Important Court Dates for Securities Fraud Case Set for January

Westbury, NYA so-called "pump-and-dump" stock fraud scheme that allegedly helped furnish a luxurious lifestyle for the former chairman and chief executive of DHB Industries will have another day in court early in the new year. The securities fraud litigation alleges that David H. Brooks was involved in fraudulently draining millions from the business, according to the December 31 issue of Newsday.

Brooks founded and formerly headed DHB Industries, a body armor company originally based in the Westbury area of New York but now headquartered in Florida under the name Point Blank Solutions Inc. Brooks left the company in 2006 after being charged with numerous counts of tax, accounting and securities fraud.

According to Newsday, Brooks earned $185 million in 2004 by knowingly making false claims about the company in an assumed effort to pump up the value of its stock. Brooks reportedly pleaded not guilty to the charges and, according to Newsday, is currently under house arrest in his Manhattan apartment.

He is scheduled to go on trial for criminal charges in late January. Another court dated related to the case is set for January 15.

Last August, shareholders settled another class action lawsuit against the company and Brooks for $35 million. However, US District Judge Joanna Seybert made the order of payment against DHB Industries, not Brooks, the alleged perpetrator of the securities fraud. As a result, an appeal has been launched with the intent of holding Brooks liable for the $35 million settlement. A federal appeals court in Manhattan will hear the appeal prior to the start of Brooks' criminal trial.

A lawyer involved in the case told Newsday that the appeal would be a worthy test of the Sarbanes-Oxley Act, which dictates a higher accountability from company executives. DHB had indemnified Brooks from having to make the payment. Sarbanes-Oxley requires chief executives and chief financial officers to forgo their stock market profits earned during periods when certified financial statements have been falsified, as prosecutors allege.

In indemnifying Brooks, the company is accused of flouting the law.

DHB, now doing business as Point Blank Solutions, is the largest manufacturer of protective body armor in the US for troops currently stationed in Iraq and Afghanistan.