(Reuters) – Former White House Budget Director David Stockman would pay $7.2 million under a settlement with U.S. market regulators, who sued him and others on allegations of accounting fraud at bankrupt auto parts maker Collins & Aikman Corp, court documents filed Monday said.
Stockman agreed to pay $4.42 million plus prejudgment interest of $2.37 million and a civil penalty of $400,000, according to the final judgment filed in U.S. District Court in New York in a lawsuit brought by the U.S. Securities and Exchange Commission (SEC) in 2007.
The judgment has yet to be approved and signed by the presiding judge, who halted proceedings in the case in January when the SEC said the parties had reached a settlement in principle.
According to Monday’s filing, Stockman would receive credit against his $7.2 million obligation, up to $4.4 million, for any amounts paid by him within 14 days of the final judgment in settlement of two shareholder claims against a private equity firm he co-founded, Heartland Industrial Partners LP.
In January 2009, prosecutors dropped criminal fraud charges against Stockman and three other Collins & Aikman officials. Stockman, a former U.S. congressman from Michigan and President Ronald Reagan’s budget director from 1981 to 1985, became a private equity investor after leaving government.
He became a Collins & Aikman director in 2001 and served as its chief executive officer from August 2003 to May 2005. The company filed for bankruptcy protection five days after Stockman’s departure as CEO.
The SEC sued Stockman and eight other former Collins & Aikman officers and directors in March 2007. The suit alleged that Stockman fraudulently inflated the company’s income by accounting improperly for supplier payments.
The case is Securities and Exchange Commission v. Collins & Aikman Corp et al, U.S. District Court for the Southern District of New York No. 07-2419 (Reporting by Grant McCool, editing by Gerald E. McCormick)