By Dan Christensen, BrowardBulldog.org
The embattled founder of financially-hobbled Pompano Beach body armor maker Point Bank Solutions refers to himself on his foundation’s website as a “Living Lifesaving Legend.”
But federal prosecutors say former Broward mogul David H. Brooks is a world-class crook responsible for an audacious $200 million corporate theft.
Brooks, forced out as CEO a year before his 2007 arrest, has been on trial for nearly six months in Central Islip, N.Y. on federal fraud and conspiracy charges. A writer for Vanity Fair has called it “the year’s most entertaining trial you’ve probably never heard of.”
The grand jury’s 61-page indictment describes a corporate chieftain gone wild. It boils down to this: Brooks looted his publicly traded company and burned through its cash like it was Monopoly money.
Point Blank, once known as DHB Industries, is a leading manufacturer of “bullet, fragmentation and stab resistant apparel and related ballistic accessories.” Its products are used by U.S. soldiers in Iraq and Afghanistan, as well as federal and state agents and local police.
In the middle of the trial, Point Blank filed for Chapter 11 bankruptcy protection in Wilmington, Delaware claiming assets of $64 million and debts of $68.5 million. The company blamed the filing on tight credit and “legal issues from former management” that it said were costing it $600,000 a month in legal fees.
Point Blank, which once employed about 1,500 people, had 920 employees at the end of last year. Its stock, which once traded as high as $20 on the American Stock Exchange, now sells for 25 cents on the pink sheets. You can see Point Blank’s website here.
Court records lay out Brook’s over-the-top lifestyle. He owned a Lear Jet, took fabulous vacations, threw lavish parties, paid for his then-wife’s facelift. He bought dozens of racehorses, a fleet of luxury cars and a treasure chest of showy jewelry – including a $100,000 diamond, ruby and sapphire-studded belt buckle in the shape of an American flag.
Brooks apparently had a kinky side, too. He used company money to hire prostitutes to service Point Blank’s board of directors, and spent more than $1,000 a month buying “large amounts of pornography for his son,” according to court papers filed by Assistant U.S. Attorney Christopher A. Ott.
Brooks, who faces more than 100 years in prison if convicted, now spends big on about three dozen lawyers. Court records indicate his legal tab is upward of $25 million a year.
The trial, which began Jan. 20, has been awash in waves of rancor. In April, Brooks was cited for contempt of court by Judge Joanna Seybert. In May, the judge threatened one defense lawyer with sanctions for being disrespectful, according to Newsday.
The government says Brooks, trading on inside information, made $185.3 million when he sold at the stock’s high of about $20 a share in 2004. He and other company officials allegedly dumped the stock after pumping it up with rosy forecasts and phony asset valuations that made the operation appear more profitable that it actually was.
“The goal of this scheme was to ensure that DHB consistently reported gross profit margins of 27 percent or more and increased earnings, to correspond to the expectations of professional stock analysts,” government court filings say.
Co-defendant Sandra Hatfield, Point Blank’s ex-chief operating officer, made around $5 million in the same insider scheme, the government says.
They and Point Blank chief financial officer Dawn Schlegel managed to cover up what they were doing for a time by making fraudulent entries in the company’s books and lying to auditors, the government says.
Schlegel later became a key witness against her former colleagues. She pleaded guilty to conspiracy to defraud the government and conspiracy to conceal tax information and faces 10 years in prison.
Hatfield, a former Pompano Beach resident, remains free on bond. But Brooks, who owns an oceanfront condo in Boca Raton, has been jailed since a week before the trial started.
Brooks had been released on a whopping $400 million bond in early 2008. That bond was revoked, however, after the FBI convinced the judge that Brooks had violated the conditions of bond by secretly transferring up to $300 million into bank accounts in San Marino, a tiny independent state within Italy.
Brooks’ lead defense counsel, Kenneth Ravenell of Baltimore, Md., declined comment.
The case is expected to go to a jury later this month.