Judge considers dismissing U.S. fraud case against Bank of America
By John Peragine
ASHEVILLE N.C. (Reuters) - A federal judge on Wednesday said he would consider dismissing a U.S. Department of Justice lawsuit accusing Bank of America Corp (BAC.N: Quote) of civil fraud in the sale of mortgage securities that soured during the global financial crisis.
While not issuing a formal ruling, U.S. District Judge Max Cogburn said he had concerns and indicated at a hearing in Asheville, North Carolina that he might adopt the recommendation of a federal magistrate judge for a dismissal of the fraud claims tied to the $850 million (506.29 million pounds)sale of securities.
"DOJ may not have the evidence to try this as a fraud case," Cogburn said.
Cogburn's skepticism comes at a crucial time, as the second-largest U.S. bank negotiates with the Justice Department and other federal and state authorities to potentially pay more than $12 billion to resolve a range of probes into its sale of mortgage securities that quickly imploded.
Cogburn also told assistant U.S. Attorney Daniel Ryan that the government needed to provide more substantial information to support its case.
While the case from the U.S. Attorney's office in Charlotte is not a major factor in Bank of America's negotiations, it has added further pressure on the bank as it seeks to put a range of mortgage-related liabilities stemming from the financial crisis behind it.
In announcing the lawsuit, Attorney General Eric Holder had said it reflected the Justice Department's ongoing efforts to "hold accountable those who engage in fraudulent or irresponsible conduct.”