Brooks, Hatfield convicted in stock fraud scheme

Body-armor magnate David Brooks was convicted of all 17 counts against him after a trial in federal court on charges that he orchestrated a massive stock fraud scheme, and his co-defendant, Sandra Hatfield, was found guilty of 14 of the 16 counts against her.

Brooks and Hatfield were each charged in a 16-count indictment with conspiracy; securities, wire and mail fraud; insider trading; and obstruction of justice. In addition, Brooks was charged with a 17th count - lying to auditors. Hatfield was acquitted of the mail and wire fraud charges.

Both face 25-year maximum sentences on many counts.

The case was a joint investigation of the FBI and the IRS. Brooks had been accused by federal prosecutors of siphoning $6 million from his DHB Industries for purely personal, and, at times, over-the-top expenses. Brooks also was accused of illegally making $185 million through a stock scheme. Hatfield, the former chief operating officer of DHB, was accused of making $5 million through the stock scheme.

The Central Islip trial, probably the longest in memory in the Eastern District, lasted eight months, and the jury - six women and five men - deliberated for 14 days.

Federal prosecutors Christopher Ott, Richard Lunger, and Christopher Caffarone declined to comment on the verdict, as did Brooks' lead defense attorney, Kenneth Ravenell. Hatfield's attorneys, Maurice Sercarz and Roland Riopelle, also declined to comment.

Brooks had built the Westbury-based company into a major manufacturer of body armor. Prosecutors did not claim that any of the body armor was defective, and testimony showed that Hatfield was obsessed with producing a quality product for U.S. soldiers.

Bizarre twist to average case

Before his arrest, Brooks' public notoriety was confined to media reports of the lavish bat mitzvah he threw for his daughter Elizabeth in 2005 that cost between $8 million and $10 million.

The government's charges were not untypical for white-collar cases - involving allegations of a pump-and-dump stock scheme and the theft of company money to pay for personal expenses.

The stock scheme allegedly involved inflating the value of the company stock from about $2 to $20 a share through a number of techniques, including vastly inflating the company's inventory of body armor.

But the money involved - almost $200 million - revelations of Brooks' over-the-top lifestyle and increasingly unusual courtroom sideshows combined to make the trial among the more bizarre in memory.

For instance, Brooks was accused of using company money illegally to purchase a $101,000 belt buckle in the shape of an American flag, encrusted with diamonds, rubies and sapphires.

And it's not every day that an FBI agent walks into a courtroom in the middle of a trial and seizes the contents of a defendant's wastebasket as part of a still-ongoing investigation into whether Brooks tampered with the jury.

Or the defense asserts that the payment of company money to prostitutes might be an acceptable technique to motivate employees.

Or the defendant says he is entitled to have his company pay for the grave of his mother, plastic surgery for his former wife, camp tuition for his children, flights between Atlanta and Madison, Wisc., so a daughter could attend a Halloween party, or allegedly drain millions of dollars off through a shell company to pay for the upkeep of his harness stable - the largest such stable in North America.

In their defense

Defense attorneys said Brooks was entitled to the money for personal expenses through agreements approved by company officers, and that Hatfield and Brooks had built the company and earned the money from their stock sales.

Prosecutors said the documents involving personal expenses were forgeries and scoffed at the idea that the defendants were patriots providing quality goods for the military.

"And now they have the audacity to come before you and talk about how they protect soldiers . . . Wrapping themselves in the American flag," said prosecutor Christopher Caffarone.

"There's only one American flag that Mr. Brooks cared about. This one. The one encrusted with diamonds and rubies and sapphires," Caffarone said holding up the $101,000 belt buckle. "And Mrs. Hatfield stood by him at every step."