Thursday, March 22, 2007
Former Congressman and Reagan Administration budget wunderkind David Stockman could be facing federal charges shortly related to his time as CEO of Collins & Aikman, a now-bankrupt auto industry supplier. Stockman made a splash in the early part of the century when his investment fund, Heartland Industrial Partners, began rolling-up auto suppliers that resulted in the formation of C&A, which went into bankruptcy in 2005 shortly after Stockman stepped down as CEO. According to a CNN.Com report (here), Stockman and other former executives may be facing the usual array of conspiracy, securities fraud, and false records charges related to accounting for rebates -- a problem that has plagued other auto suppliers like Delphi -- and misstatements to shareholders about the financial condition of the company. Another possible area relates to receivables financing that may lead to mail or wire fraud charges.
There was a time when the accounting troubles at companies like Enron and WorldCom were attributed in part to their involvement in the high-tech "new economy" that encourage some rather creative accounting. Stodgy, old-time manufacturers were thought to be immune to such problems, but recent accounting woes at General Motors, Delphi, and C&A show that even the smokestack industries seem to have their fair share of financial legerdemain. (ph)