Joan Fabrics ceo among those charged by SEC
March 29, 2007-- Home Textiles Today,
Among the others charged is David Stockman, former CEO and president of C&A and a former congressman and federal budget director. Stockman is co-founder of Heartland Industrial Partners, a private-equity firm that owns a minority stake in home textiles manufacturer Springs Global.
The SEC has charged the defendants with involvement in fraudulent schemes between 2001 and 2005. Further, the SEC claims members of the group made false and misleading statements about C&A’s finances to obtain funding. Despite the boost in financing, C&A filed for bankruptcy in May 2005.
The SEC claims McCallum agreed to provide C&A with “round-trip transactions. These transactions were structured to give the appearance that C&A was receiving rebates that would increase C&A’s income from a company McCallum owned.
In fact, because C&A repaid McCallum or his companies for each purported rebate, the transactions should have had no effect on C&A’s earnings, the SEC said.
Between the round-trip transactions and the improper accounting for rebates, C&A fraudulently increased its reported income by more than $49 million, the agency said.
The SEC is seeking repayment of "ill-gotten gains" and civil penalties against the defendants.
C&A, a former supplier of velvet to the residential upholstery industry, acquired Joan Fabrics’ automotive velvet business in 2001 and last year abandoned the upholstery market to focus on automotive.