A prominent mortgage industry backer of the proposed U.S. financial industry bailout bill embezzled $879,000 from his failed company, a lawsuit alleges.

Mortgage Bankers Association of America Chief Operating Officer John Courson has been accused in a civil lawsuit of defrauding former branch managers and embezzling $879,000 in last year's collapse of his Folsom, Calif., brokerage, The Sacramento Bee reported Monday.

In his post as leader of the MBAA, Courson last week sent letters to U.S. House of Representatives and Senate members urging them to back quick passage of the $700 billion bailout proposal, in which the U.S. Treasury would purchase "toxic" mortgage-backed derivative securities from mortgage finance companies, the newspaper said.

In court documents, Courson denied wrongdoing in several cases filed against him after the February 2007 collapse of Central Pacific Mortgage Co. He is also the target of a $1.6 million civil fraud suit filed by the now-defunct Lehman Brothers Bank of New York, the newspaper reported.

Courson declined to be interviewed by the Bee but the MBAA issued a statement saying, "John was very forthcoming about all the details surrounding the closing of Central Pacific Mortgage."