David Brooks Indicted for Securities Fraud, Tax Fraud

David Brooks, a former chief executive of body-armor maker DHB Industries Inc, faces criminal securities fraud charges; he was released on $400 million bails.

DHB Industries is now known as Point Blank Solutions Inc PBSO.PK and has new management. The U.S. Attorney’s office in Brooklyn, which is prosecuting the case, has accused Brooks and former DHB Chief Operating Officer Sandra Hatfield of improperly altering the company’s books to increase earnings and profit margins.

Brooks was charged in October with securities fraud, insider trading, tax evasion and other offenses. Federal prosecutors contend he improperly inflated corporate profits and made the company pay for personal expenses.

In a written order issued Thursday, Judge Joanna Seybert in U.S. district court in Brooklyn, New York, agreed to release Brooks on a $400 million bond co-signed by several family members and secured by $48 million in assets. Brooks was ordered to home confinement while he awaits trial.

“David is pleased to be able to spend time with his family and with his lawyers to begin preparing his defense,” asserted his federal criminal defense lawyer, Paul Shechtman.

Tax evasion is covered under 26 U.S.C. ยง 7201 and in that statute it states that it is a crime for any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.

To prove a federal criminal securities fraud case, the government must prove beyond a reasonable doubt that: 1)the defendant used a device or scheme to defraud someone, made an untrue statement of a material fact, or failed to disclose a material fact which resulted in making the defendant’s statements misleading; 2) the defendant’s acts were, or failure to disclose was, in connection with the purchase or sale of securities; the defendant used the mail or telephone in connection with these acts or this failure to disclose, and the defendant acted for the purpose of defrauding buyers or sellers of securities. If the government successfully convicts the defendant on securities fraud charges, the defendant can be fined up to $1,000,000 (up to $5,000,000 if a corporation), imprisoned for up to 10 years, or both.

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