NEW YORK (AP) -- Bank of America Corp., accused of lying about the quality of mortgages it passed along to financial firms Fannie Mae and Freddie Mac, was found liable for fraud on Wednesday in a civil case the government said captured the frenzied pursuit of profits at all costs just before the economy collapsed in 2008.
A Manhattan jury returned its verdict following a monthlong trial focusing on prime mortgages that Bank of America's Countrywide Financial unit completed in late 2007 and 2008. U.S. District Judge Jed S. Rakoff said he would determine on Thursday when a penalty phase will begin.
The verdict was returned against Bank of America, Countrywide and a former executive, Rebecca Mairone.
Bank of America, which denied there was fraud, said it was evaluating its options for appeal.
"The jury's decision concerned a single Countrywide program that lasted several months and ended before Bank of America's acquisition of the company," spokesman Lawrence Grayson said by email.
Mairone's lawyer Marc Mukasey called her "a model of honesty, integrity and ethics."
U.S. Attorney Preet Bharara said the companies and Mairone were "liable for making disastrously bad loans and systematically removing quality checks in favor of (Bank of America and Countrywide's) balance."
"In a rush to feed at the trough of easy mortgage money on the eve of the financial crisis, Bank of America purchased Countrywide, thinking it had gobbled up a cash cow," he said in a statement. "That profit, however, was built on fraud, as the jury unanimously found."
The trial related to mortgages the government said were sold at break-neck speed without regard to quality as the economy headed into a tailspin.
The government had accused the financial institutions of urging workers to churn out loans, accept fudged applications and hide ballooning defaults.