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October 29, 2007

Body Armor Profiteer Indicted Iraq  Politics

David Brooks, who made a fortune selling faulty body armor to the Army and Marines, has been indicted. Marine Corps Times:

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. [...]

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. [...]

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. [...]

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 Internal Revenue Service.

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.

At the beginning of the Iraq war, Brooks' company had a monopoly on the production of body armor. The Army and Marines eventually had to recall some 23,000 of his vests. Brooks, surprise, surprise, was a hefty contributor to Republican political campaigns.

Posted by Jonathan at October 29, 2007 05:39 PM  del.icio.us digg NewsVine Reddit YahooMyWeb