The chief exec of a company entrusted with providing the US military with protective kit is facing charges of 'pervasive accounting fraud' levelled by the SEC.
The markets watchdog filed securities fraud charges against David H. Brooks, the former CEO of DHB Industries, a major supplier of body armour to the US military and law enforcement agencies.
The SEC believed that Brooks, with the assistance of DHB’s former chief financial officer Dawn M Schlegel, manipulated the company’s gross profit margin and net income by overstating inventory values, falsifying journal entries, and failing to include appropriate charges for obsolete inventory.
According to the SEC, Brooks used company credit cards and cheques to pay millions of dollars in personal expenses, including luxury cars, jewelry, art, real estate, extravagant vacations, personal aircraft usage, and horse training. As a result of the misconduct by Brooks, DHB filed false and misleading financial documents with the SEC and made false statements in company press releases.
'This case shows that the SEC will not tolerate the improper use of corporate funds to pay personal expenses,' said Linda Chatman Thomsen, director of the SEC’s Enforcement Division.
David Nelson, the SEC Regional Director in Miami, added, 'This case involves egregious conduct by a company CEO. As always, we aggressively pursue and prosecute company executives who betray the trust of public shareholders in order to line their own pockets.'
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