$143 million to be used to repay scammed investors

More than $143 million, seized from the late owner of a Westbury body armor firm who was convicted of masterminding a massive stock fraud scheme to fund his lavish lifestyle, will be used to compensate victims, federal prosecutors announced Monday.

U.S. District Court Judge Joanna Seybert entered an order forfeiting proceeds seized from David Brooks, the founder and chief executive officer of DHB Industries. The civil forfeiture is the largest recovered by the U.S. Attorney's Office for the Eastern District of New York.

“This case demonstrates the critical role that civil forfeiture plays in depriving criminals of their ill-gotten gains and putting those funds back in the hands of victims,” said U.S. Attorney for the Eastern District Richard Donoghue. "Brooks’ sentence, which justly included criminal forfeiture and victim restitution, was frustrated for reasons having nothing to do with his well-established guilt. While justice may have been delayed, it will not be denied."

A federal jury in 2010 convicted Brooks in a 17-count indictment that included conspiracy; securities, wire and mail fraud; insider trading and obstruction of justice. Brooks subsequently pleaded guilty to filing false tax returns and was sentenced to 17 years in prison. The court ordered that his seized assets be used to pay forfeiture and victim restitution.

Prosecutors said Brooks looted $6 million from his company and made $185 million by inflating the stock price of his company, which sold body armor for U.S. troops and bullet-resistant vests to police departments. 

He used the money to fund a lavish lifestyle, from an $8 million bat mitzvah for his daughter to a $101,000 belt buckle in the shape of an American flag, encrusted with diamonds, rubies and sapphires, prosecutors said.

Brooks, who was appealing his conviction, died in 2016 at a federal prison in Danbury, Connecticut, causing his fraud convictions and sentence to be vacated. While a federal appeals court ruled that Brooks' death effectively erased more than $165 million in criminal penalties and victim restitution, federal prosecutors continued to pursue a civil forfeiture action that would produce a fund for the victims.

A consent decree, signed last week by federal prosecutors and attorneys representing Brooks, his estate, family members, trusts and shell companies, settled the remaining claims. The global settlement agreement, prosecutors said, will compensate nearly 90 percent of the approved losses suffered by DHB investors.

“Today’s civil forfeiture order effectively reinstates the financial sanctions imposed on Brooks and will allow the government to compensate Brooks’ victims for the bulk of their losses," said FBI Assistant Director-in-Charge William Sweeney Jr. 

The forfeited "looted assets," detailed in the final consent decree, include a 2006 Bentley, a 2005 Ferrari, jewelry and a commissioned replica of the Wall Street "Charging Bull" statue. The Brooks family will be allowed to keep seven items seized by the government, including the diamond-encrusted belt buckle and a "lips and tongue charm" paved with rubies and diamonds, documents show.

Richard Klugh, Brooks' Miami-based federal appeals attorney, did not respond to a request for comment. Attorneys representing Brooks' family and trusts also did not respond to requests for comment.

In July 2006, DHB relocated its headquarters from Westbury to Pompano Beach, Florida. The next year, the company changed its name to Point Blank Enterprises Inc. A Point Blank attorney did not respond to a request for comment.

By Robert Brodsky

robert.brodsky@newsday.com@BrodskyRobert

Robert Brodsky is a breaking news reporter who has worked at Newsday since 2011. He is a Queens College and American University alum.