and $22.5 million in civil penalties. His two colleagues, the former President and the former CFO, will pay $5.5 million and $130,000 in givebacks and penalties, respectively.

I don’t want to totally minimize the settlement, which includes one of the largest SEC fines for a corporate executive in US history. But here’s everything you need to know about the American justice system in the age of financial fraud:

Under the agreement, the three men did not admit wrongdoing.

Mozilo is probably the biggest fish involved in the financial meltdown ensnared by federal prosecutors. His sins of misleading shareholders and taking stock profits when he knew the company was about to collapse were obvious. His failure to inform investors of the precarious state of mortgages the company took on mirrors the mortgage bond scandal and a host of other crimes. The risk that Countrywide took on was also emblematic of the subprime mortgage disaster, and resonates to this day in the fraud of the mortgage servicing industry. And the SEC couldn’t even get an admission of wrongdoing out of the guy.

There is a criminal investigation being undertaken by the US Attorney in Los Angeles. So there’s still an opportunity for a perp walk here. But I’m sure it would surprise a lot of people. And even if it happened, Mozilo would be alone among the villains of the financial crisis in actually serving time.

Third-world legal system, indeed.

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David Dayen

David Dayen