Labor & Employment Law

Ex-CEO of military contracting firm accused of defrauding company nearly $200 million

By Dobin & Jenks

David Brooks, a founder and ex-chief executive officer of DHB Industries (DHB), a contracting company for the U.S. military and other agencies, is accused of looting the company of $185 million. According to a federal prosecutor, Mr. Brooks allegedly used the looted money to fund ?lavish? personal expenditures.

Along with Sandra Hatfield, DHB?s former chief operating officer, Mr. Brooks is accused of securities fraud, insider trading, manipulating financial records, and a bevy of additional charges. Brooks and Hatfield reportedly used deceitful techniques to increase the company?s reported earnings and profits substantially.

According to federal prosecutors, Brooks and Hatfield reportedly inflated the value of DHB?s stock by lying about the inventory of supposedly shipped combat vests to the U.S. military. As a result, the duo defrauded the company for a combined $190,000 million, reportedly $185 million for Brooks, and $5 million for Hatfield. Both have pleaded not guilty to the charges
.
?This is a case about the naked greed of two people, Sandra Hatfield and David Brooks, and the lies and the fraud that they used to satisfy that greed,? Richard Lunger, Assistant U.S. Attorney told jurors in his opening statement. ?In the end they lied in order to push up the price of the company?s stock, then [they] sold their stock for $190 million.?

In July 2006, shares of DHB stock were removed from American Stock Exchange listings. Although still headquartered in Pompano Beach, Florida, DHB has since been renamed Point Blank Solutions, Inc. According to the company?s Web site, Point Blank is an industry leader in ballistic technologies, including its Point Blank Body Armor and other protective apparel, for the military and other authorities.

For more information about the case, click on the following Bloomberg Business Week article on the DHB Fraud of Ex-CEO

To learn more about this and other financial fraud cases, visit the U.S. Securities and Exchange Commission?s Web site www.SEC.GOV

The case is U.S. v. David Brooks, 06-CR-550, U.S. District Court, Eastern District of New York (Central Islip).

Full post as published by The Law Planet Blog on January 28, 2010 (boomark / email).