reviewed investor presentation materials in March 2005 and knew that they contained false information to be disseminated to the public; John G. Galante, who helped draft a March 17, 2005 press release knowing that it contained false information and also provided false information for inclusion in an April 4, 2005 press release; and Christopher M. Williams, who participated in a scheme, directed by Stockman, to generate false documents regarding the company's borrowing base and thereby inflate the company’s liquidity figures, knowing these liquidity figures would be reported to the public. The materially false or misleading public statements in March 2005 enabled C&A to secure millions of dollars in additional financing. Soon after C&A obtained these funds, its true financial condition became known and C&A filed for bankruptcy.
6.Stockman had major financial incentives to engage in the fraud. Stockman and his private equity firm Heartland Industrial Partners (“Heartland”) had invested approximately $360 million in C&A and knew that they would lose that investment if C&A's financial condition became public. By fraudulently inflating C&A's earnings and cash flow figures, Stockman was able to conceal C&A's true financial condition, secure additional funding, and maintain the appearance of financial viability. Moreover, throughout this period Heartland collected millions of dollars in management fees and other payments from C&A. Heartland received approximately $45 million in fees from C&A between 2001 and 2004, with approximately $22 million ultimately going to Stockman. The other individual defendants also benefited from the fraud because it enabled them to continue receiving salary payments from C&A or, in the case of McCallum, to continue profitable business dealings with C&A.