Reaganomics was a fraud, too

Kudos, John Pierce

Damn shame we can’t indict Stockman for that as well…

Stockman Is Charged With Fraud – New York Times

About a month before his company filed for bankruptcy protection, the chief executive of Collins & Aikman, a maker of vehicle instrument panels and floor mats, made a last-ditch attempt for a loan.

The chief, David A. Stockman, the former Michigan congressman and budget director for President Ronald Reagan, got on the phone in early April 2005 with bankers from Credit Suisse. The parts supplier had about $110 million in liquidity, he told the bankers, according to court papers. He reassured them that his forecasts were sound.

But according to an eight-count indictment unsealed in court yesterday, that was not true: the company had already borrowed so much that it could not take on new debt without violating existing loan agreements. It had exhausted its credit.

Based on Mr. Stockman’s assurances, Credit Suisse gave Collins & Aikman $75 million. By May, however, all of it was gone. The board forced Mr. Stockman to resign and the company filed for bankruptcy protection five days later.

Mr. Stockman, 60, of Greenwich, Conn., and three others — J. Michael Stepp, the chief financial officer; David R. Cosgrove, the controller; and Paul C. Barnaba, director of purchasing — now face charges that include bank fraud and conspiracy and obstruction of justice.