Federal prosecutors have ended their criminal investigation of former Countrywide Financial Corp. (CFC) chairman and CEO Angelo Mozilo, after deciding that his actions managing the nation's largest lender did not constitute criminal behavior, according to a report in The Los Angeles Times.

A grand jury in Los Angeles began hearing evidence against Mozilo in 2008. In the summer of 2007 the firm's stock tanked after Merrill Lynch analyst Kenneth Bruce (a former Countrywide employee no less) issued a "sell" rating on the company, suggesting it might eventually wind up in bankruptcy.

Throughout 2007 and 2008 the lender's stock went on a roller coaster ride as its delinquencies (as well as the overall industry's) began to accelerate. With Countrywide facing bankruptcy, Mozilo – who founded the company in the late 1960s with partner David Loeb – decided to sell the firm to Bank of America.

As CFC's stock fell further investors lost billions of dollars in equity.

As Countrywide's fortunes began to crumble, Mozilo and his chief lieutenant at the company, David Sambol, faced criticism for lax lending standards, and their foray into subprime, alt-A, and payment option ARM originations. The firm's worst loans were held on the balance sheet of its thrift affiliate – mortgages that would become a major headache for BofA.

In the wake of Countrywide's near failure, Mozilo, Sambol and others at the firm were sued by investors for mismanagement, civil fraud, and misleading shareholders.

The Securities and Exchange Commission sued Mozilo and Sambol for misleading shareholders with the two men settling the case out of court in October 2010. Mozilo, 72, agreed to pay the SEC $67.5 million without admitting or denying wrongdoing. (The government accused him of insider trading in connection with his sale of roughly $140 million worth of Countrywide stock over three years, charges he vehemently denied.)

Prior to the housing bubble and Countrywide's collapse, he was considered the fiercest competitor in the business and was planning to write his autobiography with a ghost writer. The book was never completed.

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