DHB Industries, the supplier of body armour to the US military, was charged today by the SEC for engaging in a ‘massive accounting fraud,’ according to the federal watchdog.
The commission separately charged three of the Miami-based company’s former outside directors and audit committee members, Jerome Krantz, Cary Chasin, and Gary Nadelman, for being ‘wilfully blind to numerous red flags signaling the accounting fraud’ that resulted in the company’s payments for the former CEO David Brooks’ luxury cars, jewelry, real estate, art and prostitution services, the SEC said.
The SEC alleges that executives of the company, now known as Point Blank Solutions, tampered with key figures such as gross profit and net income in the earnings releases and filings between 2003 and 2005. Brooks, who has previously been charged by the agency, managed to funnel at least $10 million out of the company by conducting fraudulent transactions.
‘As the fraud swirled around them, Krantz, Chasin, and Nadelman ignored the obvious and submitted to the directives and decisions of DHB’s senior management while themselves profiting from sales of the company’s securities,’ says Eric Bustillo, director at the agency’s Miami office.
The company is currently in bankruptcy and its settlement with the SEC is pending bankruptcy court approval.
‘In regard to the SEC’s recent charges, all stem from the actions of officers or directors who are no longer affiliated with our company and haven’t been for several years,’ a company spokesperson claims.