SEC

LA judge says Countrywide exec message can be used

AP News
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Posted: Oct 08, 2010 7:43 PM
LA judge says Countrywide exec message can be used

A judge ruled Friday that federal regulators in an upcoming trial can use a message written by a former Countrywide Financial Corp. executive in which he called himself a "magnet" for prosecution.

The ruling was one of several issued by federal Judge John F. Walter during a pretrial hearing in the fraud and insider trading case against former Countrywide Chairman Angelo R. Mozilo and two former top executives.

Former Chief Financial Officer Eric P. Sieracki's lawyer Shirli Weiss argued the message, written in the fall of 2007 as the company's fortunes declined during the housing market collapse, should be barred because it was would mislead jurors.

"There are portions of the notes that are sensational and unfairly prejudicial," Weiss said.

But Walter said the messages' value in determining the defendants' guilt outweighed the risk that jurors could be inappropriately influenced

"I conclude that the notes are relevant," he said.

Walter also tentatively permitted into evidence an e-mail exchange between Sieracki and his father that the judge said could be used to show the former CFO deliberately avoided knowledge of wrongdoing by the company.

But he struck down requests by the Securities and Exchange Commission lawyers that defense attorneys be barred from calling agency staff as witnesses during the trial that is set to begin Oct. 19.

Lawyers for Mozilo, Sieracki and former Countrywide President David Sambol declined to comment after the hearing. The three have denied allegations that they deceived shareholders and profited on confidential information.

Calabasas, Calif.-based Countrywide was a major player in the market for high-risk subprime mortgages, the disintegration of which touched off the financial crisis that has gripped the U.S. and global economies.

Countrywide became the biggest U.S. mortgage lender overall before it spiraled into disaster when the mortgage meltdown hit. It was bought by Charlotte, N.C.-based Bank of America Corp. in July 2008.

Countrywide's lending practices are reportedly also the subject of a criminal probe in Los Angeles. U.S. attorney's office spokesman Thom Mrozek declined to comment on the investigation.