Angelo R. Mozilo charged with securities fraud.

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From the NY Times.

Angelo R. Mozilo, the self-made man from the Bronx who built Countrywide Financial into the nation's largest mortgage lender before the credit squeeze hit, has been charged with securities fraud and insider trading in a civil suit brought by the Securities and Exchange Commission.

Citing e-mail messages in which Mr. Mozilo referred to Countrywide loan products as toxic and poison, S.E.C. officials said that he had misled investors about growing risks in the company's lending practices from 2005 through 2007.

During this time he also generated $140 million in profits by selling stock in the company, the S.E.C. said.

?This is the tale of two companies, said Robert Khuzami, enforcement director at the S.E.C. Countrywide portrayed itself as underwriting mainly prime-quality mortgages, using high underwriting standards. But concealed from shareholders was the true Countrywide, an increasingly reckless lender assuming greater and greater risk.

At a news conference announcing its filing of the suit, the most prominent against an executive involved in the mortgage crisis, Mr. Khuzami said the S.E.C. had made it a priority ?to pursue cases at the root of the financial crisis. As the nation's largest mortgage lender, Countrywide helped fuel the housing boom by offering loans to high-risk borrowers.

Carl W. Tobias, a law professor at University of Richmond, said he expected to see more such cases brought by the S.E.C. The S.E.C. would like to have back the reputation that many feel it has lost as an aggressive enforcer, Mr. Tobias said. I wouldn?t be surprised to see other cases.

The suit also said that David E. Sambol, former president of Countrywide, and Eric P. Sieracki, its former chief financial officer, hid from investors the high-risk nature of the loans the company was making. Countrywide needed to maintain its position as the leading lender in a white-hot mortgage market, the S.E.C. said, and underwrote increasingly dangerous loans, all the while assuring investors that its loans were top quality.