Bank
of America Can't Wrestle With $1.27B Countrywide Verdict
Scott
Flaherty, The Litigation Daily
Never
one to mince words, U.S. District Judge Jed Rakoff in Manhattan had a
few harsh ones for Bank of America Corp. on Tuesday, ruling that it
"utterly failed" to offer a compelling reason to retry a
mortgage fraud case that put the bankon
the hook for $1.27 billion.
Ina
15-page decision, Rakoff rejected a motion for judgment as a
matter of law or a new trial lodged by Bank of America's lawyers at
Williams & Connolly.
"The
jury's conclusion that this was a massive and intentional fraud was
amply supported by the evidence," Rakoff wrote.
The
ruling marks the latest win for U.S. Department of Justice in the
civil fraud case, which accuses the bank's Countrywide Financial unit
and former Countrywide executive Rebecca Mairone of duping Fannie Mae
and Freddie Mac into buying shoddy mortgages. The case was first
brought in 2012 by whistleblower Edward O'Donnell, a former
Countrywide Home Loans vice president.
A
jury found against the bank in October 2013, determining that
Countrywide misrepresented to Fannie and Freddie the quality of
mortgages it originated through a program known internally as
high-speed swim lane (HSSL), or "hustle." In July, Rakoff
leveled a fine of $1.27 billion against BofA and hit Mairone with a $1
million penalty for her role in the scheme. (O'Donnell, a key witness
in the government's case, eventuallyraked
in a $57.7 million whistleblower award.)
In
the wake of Rakoff's July decision, the bankasked
for a new trialand
asserted that there wasn't enough evidence of a "material
misrepresentation" on Countrywide's part to support the jury's
fraud findings. Rakoff sniped at that argument in Tuesday's ruling,
writing that it "borders on the frivolous."
A
BofA spokesman confirmed Tuesday that the company will appeal. The
bank's legal team includes Williams & Connolly's Brendan Sullivan
and Enu Maingini. Marc Mukasey of Bracewell & Giuliani, who
represents Mairone, said he was "quite optimistic" about the
prospects for a successful appeal.
"Remember,
the government's case was built on the testimony of a witness who was
a willing participant in the High Speed Swim Lane process and whom,
unbeknownst to us during trial, will recover $58 million dollars for
turning on his former colleagues," Mukasey said.
