Bank of America liable in fraud case
NEW YORK — Bank of America was found liable for fraud on Wednesday for a program — dubbed “the Hustle” — that caused millions in losses to federally backed mortgage finance firms Fannie Mae and Freddie Mac amid fallout from the financial crisis.
The civil verdict by a Manhattan federal court jury similarly found the bank's Countrywide Financial unit liable and determined that former Countrywide executive Rebecca Mairone committed fraud while overseeing the loan-origination program.
Bank of America acquired Countrywide in July 2008.
The decision following a month-long trial focused on evidence that the Countrywide program processed mortgage applications at high speed with little checking for fraud, misrepresentations or other potential wrongdoing.
U.S. District Judge Jed Rakoff is expected to determine civil costs to be paid by the bank in the penalty phase of the case.
“Almost a year to the day after we brought suit, a unanimous jury has found Countrywide, Bank of America and senior executive Rebecca Mairone liable for making disastrously bad loans and systematically removing quality checks in favor of its own balance,” Manhattan U.S. Attorney Preet Bharara said in a statement. “As demonstrated at trial, they adopted a program that they called the Hustle, which treated quality control and underwriting as a joke.”
Bank of America bought Countrywide “thinking it had gobbled up a cash cow,” said Bharara, but profits from the program were “built on fraud.”
Bank of America spokesman Lawrence Grayson said the Charlotte-based financial giant, the second-largest U.S. bank, is studying the verdict.
“The jury's decision concerns a single Countrywide program that lasted several months and ended before Bank of America's acquisition of the company,” Grayson said. “We will evaluate our options for appeal.”
Defense attorney Marc Mukasey called Mairone “a model of honesty, integrity and ethics.” Insisting there was no fraud, Mukasey said, “We'll fight on.”
Show commenting policy
TribLive commenting policy
- Defense chief says U.S. can fly over South China Sea
- Worries mount of unleashed ‘Taliban 5’
- Suspect in killings of wealthy D.C. family arrested
- Fossils point to relative of ‘Lucy’ species
- IRS believes identity thieves are from Russia
- Nebraska lawmakers ban death penalty
- Lawyer argues in New York court that chimpanzees have same rights as humans
- Growth potential remains for online gambling
- Administration finalizes, defends broader regulations under Clean Water Act
- Morgan settles lawsuit with Wal-Mart over crash
- Charged Baltimore officers seek change of venue