Body Armor Execs Indicted For Fraud

CEO and COO of Supplier To Troops Allegedly Manipulated Records to Inflate Stock, Pocket $200M

(AP)  The former CEO of the nation's leading supplier of body armor to the U.S. military was indicted Thursday on charges of insider trading, fraud and tax evasion in a scheme that netted him more than $185 million, prosecutors said.

David H. Brooks, 53, the founder and former chief executive of DHB Industries Inc., appeared in federal court on Long Island and was ordered held without bail. His lawyer entered a not guilty plea.

"David Brooks grew up in Brooklyn and that means he doesn't run away from a fight," attorney Paul Shechtman told reporters after the proceeding.

The charges were outlined in a superseding indictment that also named Sandra Hatfield, 54, the former chief operating officer of DHB. The pair was accused of falsely inflating the value of the inventory of DHB's top product, the Interceptor vest, to help meet profit margin projections.

The vest, designed to withstand rifle fire and shrapnel, was made for the Marine Corps and other branches of the military.

Last year, Hatfield and former Chief Financial Officer Dawn Schlegel were indicted on charges of insider trading in the same scheme to inflate the value of the vests. Hatfield, who was released on $1 million bond in that case, is expected to be arraigned on the new charges next week.

Hatfield's lawyer, Roland G. Riopelle, said the charges announced Thursday are "basically the same" as those in the previous indictment and predicted his client would be acquitted at trial.

Schlegel was not named in the superseding document. Prosecutors declined to comment on whether she may have taken a plea deal; her attorney did not immediately respond to a phone message.

Authorities allege the scheme propelled the company's stock from $2 a share in early 2003 to nearly $20 a share in late 2004. When the pair sold several million DHB shares at that time, Brooks made more than $185 million and Hatfield more than $5 million, according to the U.S. attorney's office.

When an employee identified only as "John Doe" confronted Hatfield in late 2004 with evidence that the inventory of vests was overvalued by up to $8 million, prosecutors say she told him the company "could not 'take a hit' of reducing the valuation to the correct amount."

Brooks and Hatfield also are accused of failing to report more than $10 million in bonus payments to themselves and other DHB employees to the IRS.

Brooks also is accused of using DHB funds to buy or lease luxury vehicles for himself and family members, and to pay for vacations, jewelry, cosmetic surgery, country club bills and family celebrations.

Prosecutors say he threw lavish bar and bat mitzvahs for his children in which entertainers like Tom Petty, Aerosmith and the Eagles performed.

Brooks, who owns more than 100 horses and races them at harness tracks around the country, also used DHB funds for his private horse racing business, prosecutors said.

During the bail hearing, Assistant U.S. Attorney John G. Martin argued that Brooks was a flight risk and should not be granted bail because he may have millions in assets hidden overseas.

Shechtman argued he wasn't, noting that Brooks, who had moved to London after the two women were indicted, moved back to New York earlier this year despite knowing he could be arrested in the case.

U.S. District Judge Joanna Seybert ordered the hearing continued until Monday.

Brooks resigned from DHB in July 2006, about the same time the company relocated its headquarters from Westbury to Pompano Beach, Fla. Hatfield left the company in November 2005.

Also Thursday, the Securities and Exchange Commission filed related civil charges against Brooks, accusing him of manipulating DHB's earnings and funneling millions of dollars out of the company through fraudulent transactions with an entity that he controlled.

In a civil lawsuit filed in federal court in Miami, the SEC alleged that Brooks profited from selling his DHB stock at the end of 2004 when the stock price was at its height, and that he did so while possessing significant nonpublic information in violation of insider trading laws.

The SEC is seeking unspecified fines against Brooks, restitution of any ill-gotten gains, return to DHB of his bonuses and profits from stock sales, and a prohibition against him serving as an officer or director of any public company.

If convicted, Brooks and Hatfield could face up to 70 years in prison.

[lloydbest1]

Posted by brianbwb at 11:43 AM : Oct 27, 2007

The 72 hour limit''s about up. Just wanted to get back and thanks for the leads.....

Haven''t read the whole thing yet nor have I checked all the links referenced but so far....my GAWD!!!!

What does Bush and his mob have to do to get indicted, anyway...rob a bank? Goose an Alter Boy? What????

[brianbwb-2009]

http://www.defensereview.com/article842.html

check it out.

[brianbwb-2009]

And this exerpt from DefenseReview.com

"It has been confirmed that;

Gen. Moran now has in his possession ballistic test data/results clearly showing that Pinnacle Armor''s Dragon Skin body armor has been tested to DoD standards and exceeded each standard and far exceeded the standards to which the plate technology is tested at a civilian test lab. Is the DoD/U.S. Army on testing SAPI, ISAPI, and ESAPI plates (ceramic hard armor) below civilian standards? We can only speculate as to why the DoD/U.S. Army would want SAPI, ISAPI, and ESAPI plates and/or Dragon Skin (or any body armor tech for that matter) intended for military use to be tested to less than civilian standards, when our infantry warfighters are facing military-level ballistic threats (assault rifles, machine guns, etc.) from the enemy. If the DoD/U.S. Army is testing the SAPI, ISAPI, and ESAPI ceramic armor plates to lower standards, this could at least partially explain the durability issues that they suffer on the battlefield, as well as the same limited coverage U.S. infantry warfighters have had for the past ten years."

You think my post was chilling, you should really read this entire article...

[brianbwb-2009]

eo Lloybbest

Sorry it took so long, but I am in Singapore, 12 hours ahead of you.

I wrote my representative the day I heard that My friend''s son was forbidden by order to wear the dragon skin armor, paid for by his family as a gift. this was what, some five years ago.

I will point you to a starting place to check my assertions, I get my info from sources that have no real reason to play "left vs. right" politics.

www.military.com/soldiertech/0,14632,Soldiertech_060420_dragon3,,00.html - 39k - for one, there are various military and non military and law enforcement publications that discussed this for quite some time, some until today.

Peace.

[robertsgt40-2009]

Imagine my absolute shock that someone would profiteer from the war. Just think if someone would "investigate" Haliburon,KBR,GE,Cheney,Bush Wolfie,Pearljam,Feith,Condie and all the rest that sold out our country...Nahh. But CBS has done their part at least in covering it up.

[lloydbest1]

Oops.

Brian, I guess you did as I suggested while I was composing my next post. Sorry about that.

Still we should keep the heat on as it were...Thx, Lloyd

[lloydbest1]

Brianbwb:

I don''t generally respond to others'' comments to my posts; in my opinion this is not a chat room. But this one time....

Read the question at the end of my post at 8:23 AM. It is not a frivilous one. I am very serious when I consider the possibility that The president and his vice president might be liable for murder IF it can be proven beyond a reasonable doubt that DHB''s product is, in fact, trash; that Bush and/or Cheney gave DHB exclusive right to manufacture this product and market it to our defense; that they insisted that this vest and no other may be used; and that they had prior knowledge that the armor was inferior for the job it was asked to do.
Where ever did you get your information from, anyway? Your posts of 7:49 and 8:12 are chilling indictments. We need to keep this one visible. I have already dashed a note off to my representative regarding this case and the possible White House involvement in it. I would like to ask you do the same (if you haven''t already) and since you have access to information I do not, ask you to hand some of it off to an attorney who might be able to determine the extent of Executive guilt (if any) and take action.....

[brianbwb-2009]

The "war on terror" is a fraud and the largest bank (US Treasury) heist in world history.
Posted by tuckerndfw

Actually it pales next to the estimated 15 trillion adjusted dollar cost of Vietnam, but is still one that will bankrupt the US (again).

[brianbwb-2009]

Oh and by the way, he was forbidden by order to wear his own, safer, family paid for vest...

[brianbwb-2009]

.then can we consider charging Brooks and Hatfield - as well as two infamous goons in the executive branch of our government - with capital murder?
Posted by LloydBest1

I would certainly consider it, I would also consider that even I knew of this only a few months into the war, when a friend''s family bought him a Dragon Skin vest to take to Iraq, as the father was a police officer, who bought his own dragon skin because it was common knowledge that the Interceptor was inadequate.

If I, a civilian knew that much way back then, surely the facts must be known to far more than just the a-holes in the Whites'' House, for example, the representatives of the districts the factories are located, the military brass in the Pentagon, etc. Quite a few new inmate candidates, on both sides of the muddy aisle.

[brianbwb-2009]

"Trust in you will be shattered, your dependibility be questioned, your employees shamed and yourself at risk of imprisonment." Posted by LloydBest1

In my less jaded days I would agree wholeheartedly with you, but recent examples of ultra light "wrist slap" sentences, pardons, unwillingness to prosecute, and the fact that even though their reputations have become garbage, many are so rich from their crimes that they no longer care what people think, or they do calculations like "10 years in a campus jail for 200 million? less fines, thats fifteen mil a year, and if I make a $25K campaign contribution, I''ll probably do less than four, so its worth it".

The point I was getting at was one the article missed, (whether intentionally or not, I won''t speculate) that the vests do not work, and a competing armor vest does work much better, according to many believable sources like law enforcement, and certain Major Generals, who were "retired" for opposing the bid to DHB.

People are dying as a direct result of this corruption, and an SEC violation is the most that the complicit-by-omission-of-action DOJ will do.

This exposes the hypocrisy of the "support the troops" crowd, as the soldiers'' deaths, for reasons other than the protection of the country, are ignored for the sake of support for the agenda of the enablers, facilitators, and profiteers from all this meaningless death and destruction...

[afmca]

Hey - the two executives are just another example of what a good Republican is. Line your own pockets and screw the rest. Repubs are never angry about the crime; they are only angry about them being caught.

[lloydbest1]

Part 2.
I did say "for the purposes of this argument".

In a nod to brianbwb, there seems to be a bit more to this than simply a couple of not-too-bright executive officers robbing the store. It also appears that there has been some considerable White House meddling in this fiasco. If it was generally known by the administration that this particular brand of body armor was, in fact, inferior....then can we consider charging Brooks and Hatfield - as well as two infamous goons in the executive branch of our government - with capital murder?

[lloydbest1]

Posted by gunnerv1 at 03:56 PM : Oct 25, 2007
Posted by brianbwb at 07:49 AM : Oct 26, 2007

For the purposes of this arguement, it really doesn''t matter whether this is a quality vest is doing its job (gunner) or is a lethal POS that puts troops lives in danger (brian); the issue is ethics. In business ethics is job one. You can generate all the profit you want, treat your employees like royalty, be exemplary environmental stewards and fine corporate citizens, and have a top notch product...

But if your ethics are bankrupt, eventually your company will be as well. Trust in you will be shattered, your dependibility be questioned, your employees shamed and yourself at risk of imprisonment.

The advice my own CEO gave when he came on board was "Do not do anything you don''t want to read about in the papers the next day."

[brianbwb-2009]

"It would appear that U.S. Army Natick and PEO are actively protecting their Interceptor body armor program and preferred contractors (soft armor and ceramic hard armor components), and blocking Dragon Skin from being adopted/procured, even though (we believe) these organizations are already aware that Dragon Skin is superior to Interceptor, with Dragon Skin offering superior ballistic protection to Interceptor in terms of coverage area at the same weight, multi-hit capability, threat level protection, and durability."

"... And, the worst part is, they%u2019re doing this during wartime. If we%u2019re correct in our assessment, then the actions we%u2019ve described could actually rise to the level of treason... The actions that have been taken so far by certain individuals are potentially criminal and thus prosecutable acts. Our warfighters%u2019 lives are at stake (again, during wartime). Remember, our infantry warfighters are currently suffering approx. 95% of all combat casualties in Iraq and Afghanistan, so they deserve the best weapons and ballistic protection they can get. In our opinion, as well as the opinions of a number of military and PSC/PMC professionals we%u2019ve spoken with, Interceptor simply ain%u2019t it, and SOV/Dragon Skin is (the best existing body armor for anti-rifle protection)."

[brianbwb-2009]

Posted by gunnerv1

If your child were shipped home in a body bag because of these vampires selling defective products, and forcing your loved one to use them, would "Ripping off the Government and the Public has been going on since before the War of 1776. Get use to it,.." as you put it, be of any consolation?

Like most of the war lovers, human life means apparently nothing to you, except for your own, (perhaps), so why should any one even consider your opinion?

[brianbwb-2009]

These vests are inferior to a vest known as Dragon Skin, and have been proven unable to stop a 9mm round from a pistol, whoever said that they work is lying in the face or repeated independent tests. Domestic law enforcement refuses to use the Interceptor, and there have been repeated recalls of thousands of defective vests. Brooks was a $25,000.00 republican campaign contributor, and had an exclusive no bid contract to supply this garbage. The price was marked up artificially, inflating the stock value of the comnpany, which Brooks then sold, making enough to have a $10,000,000 party with 50 cent, and Aerosmith as entertainment. The monopoly was broken when the product couldn''t be delivered in quantity, and the government, to, as they said "break the bottleneck" gave contracts to 5 other companies owned by cronies of Bush.

While he was partying, the soldiers are given these open back, bra strapped, ineffective vests to deal with AK47 rounds, and are forbidden to use the superior Dragon Skin armor, even though they, or their families purchased it from their own money.

This vampire sells out the soldiers, quite a few get killed or wounded because the armor doesn''t work. In the face of this treason, the best the government can do is an SEC violation? These clowns will still be rich, and after Bush pardons them, free.

Where are all the "super-patriot", war lovers that usually post here? You can''t blame this one on the Democrats, this one was all Bush.

[gunnerv1]

Ripping off the Government and the Public has been going on since before the War of 1776. Get use to it, Members of all Political parties are just as guilty of it. (If I had all that money I''d give to the poor and feed and house the homeless, Yeah right buddy, you''d be an a$$bag just like the rest of ''em. Look at the Hollywood left, I don''t see many of them parting with their Million$ (unless it''s for Hillbilly)).

[neobrian-2009]

Corruption,Greed,Fraud= The basic elements essential to be a "True Republican",..Remember " Friends Don`t let Friends Vote republicon "

[Krazcarl]

The rich are getting richer by hook or crook is this news?