Mozilo Free, Engle in Prison: A Story of How Executives Skate and Borrowers Pay

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by andré douglas pond cummings

On the heels of news that Angelo Mozilo, the former CEO of now-defunct Countrywide, who made more than $500 million in bonuses by peddling toxic and poisonous loans in the run-up to the financial market crisis or 2008, has been absolved of any criminal wrong doing, the New York Times reports that the Obama Justice Department is aggressively imprisoning individuals that took out the toxic loans, but not even criminally investigating the lenders or executives that were wildly writing and authorizing them.

As carefully documented by the NY Times, Charlie Engle, a 48 year-old man whose accomplishments include overcoming a serious drug addiction to become one of the best marathon runners in the world, eventually running across the Sahara Desert in 2006 with two others, has been imprisoned for 21 months for overstating his income on two “liar loans” that he took out at the encouragement of his mortgage broker several years ago. Despite weak evidence (forensic handwriting analysis indicated that Engle’s signature on at least one “liar loan” was forged), the government pursued its case against Engle as if HE was responsible for collapsing the global economy (while individuals like Dick Fuld, Joseph Cassano, Angelo Mozilo and others, much better candidates for governmental pursuit for collapsing the economy, remain criminally uncharged with ill gotten bonuses intact).

Particularly outrageous in Engle’s case is the way in which the government brought its case. The IRS special investigation was initiated by an IRS agent watching the documentary “Running the Sahara” and wondering whether Engle was funding his training by speculating in the real estate market bubble. Confident that Engle was speculating in real estate in order to fund his marathon running and his Sahara Desert run of 2006, this agent pursued Engle with a complement of multiple agents and investigators, the involvement of multiple theories, entailing personal dumpster diving at Engle’s home, using an attractive and flirtatious female undercover agent, and involving a hidden wire. All this to “catch” Engle in the deception of misstating his income on two investment home applications, encouraged and supported by a mortgage broker.

So, to be clear, Joseph Cassano, former executive at AIG, who famously proclaimed that he could envision no scenario where any of the billions of dollars of credit default swaps his division had recklessly written could lose even one dollar, has not been charged criminally, but Charlie Engle is in prison for taking out two “liar loans.”  Angelo Mozilo who engaged in widespread and systematic deception in selling self-described “toxic” and “poisonous” loans to the pubic, was criminally absolved, but Charlie Engle is in prison for taking out two of the types of loans that Mozilo was widely and recklessly peddling? Just another enormous disappointment in the way the financial market crisis has been handled by the Obama administration and those agencies and legislators charged with representing and protecting the public. Apparently, Engle must be the low-hanging fruit that the government is willing to charge, while Mozilo, Cassano, Fuld, and others are untouchable.  Angelo Mozilo, Josepha Cassano, Dick Fuld and a host of Wall Street executives bankrupted their firms, while ignorantly and recklessly trading in the subprime mortgage market.  As reported in the New York Times, it appears that the time has passed where criminal indictments will be brought against any of the executives that crashed the global economy.