SEC Announces Fraud Charges

sec.gov, Mar 29, 2007

The Securities and Exchange Commission today filed civil fraud charges against auto parts manufacturer Collins & Aikman Corporation (C&A), David A. Stockman, C&A's former Chief Executive Officer and Chairman of the Board of Directors, and eight other former C&A directors and officers.

The SEC's complaint alleges that between 2001 and 2005, Stockman personally directed fraudulent schemes to inflate C&A's reported income by accounting improperly for supplier payments. In furtherance of those schemes, the complaint alleges that Stockman and other defendants obtained false documents from suppliers designed to mislead C&A's external auditors. According to the complaint, when aspects of the schemes were discovered in March 2005, Stockman embarked on a public campaign to mislead investors, potential financiers and others by minimizing the extent of the fraudulent accounting and hiding C&A's dire financial condition. The other former officers, including the Chief Financial Officer, Corporate Controller, and Treasurer, and a former member of C&A's Board of Directors, are alleged to have participated in the accounting schemes or the campaign to mislead investors. Read more at sec.gov.