March 22, 2007
Stockman Looks Like the Next Former CEO Charged
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)
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