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# Other

# SEC v. Collins & Aikman Corporation, et al. Case No. 07-cv-02419-SAS (E.D.N.Y.)

                            Sept. 21, 2022                       

On March 26, 2007, the Commission filed a complaint (the “Complaint”) against Collins & Aikman Corporation (“C&A”), David A. Stockman (“Stockman”), J. Michael Stepp (“Stepp”), Gerald E. Jones (“Jones”), David R. Cosgrove (“Cosgrove”), Elkin B. McCallum (“McCallum”), Paul C. Barnaba (“Barnaba”), John G. Galante (“Galante”), Christopher M. Williams (“Williams”), and Thomas V. Gougherty (“Gougherty”) (collectively, the “Defendants”). The Complaint alleged that, between 2001 and 2005, C&A and several of its former officers and employees, including its Chief Executive Officer, Stockman, engaged in pervasive accounting fraud. See Complaint. 

On March 30, 2007, the Court entered a final judgment against C&A permanently enjoined it from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. See C&A’s Final Judgment. 

On April 20, 2010, the Court entered final judgments against Cosgrove, McCallum, Stepp, and Barnaba, in which each were ordered to pay civil penalties to the U.S. Treasury. See Cosgrove’s Final Judgment; McCallum’s Final Judgment; Stepp’s Final Judgment; and Barnaba’s Final Judgment. The Court also entered a Stipulation dismissing Jones, Galante, Williams, and Gougherty with prejudice.

Lastly, on April 20, 2010, Stockman was ordered to pay, and has paid, a total of $2,800,000.00 in disgorgement, prejudgment interest, and penalties to the Court Registry Investment System (“CRIS”). The Clerk was ordered to hold the funds in an interest bearing account with the CRIS (collectively, the “Fund”), pending further order of the Court. See Stockman’s Final Judgment

On December 2, 2019, the Court entered an order that established a Fair Fund for the $2.8 million paid into the Fund, along with any accrued interest and earnings thereon, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002 and, appointed Miller Kaplan Arase LLP as the Tax Administrator to fulfill the tax obligations of the Fair Fund. See the Court’s Order. 

On December 3, 2019, the Court entered an order that appointed Epiq Class Actions & Claims Solutions, Inc. as the Distribution Agent to oversee the administration and distribution of the Fair Fund to harmed investors. See the Court Order.

On March 4, 2020, the Commission filed a motion to approve a distribution plan, together with the distribution plan (the “Plan”). See the Commission’s Motion with the Plan.

The Plan provides that the distribution of the Fair Fund to investors who were harmed by the improper conduct alleged in the Complaint. The Distribution Agent will determine each Eligible Claimant’s pro rata share based upon each Eligible Claimant’s total Recognized Claim divided by the aggregate total of all Eligible Claimants Recognized Claims in accordance with the terms of the Plan.

Claim forms can be found here and must be postmarked (or if not sent by U.S. Mail, received) no later than July 17, 2020.

On March 5, 2020, the Court entered an order that approved the Plan. See the Court Order. 

On March 5, 2021, the Court entered an order granting the Commission’s Motion to transfer funds from the Court Registry Investment System to the escrow account established by the Distribution Agent for distribution of the Fair Fund to Eligible Claimants. See the Court’s Order.

For more information, please contact the Distribution Agent:

Epiq Class Actions & Claims Solutions, Inc.Telephone Number: 833-991-1534Email: Questions@SECvCollinsandAikmanFairFund.comWebsite: www.SECvCollinsandAikmanFairFund.com

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