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Angelo Mozilo wants Allstate securities case dropped

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Former Countrywide Financial Corp. (CFC) CEO Angelo Mozilo is asking to be dismissed from a securities fraud case filed by Allstate Insurance (ALL) against his former employer. Late last year, Allstate sued Countrywide, Mozilo and other former Countrywide executives, alleging the parties ignored underwriting guidelines on mortgage loans sold to Allstate Insurance and other institutional investors in the form of mortgage backed-securities. The housing crisis caught up to Countrywide in 2008, resulting in the subprime lender being sold to Bank of America (BAC). Mozilo and Countrywide are now asking the court to dismiss the entire Allstate case. Mozilo's dismissal brief claims he cannot be held individually liable because Allstate has "not pled a single fact linking Mr. Mozilo to the MBS sales at issue." In addition, the former CEO says Allstate must plead facts showing Mozilo controlled one of the primary violators that are accused of breaking securities laws. Attorneys for Mozilo in court records allege Mozilo's control of Countrywide's parent company is insignificant when considering the CFC parent company is not the primary seller of MBS in the case. Instead, Mozilo's legal team contends Allstate must plead facts showing Countrywide subsidiaries that sold questionable MBS were controlled by Mozilo. Mozilo also pushed back, saying Allstate can not validly make an aiding and abetting common-law fraud claim against him. In his motion to dismiss, Mozilo contends Allstate would first have to show he "had actual knowledge of, and substantial assistance in" the fraud outlined by the plaintiffs. The motion for dismissal, which was filed in the U.S. Southern District of New York, has yet to be heard or decided by a judge. Write to Kerri Panchuk.

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