NEW YORK, April 19 Former White House Budget
Director David Stockman would pay $7.2 million under a
settlement with U.S. market regulators, who sued him and others
on allegations of accounting fraud at bankrupt auto parts maker
Collins & Aikman Corp [CKCRQ.UL], court documents filed Monday
Stockman agreed to pay $4.42 million plus prejudgment
interest of $2.37 million and a civil penalty of $400,000,
according to the final judgment filed in U.S. District Court in
New York in a lawsuit brought by the U.S. Securities and
Exchange Commission (SEC) in 2007.
The judgment has yet to be approved and signed by the
presiding judge, who halted proceedings in the case in January
when the SEC said the parties had reached a settlement in
According to Monday's filing, Stockman would receive credit
against his $7.2 million obligation, up to $4.4 million, for
any amounts paid by him within 14 days of the final judgment in
settlement of two shareholder claims against a private equity
firm he co-founded, Heartland Industrial Partners LP.
In January 2009, prosecutors dropped criminal fraud charges
against Stockman and three other Collins & Aikman officials.
Stockman, a former U.S. congressman from Michigan and President
Ronald Reagan's budget director from 1981 to 1985, became a
private equity investor after leaving government.
He became a Collins & Aikman director in 2001 and served as
its chief executive officer from August 2003 to May 2005. The
company filed for bankruptcy protection five days after
Stockman's departure as CEO.
The SEC sued Stockman and eight other former Collins &
Aikman officers and directors in March 2007. The suit alleged
that Stockman fraudulently inflated the company's income by
accounting improperly for supplier payments.
The case is Securities and Exchange Commission v. Collins &
Aikman Corp et al, U.S. District Court for the Southern
District of New York No. 07-2419
(Reporting by Grant McCool, editing by Gerald E. McCormick)