Friday, September 17, 2010

At Military Contractor’s Trial, a $100,000 Buckle

Several years ago, David H. Brooks, the chief executive and chairman of a body-armor company enriched by United States military contracts, became fixated on the idea of a memory-erasing pill.

It was not just fanciful curiosity. A veterinarian who cared for his stable of racehorses said Mr. Brooks continually talked about the subject, pressing him repeatedly to supply the pill. According to Dr. Seth Fishman, the veterinarian, Mr. Brooks said he had a specific recipient in mind: Dawn Schlegel, the former chief financial officer of the company he led until 2006, DHB Industries.

There is no memory-erasing pill. And so Mr. Brooks sat and listened this year as Ms. Schlegel, her memory apparently intact and keen, spent 23 days testifying against him in a highly unusual trial in United States District Court on Long Island that has been highlighted by sweeping accusations of fraud, insider trading, and company-financed personal extravagance.

DHB, which specialized in making body armor used by the military in Iraq and Afghanistan, paid for more than $6 million in personal expenses on behalf of Mr. Brooks, covering items as expensive as luxury cars and as prosaic as party invitations, Ms. Schlegel testified.

Also included were university textbooks for his daughter, pornographic videos for his son, plastic surgery for his wife, a burial plot for his mother, prostitutes for his employees, and, for him, a $100,000 American-flag belt buckle encrusted with rubies, sapphires and diamonds.

The expense-account abuse, the prosecution has said, represented a pittance compared with the $190 million that Mr. Brooks and another top employee are accused of making through a stock fraud scheme in which he falsified information about his company’s performance — including significantly overstating the inventory of bulletproof vests — to inflate the price of the stock before selling his shares in 2004.

As a whole, the accusations might present just another cautionary tale of excess and entitlement in a powerful individual, but Mr. Brooks’s story stands out because of details and characters that give it the strange and sordid depth of a long-running soap opera.

“What makes it interesting isn’t that there is anything novel legally about it, but just how egregious this guy’s alleged behavior is, how gross the abuses are and how much greed is involved,” said Meredith R. Miller, an associate law professor at Touro College in Central Islip, N.Y. “Add in what the company does — the fact that this is a military contractor — and the facts are really interesting,” she said.

Lawyers for Mr. Brooks have repeatedly pressed for a mistrial, accusing the prosecution of highlighting irrelevant evidence to portray Mr. Brooks “as a sex-obsessed, tax-cheating boor.”

“The accumulation of titillating and scandalous evidence,” Mr. Brooks’s lawyers wrote in one court filing, “has become a centerpiece of the trial and has incurably prejudiced the jury.”

Despite the drama, the trial has largely been ignored outside Long Island, where the body-armor company used to be based.

In court in Central Islip on Monday, prosecutors provided jurors with a recap of seven months of testimony from more than 70 witnesses, and a lawyer for Mr. Brooks began his closing argument.

Christopher Ott, of the United States attorney’s office for the Eastern District of New York, said that although the facts of the case were complicated, Mr. Brooks was simply a thief.

Mr. Ott held up the belt buckle and declared, “Instead of a gun or a crowbar, they used a trick, a scheme.”

Mr. Brooks, who his lawyers have said is in a “tenuous emotional state,” has watched much of the proceedings with glassy eyes and a nervous demeanor.

The diminished appearance bore little resemblance to the image of the man who bought a business out of bankruptcy and transformed it into one of the nation’s largest manufacturers of body armor for law enforcement and the military.

That was the man who told investors, “Adversity and challenges have been confronted and defeated,” and who threw his daughter a multimillion-dollar bat mitzvah party featuring performances from the rapper 50 Cent and the rock group Aerosmith, even as federal investigations into his actions were widening and his business was crumbling.

A lawyer for Mr. Brooks, Kenneth Ravenell, told the jury on Monday afternoon that his client represented the realization of the American dream, someone who made money while helping his country “when the military called.”

Mr. Brooks has not disputed that many of his personal expenses were paid for by the company, but his lawyers have maintained that the practice was authorized.

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