After two months of deliberation, a jury has found Ex-DHB Industries CEO David Brooks and Ex-DHB Industries COO Sandra Hatfield guilty of committing securities fraud, insider trading, and obstruction of justice. The two defendants allegedly made close to $200 million as a result of their scam. The jury also found Brooks guilty of lying to auditors.
Prosecutors claimed that Brooks and Hatfield manipulated financial records to increase company earnings and profit margins. This resulted in the inflation of stock prices. The defendants are also accused of committing insider trading from when they sold over $72 million of their DHB stock in November 2004 and then another (approximately) $118 million of their shares the following month. The sales occurred as DHB’s stock price went up to over $20/share. Hatfield made over $5 million while Brooks realized over $180 million from the scheme.
Also, Hatfield and Brooks allegedly took part in a scheme to cover up the related party status of Tactical Armor Products, which Brooks’ wife was supposed to be running separate from DHB. In fact, Brooks wholly controlled TAP. According to the Federal of Bureau of Investigation’s New York Division Web site, profits from related party transactions were used to pay for over $16 million in Brooks’ personal expenses. He reportedly doctored internal DHB documents and created fraudulent multi-million dollar transactions to cover up the scheme and fool investors and auditors. Personal expenditures included plastic surgery for his wife, luxury vehicles, pills for his 100 racing horses, his family’s use of the company jet, and other charges.
The two defendants are each facing up to 25 years in prison.
Related Web Resources:
David H. Brooks, Founder and Former Chief Executive Officer of DHB Industries, Inc. and Sandra Hatfield, Former Chief Operating Officer, Convicted of Insider Trading, Fraud, and Obstruction of Justice: Defendants Reaped Nearly $200 Million Through Their Schemes, FBI, September 14, 2010
Body armor chief guilty of $190 million fraud: jury, Reuters, September 14, 2010
As an investor who has suffered financial losses due to insider trading or securities fraud, you may be able to recoup your losses. Contact our investment fraud law firm today.