Federal regulators have charged the former chief of Countrywide Financial with fraud and illegal insider trading.

The Securities and Exchange Commission accuses Angelo Mozilo and two other Countrywide executives of deliberately misleading investors about the company's risky lending practices.  

The government claims that in 2006, Mozilo knew Countrywide was engaged in lax lending practices and headed for collapse -- even as investors were assured all was fine.

"The real Countrywide only seen from the inside was one buckling under the weight of deteriorating mortgages, lax underwriting, and an increasingly suspect biz model," said Robert Khuzami, director of the SEC's division of enforcement.

Mozilo has denied any wrongdoing. His attorney calls the SEC's allegations in the civil suit "baseless."