Former Reagan Aide Tells CNBC: I'm Victim of Overzealous Government
The former chief executive at auto parts supplier Collins & Aikman told CNBC that he and his former company were victims of overzealous regulators combined with an economic "crunch" at the Big Three automakers, and broadly denied federal fraud charges against him.
On Monday, federal prosecutors charged David A. Stockman and other former company executives with fraud and conspiracy in connection with alleged violations at the bankrupt auto parts maker.
U.S. Attorney Michael Garcia said at a news conference on Monday that Stockman "hid the full truth from the company's investors and lenders," and "resorted to lies, tricks and fraud" to boost Collins & Aikman's financial performance.
"Those charges are way wide off the mark; in fact, they are really poppycock, anybody can see that if they spend a minute looking at our case," Stockman said during an appearance on CNBC's "Kudlow & Company."
"This was not an economic joyride like Worldcom or some pump-and-dump operation where the public investors suffered," he said. "This was an epic struggle for survival on the part of an auto supplier that caught in this vicious crunch on the part of the Big Three, as it tried to make parts and survive."
Four other former company officials have already pleaded guilty to charges in the case, prosecutors said.
Stockman is a former budget director under President Reagan in the early 1980s. CNBC's Larry Kudlow served as associate director of economics in the Office of Management and Budget when Stockman was the director.
"My fund was the 40% investor, we owned 40% of the stock and along with other affiliates 75%," said Stockman. "Why would a 75% owner try to deceive himself, or the shareholders, when we were the shareholders?"
Prosecutors said the fraud lasted from December 2001 until the company filed for bankruptcy in May 2005.
Collins & Aikman was not named in the indictment. Garcia said his office had reached a non-prosecution agreement with the company, which has agreed to continue to cooperate with the government in its investigation.
Stockman is a former Congressman and was a founding partner at private equity powerhouse The Blackstone Group.