Wealth Finance

The ex-boss of Countrywide Financial agreed to a settlement of $67.5 million to resolve charges of duping investors while lining his own pockets, but Bank of America will pick up two-thirds of the tab.

Angelo Mozilo, poster boy of the subprime mortgage market’s boom and bust, reached a last-minute deal with the U.S. Securities and Exchange Commission before he and two other former colleagues were to face civil fraud and insider trading charges next week.

Mozilo settled without admitting or denying any wrongdoing.

The settlement also spares the executives the risk of a guilty verdict that could have been used against them in lawsuits by shareholders, or by prosecutors if a criminal probe into their activities leads to charges.

Bank of America, which bought the disgraced mortgage lender in 2008, will advance $45 million to Mozilo and $5 million to former Countrywide President David Sambol, who’s also included in the settlement. BofA said it must pay to adhere to liability provisions.

The payment comes on top of $600 million BofA agreed to pay in August to end a class-action suit filed by former shareholders against Countrywide.

The settlements, announced in Los Angeles federal court yesterday, resolve SEC charges that Mozilo, Sambol and another defendant hid risks of the company’s teetering mortgage portfolio as the real estate market soured.

The civil complaint also accused Mozilo of acting on his inside knowledge of the company’s precarious state when he sold shares between November 2006 and October 2007 ahead of its collapse, reaping more than $139 million.

In legal filings, regulators portrayed the defendants as singularly focused on market dominance – even if it meant knowingly taking disastrous risks.

The company was a major player in the market for high-risk subprime mortgages and became the biggest U.S. mortgage lender overall before it spiraled into disaster when the mortgage meltdown hit.

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