False accounting charges for ‘bulletproof’ executive

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
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

‘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.’

Further reading:

Andersen partner settles in fraud case

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