[Vision2020] very old chickens coming home to roost

[Mark Solomon]

 From one of the people who brought us "voodoo" economics.

m.
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Reagan Budget Chief Charged With Fraud

By THE ASSOCIATED PRESS
Published: March 26, 2007

Filed at 12:37 p.m. ET

Richard Lee/Detroit Free Press via Associated Press



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.

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On the Net:

http://www.collinsaikman.com

http://www.maglaw.com

http://www.ca2.uscourts.gov/

http://www.usdoj.gov/usao/nys
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