Ex-Reagan Budget Chief Charged In Fraud

David Stockman, a former top budget official in the Reagan White House, and three others were charged Monday in an alleged securities fraud conspiracy that embroiled one of North America's largest auto parts companies before the supplier collapsed into bankruptcy.

Stockman was the former chairman and CEO of Michigan-based Collins & Aikman Corp. He served as budget director under President Reagan in the 1980s and also served in Congress as a Republican from Michigan.

An indictment unsealed in U.S. District Court in Manhattan charged Stockman and three others with conspiracy to commit securities fraud, making false statements in annual and quarterly reports, making false entries in books and records, lying to auditors as well as committing bank fraud, wire fraud and obstruction of an agency proceeding.

The others charged in the indictment were J. Michael Stepp, David R. Cosgrove and Paul C. Barnaba. It was not immediately clear who was representing them.

An investigation had concentrated on Stockman and other corporate officers from Collins & Aikman.

A spokesman for Collins & Aikman said he had no immediate comment.

The indictment said the crimes occurred as Stockman served on the board of directors of Collins & Aikman from 2000 through May 2005. He was chairman of the board from August 2003 until May 2005. Stepp was vice chairman of the board of directors. Cosgrove and Barnaba also were employed by C&A.

Southfield-based Collins & Aikman filed for Chapter 11 bankruptcy protection in May 2005. Its products included interiors, carpets, acoustics, fabrics and convertible tops.

Federal authorities planned a news conference to discuss the case, and declined to comment before then.

Stockman is no stranger to public embarrassment, reports CBS News White House correspondent Mark Knoller. As budget director for Ronald Reagan 26 years ago, Stockman was called on the carpet for suggesting the president's economic policies were a ruse to lower tax rates for the rich.

Stockman later recanted his comments, apologized for them and offered his resignation. He stayed on, but he got a tongue-lashing from Reagan.