The government is making a last ditch-effort to hold him accountable for the excesses of the past decade’s subprime- mortgage boom, using a 25-year-old law that has helped the Justice Department win billions of dollars from Wall Street banks, said the people, who weren’t authorized to discuss the case publicly.

Until now, the harshest penalty imposed on Mozilo, 75, has been a $67.5 million accord with the U.S. Securities and Exchange Commission from 2010 to resolve allegations that he misled Countrywide investors. He earned $535 million from 1999 to 2008, according to compensation-research firm Equilar Inc. The size of the sanction in the SEC case, in which Mozilo didn’t admit or deny wrongdoing, compared with his pay has fueled public anger that financial executives walked away from the housing bust enriched and mostly unscathed.

‘Record Penalty’

“There is no sound or fair basis, in law or fact, to pursue any claim against Angelo Mozilo,” said David Siegel, his lawyer at Irell & Manella LLP in Los Angeles. He “stands virtually alone among banking and mortgage executives to actually have been pursued by this government before and already paid a record penalty,” Siegel said.

Thom Mrozek, a spokesman for the U.S. attorney’s office in Los Angeles, declined to comment.

Government attorneys plan to sue Mozilo, Countrywide’s former chairman and chief executive officer, and other individuals using the Financial Institutions Reform, Recovery and Enforcement Act, said one person with knowledge of probe. The law, approved by Congress in 1989 in response to savings- and-loan scandals, gives prosecutors 10 years to bring cases and has less stringent liability requirements than criminal charges.

Month Away

While U.S. prosecutors have notified lawyers that their clients are targets of civil cases, any suit against Mozilo and other individuals may be more than a month away, one of the people said.

The Justice Department has been focused on wrapping up a FIRREA settlement with Bank of America Corp. for about $17 billion over mortgage bonds inherited from its 2008 acquisition of Countrywide and 2009 purchase of Merrill Lynch & Co. The accord, which may be announced as soon as tomorrow, will penalize the Charlotte, North Carolina-based bank for how securities were marketed to investors, people familiar with the matter have said.

Mozilo said he has “no regrets” about how he ran Countrywide, according to a June 2011 deposition he gave in a lawsuit between the mortgage lender and bond insurer MBIA Inc.

‘Cataclysmic Situation’

The financial crisis was a “cataclysmic situation, unprecedented in the history of this country” that Countrywide did not cause, Mozilo said in the deposition. Mozilo said he settled the SEC lawsuit to protect his family from negative publicity.

Mozilo, known for his tanned visage, became an American success story after co-founding Countrywide in 1969 and building it into the nation’s largest mortgage lender. His fortunes turned in 2007 during a surge in defaults of loans the company made to borrowers with inadequate credit profiles. Countrywide, based in Calabasas, California, reported its first annual loss in more than two decades that year.

By March 2008, lawmakers tried to make Mozilo a poster child of Wall Street greed as the U.S. economy slumped. They beckoned him to Washington, where he testified before a combative congressional committee about his pay along with the ousted CEOs of Merrill and Citigroup Inc. U.S. Senator Charles Schumer, a New York Democrat, said in a Bloomberg Television interview two months later that Countrywide “will come to symbolize what went wrong with housing.”

Bank of America, trying to solidify its mortgage business by snatching a stumbling competitor, completed the Countrywide acquisition in July 2008. The purchase turned into an albatross. Bank of America has absorbed almost $55 billion of fines and charges since 2010, mostly attributable to Countrywide.

Individuals Accountable

U.S. prosecutors dropped a criminal probe of Mozilo in early 2011, a person with knowledge of the matter said at the time. Since then, President Barack Obama’s administration has faced a wave of criticism from public-interest groups, the media and lawmakers who say the government hasn’t held enough individuals accountable for causing the financial crisis.

The Citizens for Responsibility and Ethics in Washington, a watchdog group, sued the Justice Department in June to try to obtain its records detailing investigations of Mozilo and Countrywide. The group faulted the government for failing to prosecute either Mozilo or the company “despite substantial evidence of wrongdoing.”

Mozilo agreed to settle the SEC case in October 2010 by paying a $22.5 million fine and disgorging $45 million of gains from stock sales at what the regulator said were inflated prices. Bank of America covered a portion of his penalties.

The SEC’s lawsuit, filed 16 months earlier, accused Mozilo of reassuring Countrywide investors about the quality of the company’s loans, while knowing that its underwriting standards had deteriorated.

The SEC, which banned Mozilo from serving as an officer or director of a public company, also said he sold Countrywide shares based on inside information.

–With assistance from Hugh Son in New York.