Three former directors of DHB Industries Inc. will pay more than $1.6 million to resolve U.S. Securities and Exchange Commission claims over their roles in an accounting fraud at the military body-armor supplier.
Cary Chasin, Jerome Krantz and Gary Nadelman would be permanently barred from serving as public-company officers or directors under terms of the settlement, the SEC said today in a statement. The accords are subject to court approval.
“These directors failed to comply with their responsibilities by ignoring the repeated red flags of the massive accounting fraud that senior management orchestrated at DHB,” SEC Miami Regional Director Eric Bustillo said in the statement. “While we won’t second guess the good-faith efforts of most company directors, we will hold accountable those who completely abdicate the duties they owe to the companies and shareholders they represent.”
The SEC previously sued ex-DHB Chief Executive Officer David Brooks and two other former company officers for their roles in the fraud. The civil claims have been stayed pending resolution of criminal actions filed by the U.S. Attorney’s Office for the Eastern District of New York.
“Mr. Nadelman has accepted responsibility and is relieved to put this unfortunate chapter behind him,” Robert C. Gottlieb, his New York-based attorney, said in an e-mail.
Paul Hugel, an attorney for Chasin at Clayman & Rosenberg LLP, echoed that statement in a separate e-mail.
“Cary has settled the case the SEC without admitting or denying the allegations,” Hugel wrote. “He is happy to put this case behind him and move on with his life.”
An e-mail message seeking comment from Krantz’s lawyer wasn’t returned.
DHB changed its name to Point Blank Solutions in October 2007, the same month Brooks, former Chief Operating Officer Sandra Hatfield and former Chief Financial Officer Dawn Schlegel were indicted on fraud charges.
The company, which filed for bankruptcy in April 2010, won court approval last month to sell almost all of its assets to an affiliate of Sun Capital Partners Inc. for $36.6 million.