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Ex-DHB chief Brooks looted company, jurors told

Ex DHB executives David Brooks and Sandra Hatfield

Ex DHB executives David Brooks and Sandra Hatfield are being tried together in federal court in Central Islip. The two are accused of insider trading in an alleged $190 million scheme. In opening arguments, a federal prosecutor said they lied to push up the company?s stock price. Credit: Brooks, Howard Schnapp, 2008; Hatfield, Newsday / Alan Raia, 2007

A legal marathon that will decide whether the chief executive of a former Westbury body armor company was spectacularly -- and criminally -- greedy or a hard worker who deserved the lavish compensation he got began Monday in federal court in Central Islip.

David Brooks ran DHB Industries, one of the largest manufacturers of body armor for the military. He and his former chief operating officer, Sandra Hatfield, are charged with conspiracy, and securities, mail and wire fraud, among other financial crimes. Their trial is expected to last weeks, if not months.

"This is a case about the naked greed of two people -- Sandra Hatfield and David Brooks -- and the lies and fraud they committed," federal prosecutor Richard Lunger said to jurors and Judge Joanna Seybert.

Brooks and Hatfield deny the allegations.

Lunger said the two worked together to inflate inventory and manipulate earnings, all to make the company's gross profit margin seem bigger than it was. That kept the stock artificially high until they cashed out in 2004, he said. That netted Brooks a windfall of $185 million; Hatfield got more than $5 million, according to the U.S. attorney's office.

But even before then, Lunger said, Brooks' appetite for the company's cash was over the top.

Showing photos on multiple screens in the courtroom, he told jurors about Brooks' $101,000 diamond-encrusted belt buckle, a Bentley automobile, lavish vacations to Europe and the Caribbean, prostitutes and even plane trips for his daughter from Atlanta to Wisconsin so she could attend Halloween parties -- all paid for by shareholders.

Even leather-bound invitations for his son's bar mitzvah were classified as advertising and paid for by the company, Lunger said.

"David Brooks treated the company's bank accounts as if they were his own personal accounts," Lunger said.

But defense attorneys say prosecutors are badly misinterpreting what happened at a company that grew frenetically after 9/11 and wars in Afghanistan and Iraq increased its business.

Brooks' attorney, Kenneth Ravenell of Baltimore, said DHB "made a good product, and he's proud of it."

He said the company, which in 2006 moved its headquarters to Pompano Beach, Fla., and operates under Point Blank Solutions Inc., recognized his dedication as far back as 1997 and decided to compensate him for all personal expenses.

Lunger maintains the document showing that agreement is fake, but Ravenell said Lunger has to say that. "They say that's fraudulent, because it destroys their case," Ravenell said. "Mr. Brooks was entitled to what he received, and there was a reason why he got it."

Both Ravenell and Hatfield attorney Roland Riopelle described their clients as devoted to the company, but overmatched as it grew rapidly.

Dawn Schleigel, the company's former chief financial officer, has pleaded guilty and will testify against both defendants. Both defense attorneys said any fraud was concocted by Schleigel, and that she is cooperating to limit her prison time.

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