TribLIVE

| USWorld


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Bank of America liable in fraud case

Daily Photo Galleries

By USA Today
Wednesday, Oct. 23, 2013, 9:33 p.m.
 

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

Most-Read Nation

  1. Law enforcement, intelligence agencies want to ‘like’ you on social media
  2. U.S. coal exports undermine clean air efforts, experts say
  3. Met Museum of Art president to retire
  4. Move over, Mickey, here comes Crayola
  5. Chemical plan inspection program ‘broken’
  6. Lone clinic in Miss. for abortions still stands
  7. Mont. senator’s thesis appears to have been plagarized
  8. Stoned volunteers test drug, alcohol effect on driving
  9. Appeals court upholds nation of origin labels for meat
  10. GM adds 8.2M vehicles to recall list
  11. Billionaire to help restore crown of sacred Arlington
Subscribe today! Click here for our subscription offers.