The following is the second of a three-part blog series covering my story about being a Bank of America/Countrywide Financial Corporation whistleblower. Yesterday’s piece detailed the numerous violations I witnessed at the company. Today’s entry shows why I initially prevailed in a court of law. Part Three of the story will be posted tomorrow.
I may be the only plaintiff who has been able to convince a court of the direct involvement of the top officers of Countrywide – including cofounder, CEO and Chairman of the Board Angelo Mozilo – in wrongdoing and thus compel their testimony.
In early 2011, 12 jurors listened and watched for nearly one month, hearing about and seeing proof of more than 80 adverse employment actions taken against me by Countrywide over a two-year period, starting immediately after my alert to Cal-OSHA about dangerous conditions of a “sick building and ratcheting up again when I refused to lie on CFC’s behalf to Moody’s Investor Service.” The jury heard and saw proof that dozens of people complained of difficulty breathing, headache and stomachache, a metallic taste in their mouths and dizziness. Many sought medical attention for these sudden conditions. The jury also saw proof that I had sought mitigation from every level internally at Countrywide before contacting OSHA. It was only when I saw proof of their intent to cover-up – not mitigate – the environmental hazards that I took action. Many witnesses testified that my team and I were retaliated against. The jury heard this. Such retaliation was blatant, relentless and done in plain sight.
What I observed and felt during the trial was absolutely shocking. In my opinion, the judge and jury were subjected to a palpable and unending litany of lies, document alterations and total fabrication of documents. The manipulation of the facts was extreme, blatant and unrelenting. The number of misrepresentations strung together consecutively was startling.
These officers also, in my opinion, committed witness tampering by offering a job to a witness – after they saw her name on our witness list – to entice her not to testify. She was fired only weeks after offering what turned out to be supportive testimony for me. BofA defendants and their lawyers claimed that several other witnesses no longer worked for the company, but it was later proven they all did. Lastly, they falsely asserted that documents or parts of documents were mine. I had never seen them, let alone written them.
I refused to lie when asked to do so to Moody’s, and also testified to several instances of financial misrepresentation made by Countrywide, both internally and to outside parties:
- Countrywide distributed a press release on March 16, 2007, in which Leora Goren, Chief Human Resources Officer, stated “Countrywide is well-positioned to grow, despite current mortgage market conditions … We are eager to add top sales professionals as well other mortgage-related disciplines.” This was only two months before Countrywide, on bended knee, accepted a much-needed $2,000,000,000 injection of capital from BofA.
- In a June 2006 Town Hall meeting at the company, Countrywide President and COO David Sambol, while at Countrywide Financial Corporation, told a group of over 100 CFC executives that the primary purpose of CFC is “to increase shareholder value.” He reiterated that “creating value for shareholders (those who invest in the company) is the primary purpose of CFC.” He then prognosticates that “earnings in 2010 or 2011 will be $8/$9 per share,” states he “expects the stock price, which was currently $37, to increase to $70-$90 per share and projects a market capitalization of between $50-60B.” This is on videotape. This was stated only 14 months before Countrywide was bordering on bankruptcy and had to accept a cash infusion of $2B from BofA, then drew down all lines of credit to zero. The stock eventually traded for a couple of dollars a share, down 95 percent.
- On January 31, 2007, Countrywide President/COO, David Sambol sent a misleading email to all Countrywide executives stating “We anticipated the ramifications of the post-boom environment and began preparing ourselves for it as far back as 2004. As a result, Countrywide is better positioned than any company in our space to effectively manage our business in the current down market, and in fact seize opportunities as a result … “While others spent most of 2006 retrenching, or at best treading water, we invested in key areas of our business to position us for long-term market share growth and success. This is a core strategy that we have successfully executed throughout numerous business cycles during the Company’s history. The current cycle is no different.” [emphasis added] A few months later came the bailout by BofA.
- On September 18, 2007, Reuters printed the story that Countrywide’s CEO is “bullish, very bullish, on Countrywide’s future” and plans to double branch network. Note that this was just a few months before selling out at a bargain basement discount to BofA. It was also while he was exercising huge amounts of his stock options.
- By February 2008, the damage had been realized by many customers and shareholders of Countrywide. An issue paper published by the Center for Responsible Lending (CRL) found that “Countrywide Financial Corporation targeted borrowers for ‘unfair and unsafe’ loans and squandered shareholders’ wealth on a ‘risky and unsustainable business model’ that emphasized short-term gains and increasing top executives’ compensation.” In its paper, CRL noted that at the time Countrywide CEO Angelo Mozilo was one of the highest paid executives in the world. CRL also pointed out that “Mozilo . . . benefitted by cashing out more that $140 million in stock options from late 2006 to late 2007, reducing his holdings in the company even as he was urging shareholders to increase their own.” CRL paper at 10.
In my opinion, the intent of the above misrepresentations was to sustain shareholder and employee belief in (and investment in) the company and its capacity to recover. It is unacceptable that the officers made these statements when they knew or should have known full well they were not true. As detailed by the SEC indictment, during the final 18 months the top three executives sold CFC shares worth over $858,000,000. They pumped up the stock; then dumped it. I also testified to the fact that Countrywide misrepresented the quality of its loans to the investment community.
The case of Winston vs. Bank of America/Countrywide has been reported upon for many reasons. The strong and decisive jury verdict in my favor with over $3.8 M in damages prompted the case to be newsworthy for over two years. So, too, did the unwillingness of any in the legal system to take action against CFC/BofA witnesses for an unending litany of lies.
Two years after the jury’s verdict, the sky fell again. Tomorrow, I’ll publish my final blog of this series about how a stunning reversal by the California Court of Appeal (Second Appellate Division) nullified the jury’s decision. Whistleblowers and members of the public should all be concerned that an Appellate Court can deny due process and remove rights guaranteed by the Constitution. Legal experts are questioning the legality of this action. I am hoping to secure help in having this judgment vacated.