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Ex-CFO details Brooks' plots to hide expenses

Former DHB Industries chief financial officer Dawn Schlegel

Former DHB Industries chief financial officer Dawn Schlegel heads into arraignment in August 2006. She is now testifying for the prosecution in the trial of her former DHB boss David Brooks. Credit: Howard Schnapp, 2006

The chief financial officer for David Brooks' body-armor company said Monday that while Brooks ran the company with an iron fist, including making all financial decisions, he worked with her on a number of schemes to avoid revealing that the company illegally had paid for his personal expenses, including a $101,000 diamond-encrusted belt buckle in the shape of an American flag.

The CFO, Dawn Schlegel, also testified in federal court in Central Islip that Brooks was in total charge of Tactical Armor Products, ostensibly an independent Tennessee company that was run by Brooks former wife, Terry Brooks.

Federal prosecutors have said that TAP was actually a front David Brooks used to funnel as much as $16 million from his company, DHB Industries, which at the time was based in Westbury, to illegally support his stable of several hundred harness-racing horses.

Under questioning by assistant United States attorney Christopher Ott, Schlegel also said that none of the required legal documents filed by Brooks and DHB with the Securities and Exchange Commission ever mentioned that he was entitled to expenses of more than a maximum of $50,000 a year.

Brooks has been accused of conspiracy and fraud for allegedly looting his company for $5 million in personal expenses and illegally making another $185 million through stock fraud.

In her testimony, Schlegel also said that when independent auditors began to go over the books of DHB, Brooks and she regularly discussed how to conceal the millions of dollars in personal expenses.

Vacations by Brooks and his family to the Caribbean and Europe were explained as business expenses, plastic surgery for Brooks' former wife was hidden under health-insurance premiums, and invitations to the bat and bar mitzvahs of Brooks daughter and son were explained as company advertising, Schlegel said.

As for the $101,000 belt buckle, Schlegel it was paid for on one of Brooks voluminous credit card bills. She and Brooks agreed that they would not highlight it, believing it was unlikely that even a thorough audit would single it out among numerous other expenses.

For the second day of her testimony, Schlegel stared straight ahead at the jury across the courtroom directly in front of her. She did not look to her right where Brooks and his co-defendant, Sandra Hatfield, the former chief operating officer of DHB, sat.

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