Aug. 9 (Bloomberg) -- David Brooks, a founder and former chief executive officer of military contractor Point Blank Solutions Inc., will plead guilty to tax charges, his lawyer said.
A federal jury found Brooks guilty last year of committing a $185 million fraud and looting the company, formerly called DHB Industries Inc., to pay for personal expenses. Three tax counts were separated from the other charges he was convicted of, including insider-trading, fraud and obstruction of justice. He has asked for a new trial on those charges.
“We are channeling our efforts into the other counts,” Brooks’s lawyer Gerald L. Shargel said in a phone interview today.
Brooks, 56, and former Chief Operating Officer Sandra Hatfield were convicted last September in Central Islip, New York. Point Blank, which makes body armor for the military and police, filed for bankruptcy protection in April 2010. Brooks and Hatfield lied about the inventory of “Interceptor” combat vests that were shipped to the U.S. armed forces and falsely inflated the company’s value and their own stock, the government said.
Robert Nardoza, a spokesman for U.S. Attorney Loretta Lynch in Brooklyn, New York, declined to comment on tomorrow’s plea hearing.
In 2009, U.S. District Judge Joanna Seybert in Central Islip, severed from Brooks’s case one count of conspiracy to defraud the U.S. and two counts of filing a false tax return because they weren’t sufficiently related to the other charges, she said.
Brooks was accused of failing to report $189,400 in dividend and interest payments in 2003 and $762,500 in compensation in 2004.
Brooks hasn’t been sentenced yet. He faces as long as 25 years in prison on the most serious counts of securities fraud, conspiracy to commit securities fraud and insider trading.
Brooks earned $185 million in the scheme while Hatfield earned $5 million, according to prosecutors. Brooks spent company funds “lavishly” on perks and expenses for himself and his family, including purchases of a Bentley and a Ferrari and grooming of 100 purebred trotting horses, Assistant U.S. Attorney Richard Lunger told jurors in his opening statement at the trial in January 2010.
The scheme took place from July 2000 to July 2006, according to the government. In July 2006, DHB moved its headquarters from Westbury, New York, to Pompano Beach, Florida.
Seybert, who had previously granted Brooks’s release on $400 million bond, in January 2010 ordered him into custody after she found that he had concealed millions of dollars in overseas accounts.
The case is U.S. v. Brooks, 06-CR-550, U.S. District Court, Eastern District of New York (Central Islip).
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