David Stockman, former White House budget director under President Ronald Reagan, was chargedcriminally today, along with seven other individuals, in a securities-fraud case involving improper accounting of rebate transactions at auto supplier Collins & Aikman, according to court documents. Here’s theindictment.
Stockman, who controlled Collins & Aikman along with his private-equity fund, Heartland Industrial Partners, ran C&A from August 2003 to May 2005, when the board removed him a few days before the company filed for Chapter 11. He told the WSJ last week that he collected no salary as the company’s top executive and personally lost $13 million when Collins & Aikman filed for bankruptcy and millions more covering company expenses.
Click here and here for two fascinating statements — one from Stockman, the other from his lawyer, Elkan Abramowitz.
Said Stockman: “The massive loss of jobs and money which occurred at C&A was not due to fraud or deception, but was the consequence of an industry melt-down that generated $50 billion in supplier bankruptcies.” Says Abramowitz: “Today’s announcement . . . reflects a disappointing attempt by federal prosecutors to criminalize the good-faith efforts of a dedicated CEO to save his company . . . This is a misguided prosecution that threatens todestroy an innocent man.”