U.S. asks appeals court to reconsider Bank of America ruling
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The Bank of America building is shown in Los Angeles, California October 29, 2014. REUTERS/Mike Blake/File Photo - RTSIJL2
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By Nate Raymond
NEW YORK (Reuters) - The U.S. government has asked a federal appeals court to reconsider its decision to overturn a $1.27 billion penalty against Bank of America Corp and a jury verdict finding it liable for mortgage fraud leading up to the 2008 financial crisis.
Manhattan U.S. Attorney Preet Bharara's office petitioned a three-judge panel of the 2nd U.S. Circuit Court of Appeals in New York on Thursday to rehear the case, asking it to at least give the government an opportunity to seek a new trial.
Bharara's office argued the panel's ruling in May "overlooked a wealth of evidence" establishing the fraud perpetrated through a mortgage program called "Hustle" run by Countrywide Financial Corp, which Bank of America acquired in 2008.
"There was therefore an adequate basis for the jury's verdict," the brief argued.
Bank of America declined comment on Friday. Marc Mukasey, a lawyer for Rebecca Mairone, a former midlevel Countrywide executive who was also found liable at trial, in a statement contended 2nd Circuit got the law right the first time.
"There was no fraud," he said. "Rebecca should be allowed to move on with her life."
The lawsuit was filed in 2012 following a whistleblower's complaint, and remains one of the biggest government enforcement cases to go to trial in connection with the U.S. housing meltdown and financial crisis.
A federal jury had in 2013 found Bank of America and Mairone liable for fraudulently selling shoddy loans originated through Countrywide's "High Speed Swim Lane" program, also called HSSL or "Hustle."
The Justice Department said the program rewarded staff for generating more mortgages and emphasized speed over quality, resulting in mortgage financiers Fannie Mae and Freddie Mac being lied to about the quality of loans they bought.
Fannie Mae and Freddie Mac were seized by the government in September 2008 and remain in conservatorships.
Following the verdict, U.S. District Judge Jed Rakoff in 2014 imposed a $1.27 billion penalty on Bank of America and ordered Mairone to pay $1 million.
But the 2nd Circuit ruled three months ago that the evidence at most showed that Countrywide breached contracts to sell Fannie Mae and Freddie Mac investment-quality loans, and that there was no proof it intended any deception.
The case is U.S. v. Countrywide Home Loans Inc et at, 2nd U.S. Circuit Court of Appeals, No. 15-496.
(Editing by Jeffrey Benkoe and Alden Bentley)
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