Two former body armor company execs indicted for insider trading, fraud

[133724]

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

...


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.


http://www.trentonian.com/WebApp/appmanager/JRC/Daily;jsessionid=mhXvHghLhRWTZgJcWBQNns0ygGsg04BphDy71NcfzZypfgxvs8nc!732527842?_nfpb=true&_pageLabel=pg_article&r21.pgpath=%2FTRN%2FHome&r21.content=%2FTRN%2FHome%2FTopStoryList_Story_795906

[knitter4democracy]

1. Is that the company the Army will only buy from?

I remember hearing that they wouldn't allow soldiers to wear Dragonskin, only the armor from their preferred vendor. Is it that one?

[Kagemusha]

2. Apparently so.

I too remember that whole controversy quite vividly. Free market competition? Ha!

Doesn't surprise me in the least that the execs were skimming off the top. Won't change the Army's ways one bit either.

[napi21]

3. There's also another charge against them for filling the vests

with inferior content that caused the vests to fail. I didn't find that in any of the online articles, but it was part of the CNN report I heard earlier.