Friday, October 26, 2007
The former CEO of military armor supplier DHB Industries, now known as Point Blank Solutions, was arrested on a superseding indictment (available below) that charges him with insider trading involving proceeds of over $185 million from the sale of company stock in 2004. Also named as a defendant is the the former chief operating officer of the company, who was indicted initially back in August 2006. In addition to the insider trading, the indictment charges obstruction of justice, lying to company auditors and to the SEC, tax evasion, and accounting fraud involving undisclosed compensation and overstated inventory. According to a Wall Street Journal story (here), the diversion of company resources for personal benefits included:
more than $350,000 in expenses related to Mr. Brooks horse business; more than $36,000 expenses related to his son's Bar Mitvah; $11,420 for acupuncture treatments for his family members; $7,900 for a face lift for his wife; $10,000 for his children's summer camp; $122,000 for the purchase of iPods and digital cameras to give as gifts at his daughter's Bat Mitzvah; and $101,500 for the purchase of an armored vehicle for Mr. Brooks and his family members' personal use.
The party for his daughter was broadcast as part of MTV's "My Sweet Sixteen" series, a favorite in my house. The indictment also alleges that over $1 million of DHB money was used for family vacations, ranging from $100,000 for a trip to St. Johns to $3,200 on meals and merchandise at the Bellagio in Las Vegas. In addition to the criminal charges, the SEC filed a civil enforcement complaint (here) in the U.S. District Court for the Southern District of Florida. (ph)