Image: David Stockman
Louis Lanzano  /  AP file
David Stockman, former budget director under President Ronald Reagan, exits a federal court in New York City on March 26, 2007. Prosecutors dropped charges against Stockman after a "renewed assessment of the evidence."
updated 1/9/2009 2:35:29 PM ET 2009-01-09T19:35:29

Federal prosecutors dropped charges Friday against former Reagan budget director David Stockman, who was accused of overseeing a sweeping fraud at a troubled auto parts supplier that he led before the company collapsed into bankruptcy.

The U.S. attorney's office in Manhattan said Friday that a "renewed assessment of the evidence" in the case and information learned after his indictment led to the action. Charges were also dropped against three others.

Stockman, 62, had been charged 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.

Stockman's attorney, Elkan Abramowitz, said he was grateful that prosecutors reviewed the case.

"We were confident at some point that David Stockman would be vindicated because we knew from the beginning he had committed no crime," Abramowitz said.

Stockman was President Ronald Reagan's budget director from 1981 to 1985. He created controversy early in his tenure when he told an interviewer that he thought Reagan's across-the-board tax cuts were a "Trojan horse," or ruse, for lowering taxes on the rich. Stockman, who also predicted huge budget deficits, later described how he was taken to the White House "woodshed" for his comments.

Stockman was chief executive from 2003 to 2005 at Collins & Aikman, based in Southfield, Mich. He became a member of its board of directors in 2000. The company makes auto interiors, carpets, acoustics, fabrics and convertible tops.

Prosecutors had said Stockman and others knew that Collins was in financial trouble in December 2001 and began manipulating the company's earnings reports to hide information.

The company was forced to enter bankruptcy proceedings in May 2005 — one of several collapses to rock the auto parts industry in recent years.

After he was freed on $1 million bail at the time of his arrest, Stockman told reporters he had personally lost $13 million in the company's collapse and had done "absolutely nothing wrong, except to help save this company from a very dire circumstance."

Abramowitz said he did not know what Stockman would do now.

"He's been devoting all his efforts to proving his innocence. He has, and I'm extremely gratified that the government agrees," the lawyer said.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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