Former Reagan Aide Stockman Facing Possible Indictment

Dec 11, 2006 12:59pm

A federal grand jury in New York may be asked as soon as next month to indict a top aide in the Reagan White House, David Stockman, on fraud charges, federal officials tell ABC News. The officials said the investigation of Stockman, a former congressman who ran the Office of Management and Budget in the Reagan administration, centers on his role as CEO of a now bankrupt Michigan auto parts company, the Collins and Aikman Corporation. The investigation has focused on whether Stockman and other corporate officers misled investors about the company’s financial health.  Stockman’s lawyer said his client had done nothing wrong and that reports of a pending indictment are premature.  "We have not been told he is a target and are still hopeful the matter will be resolved without any further action by the U.S. Attorney’s Office," said Elkan Abramowitz.  He said Stockman has cooperated fully in the investigation, which was begun by the Securities Exchange Commission last summer. Federal officials say Stockman could face charges of security fraud, mail fraud, wire fraud and giving false statements to the SEC. Click Here for Full Blotter Coverage on the Brian Ross Investigative Homepage. A civil lawsuit filed by investors claims Stockman and other executives made "false and misleading statements" and artificially inflated the company’s stock prices between May 2004 and March 2005.  The company filed for bankruptcy in May 2005. Stockman was one of the youngest and most outspoken members of the Reagan Administration. His criticisms of Reagan economic policies in a 1981 interview by William Greider in "The Atlantic Monthly" magazine led Reagan to say he had taken young Stockman "to the woodshed" but did not fire him. He later wrote a controversial memoir, "The Triumph of Politics – Why the Reagan Administration  Failed." After he left the government, Stockman established a private equity company, Heartland Industrial Partners, which invested in depressed Detroit companies, including Collins and Aikman. A spokesman for Collins and Aikman, which is still operating under Chapter 11 bankruptcy protection, declined to comment to ABC News. In August, the company acknowledged receipt of subpoenas from the federal grand jury and said it had turned over similar material to the SEC. The company also said it was conducting its own internal investigation.

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