SEC Charges Former CEO of Military Body Armor Supplier with Financial Fraud and Insider Trading

U.S. Securities and Exchange Commission, Oct 29, 2007

Washington, D.C. - The Securities and Exchange Commission filed securities fraud charges against David H. Brooks, the former Chief Executive Officer and Chairman of the Board at DHB Industries, Inc., a major supplier of body armor to the U.S. military and law enforcement agencies.

The SEC's complaint, filed in U.S. District Court for the Southern District of Florida, alleges that Brooks engaged in a pervasive accounting fraud at DHB between 2003 and 2005, violated insider trading laws in 2004, and used millions of dollars in corporate funds to pay personal expenses.

"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."

The SEC's complaint alleges that Brooks, with the assistance of DHB's former chief financial officer and chief operating officer, 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.

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