Former Reagan Budget Director Charged
Monday, March 26th 2007, 11:43 am
By: News On 6
NEW YORK (AP) _ David Stockman, a former top budget official in the Reagan White House, and three other people were charged Monday in an alleged securities fraud case that embroiled one of North America's largest auto parts companies before it collapsed into bankruptcy.
Stockman, who served as budget director under President Reagan, was the former chairman and chief executive officer of Michigan-based Collins & Aikman Corp.
Federal authorities declined to comment prior to a news conference on the case.
An indictment unsealed in U.S. District Court in Manhattan charged Stockman and three others with conspiracy to commit securities fraud, making false statements in annual and quarterly reports, making false entries in books and records, and lying to auditors as well as committing bank fraud, wire fraud and obstruction of an agency proceeding.
The others charged in the indictment were J. Michael Stepp, David R. Cosgrove and Paul C. Barnaba. It was not immediately clear who was representing them.
An investigation had concentrated on Stockman and other corporate officers from Collins & Aikman. A spokesman for Collins & Aikman said he had no immediate comment.
The indictment said the crimes occurred as Stockman served on the board of directors of Collins & Aikman from 2000 through May 2005. He was chairman of the board from August 2003 until May 2005. Stepp was vice chairman of the board of directors. Cosgrove and Barnaba also were employed by C&A.
According to court papers, Stockman responded to a financial crisis at the company in 2005 by directing it to delay paying its bills as long as possible.
Meanwhile, Stockman allowed the company's employees to mislead creditors about the company's revenues and the ability of Collins & Aikman to pay its bills, prosecutors said.
The government said Stockman personally decided which of the company's suppliers and creditors would get paid and personally managed all of C&A's liquidity during the crisis.
The indictment also accused Stockman of misleading investors, saying he wanted to hide his own and other senior management's involvement in a fraudulent scheme to skew the company's accounting to hide its troubles.
Southfield, Mich.-based Collins & Aikman filed for Chapter 11 bankruptcy protection in May 2005. Its products included interiors, carpets, acoustics, fabrics and convertible tops.