An SEC civil-fraud suit filed against former Countrywide boss Angelo Mozilo has been challenged by his defense team on the basis that company disclosures have been ignored and some evidence has been misquoted, according to the WSJ.
The attorneys representing two other defendants in the case, former Countrywide President David Sambol and former CFO Eric Sieracki, have filed similar motions.
The SEC compliant, filed back in June, contends that the Countrywide execs defrauded investors by hiding potentially damaging information about the mortgage lender’s health prior to its momentous collapse.
The SEC claims Countrywide downplayed the risk of the lending products by noting that they were “prudently underwritten,” but Mozilo’s lawyers hit back, saying that the full quote was actually, “While we believe we have prudently underwritten these loans, such loans present additional risks.”
But what about Mozilo’s own colorful description regarding one of Countrywide’s loan products that allowed customers to borrow their down payment, which he called “the most dangerous product in existence and there can be nothing more toxic” in an e-mail correspondence?
Well, his defense team claimed that product wasn’t “material” to the company’s financial condition and, as a result, isn’t relevant to the securities-fraud charge.
Funnily enough, he supported the option arm back in March 2008, claiming it helped open the door to homeownership.
Will Mozilo and friends wriggle out of another lawsuit, stay tuned…