Former employees testify about fraud in DHB case

Regular rigging of the financial records at David Brooks' body-armor business was a way-of-life in order to ensure high profits, a former executive there testified Wednesday.

"I was told [they] needed a specific gross profit. . . . I just threw in numbers," Rhonda Graves, the former chief operations manager of Point Blank testified yesterday in federal court in Central Islip. "Some of them were accurate . . . others I created."

Point Blank was the subsidiary of Brooks' DHB Industries Inc. that manufactured most of the body armor for the U.S. military in Iraq and Afghanistan.

Graves, who was testifying under a grant of immunity from the government and is now a graduate student at Stony Brook University, said her instructions came from the company's then-chief operating officer, Sandra Hatfield.

Hatfield and Brooks are charged with fraud in a number of schemes, including inflating the company's profit to pump up the value of its stock and then selling their shares before their value collapsed. Brooks allegedly made $185 million through the scheme, according to federal prosecutors, and Hatfield, $5 million. Both Hatfield and Brooks maintain they are not guilty and their actions were legitimate.

Under questioning by Assistant U.S. Attorney Christopher Caffarone, Graves conceded that, whatever financial manipulations were going on, Hatfield was "absolutely" committed to producing a quality product for U.S. troops.

The principal scheme used to inflate the company's value that Graves testified to yesterday was to vastly to exaggerate the worth of the inventory of body armor.

The previous government witness in the case, former controller Travis Brooks, has testified that he quit because he believed the company's inventory was exaggerated in financial reports by $15 million to $17 million.

Earlier in the day, Travis Brooks acknowledged in questioning by Brooks' lead defense attorney Kenneth Ravenell that he had kept company records in violation of his confidentiality agreement and eventually turned them over to federal prosecutors and the Securities and Exchange Commission.

But Travis Brooks, who is no relation to the defendant, said he did so because he thought some of the business' techniques were "fraudulent." And he kept copies of the records to "protect myself" in case his word should ever be questioned.