US prosecutors on Monday charged David Stockman, a former chief executive of Collins & Aikman Corp, and other former executives with fraud related to their tenure at the bankrupt auto parts maker.
Stockman, a former Reagan administration budget director, and the other ex-Collins & Aikman executives are accused of misleading the company's investors to hide its true financial condition, according to the indictment brought by federal prosecutors in Manhattan.
Facing pressures to keep up the company's financial performance, Stockman along with others "orchestrated a scheme ... to defraud C&A's investors, banks and creditors by manipulating C&A's reported revenues and earnings," according to the indictment.
Stockman's attorney was not immediately available for comment. Separately, the US Securities and Exchange Commission brought civil charges against Stockman and other individuals, as well as against the company. Stockman left the company five days before it filed for bankruptcy in 2005. Collins is now reorganising and has put most of its assets up for sale.
Also named as defendants in the criminal indictment are former Collins & Aikman executives J. Michael Stepp, David Cosgrove and Paul Barnaba. A former Michigan congressman, Stockman headed the Office of Management and Budget during the Reagan administration. He became famous as a promoter of supply-side economic policies, dubbed "Reaganomics."
Stockman became a private equity investor after leaving government. He joined Collins & Aikman in 2002, soon after Heartland Industrial Partners, a buyout fund that he co-founded in 1999, bought a controlling stake in the company. Stockman and Heartland lost hundreds of millions of dollars when Collins & Aikman sought bankruptcy protection.
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