Government Drops All Charges Against Former Reagan Budget Director David Stockman

While prosecutorial authorities often take an “indict first, examine all the evidence later” approach, it is refreshing—and rare—when prosecutors can admit when thorough evaluation of the evidence, or additional evidence, does not bear out their initial allegations of criminal activity, instead of choosing to press forward to obtain a criminal conviction at all costs, under any theory or pretext. The U.S. Attorney’s Office for the Southern District of New wins Federal Criminal Defense Blog’s “man/woman enough to admit we were wrong” award. As reported in the Associated Press  and the New York Times, on Friday, the U.S. Attorney’s Office dropped all charges against former Reagan administration Budge Director David Stockman, 62, after a “renewed assessment of the evidence” in the case and information learned after his indictment. Stockman had been charged in March 2007 with conspiracy to commit securities fraud, to make false filings with the Securities and Exchange Commission, to falsify books and records, to lie to the auditors, to commit wire fraud, to commit bank fraud and to obstruct justice. Lev Dassin, the acting United States attorney for the Southern District of New York, issued a statement on Friday stating that “the government has concluded that further prosecution of this case would not be in the interests of justice.”

The allegations arose from Mr. Stockman’s position from 2003 to 2005 as CEO and director of Collins & Aikman, a manufacturer of auto interiors, carpets, acoustics, fabrics and convertible tops based in Southfield, Michigan. Prosecutors had alleged that Mr. Stockman allegedly manipulated Collins & Aikman’s earnings reports to hide its financial trouble. Collins & Aikman entered bankruptcy in May 2005, another casualty of the economic woes of the U.S. auto industry. Collins & Aikman officers J. Michael Stepp, David R. Cosgrove and Paul C. Barnaba were also charged in the indictment. Stockman was released on $1 million bail. He maintained from the beginning that he had done “absolutely nothing wrong, except to help save this company from a very dire circumstance.” Mr. Stockman joined Collins & Aikman after a firm that he co-founded, Heartland Industries Partners, bought a controlling stake in the company. Mr. Stockman and Heartland lost $360 million in the collapse of Collins & Aikman. The company forced Mr. Stockman to resign in May 2005.

Mr. Stockman’s attorney, Elkan Abramowitz, said he was grateful for the government’s decision and that the defense was confident that Mr. Stockman would eventually be vindicated since he had committed no crime.

Mr. Stockman was Reagan’s Budget Director from 1981 to 1985. He complained that he was blackballed by the White House for calling Reagan’s tax cuts a “Trojan Horse” for lowering taxes on the rich.