This story has been updated with a response from JPMorgan.
NEW YORK (TheStreet) -- Bank of America (BAC) was found liable for fraud by a jury in a civil trial over a lending program from at least 2007 to 2009 known internally as "Hustle," which resulted in billions of dollars of defective loans.
The U.S. Department of Justice last year sued Bank of America over the loans, made by Countrywide Financial, which Bank of America acquired in 2008. The loans produced $848.2 million in losses for Fannie Mae (FNMA) and Freddie Mac (FMCC), which is the amount the U.S. is seeking to recover. U.S. District Judge Jed Rakoff will determine the penalty.
The jury found Bank of America guilty of one count of fraud. It also found former Countrywide executive Rebecca Mairone guilty of fraud. As TheStreet first reported, Mairone is now at JPMorgan Chase (JPM).
"Almost a year to the day after we brought suit, a unanimous jury has found Countrywide, Bank of America, and senior executive Rebecca Mairone liable for making disastrously bad loans and systematically removing quality checks in favor of its own balance. As demonstrated at trial, they adopted a program that they called "the Hustle," which treated quality control and underwriting as a joke," read a statement from Preet Bharara, attorney for the U.S. Southern District of New York."The jury's decision concerned a single Countrywide program that lasted several months and ended before Bank of America's acquisition of the company. We will evaluate our options for appeal," said Bank of America spokesman Lawrence Grayson. "We are reviewing the situation," wrote JPMorgan spokeswoman Amy Bonitatibus, in an email to TheStreet. -- Written by Dan Freed in New York. Follow @dan_freed
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV