Defense contractor found guilty in fraud

By Reuters
Posted Sep. 14, 2010 at 2:11 p.m.

A former body armor magnate, who supplied the U.S. military and law enforcement agencies, and another executive were found guilty by a jury on Tuesday of orchestrating a $190 million fraud.
David Brooks, former chief executive of DHB Industries, and Sandra Hatfield, the company’s former chief operating officer, were charged in 2007 with securities fraud, insider trading and other crimes.

The jury, which deliberated for more than two months in a trial that lasted eight months, also found Hatfield guilty of fraud, insider trading and obstruction of justice, the office of the U.S. Attorney for the Eastern District of New York said in a statement.

Prosecutors told the jury in federal court that Brooks, 55, and Hatfield, 56, had manipulated financial records to increase company earnings and profit margins, thereby inflating stock prices.

They said Brooks charged more than $6 million in personal expenses to the company. From a United States flag belt buckle to plastic surgery for his wife, veterinary pills for his 100 race horses, luxury cars and use of the company jet to ferry his children to and from college or to parties, Brooks was spending DHB money, prosecutors said.

Brooks and Hatfield face a possible maximum prison term of 25 years.

Defense attorney Kenneth Ravenell argued at trial that Brooks was allowed to make the purchases because of agreements he had with the company.

He said many of the expenses the government questioned were legitimate and admissible. Ravenell also said Brooks was owed funds by the company and some of his spending went toward the company’s debt to him.

DHB changed its name to Point Blank Solutions and moved its headquarters to Pompano Beach, Fla., after Brooks left inĀ  July 2006. Point Blank filed for bankruptcy protection in April, partly due to the legal costs associated with Brooks.

The company supplies the U.S. military with more than 80 percent of its soft body armor, according to court documents.

The case is USA v Brooks et al, U.S. District Court for the Eastern District of New York, No. 06-550.

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