Criminal Charges Served Up Against Former Reagan Aide

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March 26, 2007 1:01 PM

David Stockman, the former White House budget director under President Ronald Reagan, was indicted on several charges today as part of a criminal investigation into accounting practices at one of the U.S.'s largest auto parts companies before it went bankrupt almost two years ago.

Stockman, the former chairman and CEO of Collins and Aikman, the auto parts company based in Southfield, Mich., was indicted for conspiring to commit securities fraud, making false statements in financial reports, making false entries in books and records, lying to auditors, committing bank and wire fraud and obstructing an agency proceeding. 

In a statement released shortly after today's charges were announced, Stockman denied any wrongdoing.  "My actions were motivated by the goal of saving the company, its investors and thousands of employees from a brutal financial squeeze by the Big Three automakers," he said.  "There is not a hint of wrongful gain.  In fact, my fund and I took the largest single loss."

The Blotter on ABCNews.com reported last week that Stockman, famed for his role in developing what is known as Reaganomics, was to be indicted today as part of the criminal investigation of the now bankrupt Collins and Aikman, where he served as chairman and CEO from 2002 to 2005.

Officials said Stockman is expected to surrender to federal marshals sometime this week.

Click Here for Full Blotter Coverage.

Stockman's lawyers, who have insisted their client had done nothing wrong, reiterated their client's claim of innocence.  "The evidence will show that, far from being a fraudster, Mr. Stockman acted in good faith, working without pay to save the company, and later helping uncover and remedy the very problems prosecutors now want to blame him for," they said in a statement.

Stockman is also plagued by a civil lawsuit filed by investors who claim Stockman and other executives made "false and misleading statements" and artificially inflated the company's stock prices between May 2004 and March 2005.  The company filed for bankruptcy in May 2005.

Three others -- J. Michael Stepp, David R. Cosgrove and Paul C. Barnaba -- were also charged in today's indictment.

Stockman was one of the youngest and most outspoken members of the Reagan administration. His criticisms of Reagan's economic policies in a 1981 interview by William Greider in "The Atlantic Monthly" magazine led Reagan to say he had taken young Stockman "to the woodshed" but did not fire him.

He later wrote a controversial memoir, "The Triumph of Politics -- Why the Reagan Administration Failed."

After he left the government, Stockman established a private equity company, Heartland Industrial Partners, which invested in depressed Detroit companies, including Collins and Aikman.

Collins and Aikman has so far not commented on the charges.

In August, the company acknowledged receipt of subpoenas from the federal grand jury and said it had turned over similar material to the SEC.

The company also said it was conducting its own internal investigation.