Ex-body armor execs indicted in fraud

[unhappycamper]

Ex-body armor execs indicted in fraud
By Frank Eltman - The Associated Press
Posted : Thursday Oct 25, 2007 13:19:36 EDT

CENTRAL ISLIP, N.Y. — Two former top executives of the leading supplier of body armor to the U.S. military were indicted Thursday on charges of insider trading, fraud and tax evasion in a scheme that netted them nearly $200 million, prosecutors said.

David H. Brooks, 53, the former CEO of DHB Industries, Inc., and Sandra Hatfield, 54, the former chief operating officer, were charged in a superseding indictment with manipulating DHB’s financial records to increase earnings and profit margins, thereby inflating the price of DHB’s stock.

“Corporate executives who line their own pockets at the expense of their shareholders flaunt the responsibilities they owe their companies and the investing public,” U.S. Attorney Benton J. Campbell said in a statement.

The former DHB executives are accused of falsely inflating the value of the inventory of DHB’s top product, the Interceptor vest, to help meet profit margin projections. The vest, designed to withstand rifle fire and shrapnel, was made for the Marine Corps and other branches of the military.

When an employee identified only as “John Doe” confronted Hatfield in late 2004 with evidence that the inventory of vests was overvalued by up to $8 million, prosecutors say she told him the company “could not ‘take a hit’ of reducing the valuation to the correct amount.”

Authorities allege the scheme propelled the company’s stock from $2 a share in early 2003 to nearly $20 a share in late 2004. When the pair sold several million DHB shares at that time, Brooks made more than $185 million and Hatfield more than $5 million, according to the U.S. attorney’s office.


Rest of article at: http://www.marinecorpstimes.com/news/2007/10/ap_bodyarmor_071025/



uhc comment: I've heard rumbles that the SEC is waking from its lethargy and has begun prosecuting criminals again. They certainly have enough material to work with.