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United States ex rel. O'Donnell v. Countrywide Financial Corp.

United States District Court, S.D. New York

February 3, 2015

UNITED STATES OF AMERICA ex rel. EDWARD O'DONNELL, Plaintiff,
v.
COUNTRYWIDE FINANCIAL CORPORATION; COUNTRYWIDE HOME LOANS, INC.; COUNTRYWIDE BANK, FSB; BANK OF AMERICA CORPORATION; BANK OF AMERICA, N.A.; and REBECCA MAIRONE, Defendants

For United States of America, Plaintiff: Carina Hyatt Schoenberger, Ellen Melissa London, Jaimie Leeser Nawaday, U.S. Attorney's Office, SDNY, New York, N.Y. USA; David Gerard Wasinger, The Wasinger Law Group, P.C., St. Louis, MO USA; Jeannette Anne Vargas, U.S. Attorney's Office, Sdny (86 Chambers St.) New York, N.Y. USA; Joseph Nicholas Cordaro, U.S. Attorney's Office, SDNY, New York, N.Y. USA; Joseph Nicholas Cordaro, U.S. Attorney's Office, SDNY, New York, N.Y. USA; Shane Patrick Cargo, U.S. Attorney Office SDNY, New York, N.Y. USA.

For Bank of America Corporation, successor to Countrywide Financial Corporation, Countrywide Home Loans, Inc., and Full Spectrum Lending, Defendant: Brendan V. Sullivan, Jr., LEAD ATTORNEY, PRO HAC VICE, Williams & Connolly, Washington, DC USA; Adam Joshua Podoll, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Allison Blair Jones, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Amy Mason Saharia, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Catherine Saudek Duval, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Craig D. Singer, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Enu A. Mainigi, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Eric G. Blankenstein, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Jennifer Nicole Wimsatt Pusateri, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Kannon K. Shanmugam, Williams & Connolly LLP, Washington, DC USA; Katherine Carney Hayes, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Kenneth Charles Smurzynski, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Lauren Kristina Collogan, Williams & Connolly LLP, Washington, DC USA; Malachi Brown Jones, Jr., PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Matthew Blumenstein, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Ryan T. Scarborough, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Stephen L. Urbanczyk, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Steven M. Cady, Williams & Connolly LLP, Washington, DC USA; Stewart Hill Ackerly, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA.

For Countrywide Bank, Fsb, Defendant: Derek M Adams, PRO HAC VICE, Goodwin Procter, LLP (DC), Washington, DC USA; Gus P. Coldebella, Goodwin, Proctor, LLP (DC), Washington, DC USA; Kelly E Phipps, PRO HAC VICE, Goodwin Procter, LLP (Boston), Boston, MA USA; Meghan K. Spillane, Goodwin Procter LLP, New York, N.Y. USA; Ryan P Lirette, PRO HAC VICE, Goodwin Procter, LLP (DC), Washington, DC USA; Tamara H Schulman, Goodwin Procter, LLP (DC), Washington, DC USA.

For Rebecca Mairone, Defendant: Daniel Seth Meyers, LEAD ATTORNEY, Bracewell & Giuliani, LLP, New York, N.Y. USA; Konstantin Chelney, LEAD ATTORNEY, Bracewell & Giuliani, LLP, New York, N.Y. USA; Marc Lee Mukasey, LEAD ATTORNEY, Bracewell & Giuliani, LLP, New York, N.Y. USA; Marvin Robert Lange, LEAD ATTORNEY, Bracewell & Giuliani, LLP, New York, N.Y. USA; Michael C. Hefter, LEAD ATTORNEY, Bracewell & Giuliani, LLP, New York, N.Y. USA; Ryan Michael Philp, LEAD ATTORNEY, Bracewell & Giuliani, LLP, New York, N.Y. USA; Seth Michael Cohen, LEAD ATTORNEY, Bracewell & Giuliani, LLP, New York, N.Y. USA; David Lawton, Bracewell & Giuliani, LLP, New York, N.Y. USA.

For Countrywide Home Loans, Inc., Intervenor Defendant: Derek M Adams, PRO HAC VICE, Goodwin Procter, LLP (DC), Washington, DC USA; Gus P. Coldebella, Goodwin, Proctor, LLP (DC), Washington, DC USA; Kelly E Phipps, PRO HAC VICE, Goodwin Procter, LLP (Boston), Boston, MA USA; Meghan K. Spillane, Goodwin Procter LLP, New York, N.Y. USA; Richard Mark Strassberg, Goodwin Procter, LLP(NYC), New York, N.Y. USA; Ryan P Lirette, PRO HAC VICE, Goodwin Procter, LLP (DC), Washington, DC USA; Tamara H Schulman, Goodwin Procter, LLP (DC), Washington, DC USA; William Joseph Harrington, Goodwin Procter, LLP(NYC), New York, N.Y. USA.

For Countrywide Financial Corporation, Intervenor Defendant: Derek M Adams, PRO HAC VICE, Goodwin Procter, LLP (DC), Washington, DC USA; Gus P. Coldebella, Goodwin, Proctor, LLP (DC), Washington, DC USA; Kelly E Phipps, PRO HAC VICE, Goodwin Procter, LLP (Boston), Boston, MA USA; Meghan K. Spillane, Goodwin Procter LLP, New York, N.Y. USA; Richard Mark Strassberg, Goodwin Procter, LLP(NYC), New York, N.Y. USA; Ryan P Lirette, PRO HAC VICE, Goodwin Procter, LLP (DC), Washington, DC USA; Tamara H Schulman, Goodwin Procter, LLP (DC), Washington, DC USA; William Joseph Harrington, Goodwin Procter, LLP(NYC), New York, N.Y. USA.

For Bank of America, N.A., Intervenor Defendant: Brendan V. Sullivan, Jr., LEAD ATTORNEY, PRO HAC VICE, Williams & Connolly, Washington, DC USA; Adam Joshua Podoll, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Allison Blair Jones, PRO HAC VICE, Williams & Connolly LLP, Washington, DC Craig D. Singer, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Enu A. Mainigi, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Jennifer Nicole Wimsatt Pusateri, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Kannon K. Shanmugam, Williams & Connolly LLP, Washington, DC USA; Katherine Carney Hayes, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Kenneth Charles Smurzynski, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Lauren Kristina Collogan, Williams & Connolly LLP, Washington, DC USA; Malachi Brown Jones, Jr., PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Matthew Blumenstein, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Ryan T. Scarborough, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Stephen L. Urbanczyk, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA; Steven M. Cady, Williams & Connolly LLP, Washington, DC USA; Stewart Hill Ackerly, PRO HAC VICE, Williams & Connolly LLP, Washington, DC USA.

For United States of America, Intervenor Plaintiff: Carina Hyatt Schoenberger, U.S. Attorney's Office, SDNY, New York, N.Y. USA; Jaimie Leeser Nawaday, U.S. Attorney Office SDNY, New York, N.Y. USA; Joseph Nicholas Cordaro, U.S. Attorney's Office, SDNY, New York, N.Y. USA; Joseph Nicholas Cordaro, U.S. Attorney's Office, SDNY, New York, N.Y. USA.

MEMORANDUM ORDER

JED S. RAKOFF, United States District Judge.

This case involves a scheme by which a division of the Countrywide Defendants,[1] headed by defendant Mairone, sold mortgage loans to government-sponsored entities[2] by representing they were investment quality when, in fact, as a result of an initiative called the High Speed Swim Lane (or " HSSL" ), they had been originated in such volume, at such high speed, and at such disregard for quality assurance that it was virtually certain that many would be of inferior quality. Finding this and more, a jury, following a month-long trial, returned a verdict declaring the Countrywide Defendants and their successor-in-interest Bank of America N.A. (collectively, the " Bank Defendants" ), as well as Ms. Mairone, in violation of the Financial Institutions Reform, Recovery, and Enforcement Act (" FIRREA" ), 12 U.S.C. § 1833a, for having committed, to a civil standard, violations of the criminal mail and wire fraud statutes, 18 U.S.C. § § 1341 & 1343.

The Bank Defendants and Mairone now move for judgment as a matter of law pursuant to Rule 50, Fed. R. Civ. P., or, in the alternative, a new trial pursuant to Rule 59, Fed.R.Civ.P. The motions must be denied.

A party moving for judgment as a matter of law carries a " heavy burden." Cash v. Cnty. of Erie, 654 F.3d 324, 333 (2d Cir. 2011). " Such a motion may only be granted if there exists such a complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture, or the evidence in favor of the movant is so overwhelming that reasonable and fair minded [persons] could not arrive at a verdict against [it]." Brady v. Wal-Mart Stores, Inc., 531 F.3d 127, 133 (2d Cir. 2008) (internal citation and quotation marks omitted). The Court may therefore grant judgment as a matter of law " only if it can conclude that, with credibility assessments made against the moving party and all inferences drawn against the moving party, a reasonable juror would have been compelled to accept the view of the moving party." Zellner v. Summerlin, 494 F.3d 344, 370-71 (2d Cir. 2007) (quoting Piesco v. Koch, 12 F.3d 332, 343 (2d Cir. 1993)).

To succeed on a motion for a new trial is only slightly less onerous. A new trial may be granted only where the trial court " is convinced that the jury has reached a seriously erroneous result or that the verdict is a miscarriage of justice." Lightfoot v. Union Carbide Corp., 110 F.3d 898, 911 (2d Cir. 1997) (quoting Hygh v. Jacobs, 961 F.2d 359, 365 (2d Cir. 1992)). It is true that a trial judge, in making this determination, " may weigh the evidence and the credibility of witnesses and need not view the evidence in the light most favorable to the verdict winner." Raedle v. Credit Agricole Indosuez, 670 F.3d 411, 418 (2d Cir. 2012). Nonetheless, " trial judges must exercise their ability to weigh credibility with caution and great restraint," and " jury verdicts should be disturbed with great infrequency." Id.

Defendants have utterly failed to meet their burden on either motion. First, the Bank Defendants contend that the Government failed to introduce sufficient evidence that they made any material misrepresentation, proof of which they maintain is necessary to sustain the mail and wire fraud charges. See McLaughlin v. Anderson,962 F.2d 187, 192-93 (2d Cir. 1992).[3] Here, the Court instructed the jury at trial that the Government was required to prove that the defendants " misrepresent[ed] that the loans were of higher quality than they actually were," and that a reasonable purchaser in Fannie and Freddie's position " would have considered the true facts important in deciding whether to purchase or how to price the loans." Tr. 3468-69. The Bank Defendants now argue that the Government's evidence ...


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