Former Countrywide Financial CEO Angelo Mozilo and two other company executives face civil fraud charges today. The case, by the Securities and Exchange Commission (SEC), alleges Mozilo profited $140m from insider trading. The SEC charges Mozilo with “deliberately misleading investors about the significant credit risks being taken in efforts to build and maintain the company’s market share” — along with former COO David Sambol and former CFO Eric Sieracki. “This is the tale of two companies,” said Robert Khuzami, director of the SEC’s division of enforcement, in a statement announcing the charges. “Countrywide portrayed itself as underwriting mainly prime quality mortgages using high underwriting standards,” he continues. “But concealed from shareholders was the true Countrywide, an increasingly reckless lender assuming greater and greater risk. Angelo Mozilo privately described one Countrywide product as ‘toxic,’ and said another’s performance was so uncertain that Countrywide was ‘flying blind.'” Sambol’s attorney, Walter Brown — a partner at Orrick, Herrington & Sutcliffe — issued a response to the charges moments ago in which he says the SEC has no substantial case against Sambol. “The SEC wrongly asserts that Countrywide’s disclosures to its investors regarding its lending criteria should have been more extensive, and that Mr. Sambol is somehow responsible for insufficient disclosure,” Brown says. “The SEC thus wholly disregards Countrywide’s detailed credit risk disclosures…and that Countrywide’s investors, bondholders, rating agencies, and the financial industry were all well aware that mortgage lending practices were liberalized at Countrywide and almost all other financial institutions during the relevant time period.” Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.