Ex-DHB exec in trouble again over contraband pens

David Brooks' fondness for pens has gotten him into trouble, again.

The former body-armor magnate recently lost his commissary privileges for a month at the federal jail in Brooklyn after he was discovered to have contraband pens, according to Gerald Shargel, one of his attorneys.

Brooks, who was convicted of conspiracy, fraud and insider trading, previously has been in difficulty because he objects to jail-issued pens, which are hard to grip because they are very flexible in order to prevent them from being used as weapons.

News of the contraband pens was disclosed Monday in federal court in Central Islip as an aside at a hearing to determine how much of the $185.9 million Brooks gained through insider trading at his former Westbury-based company, DHB Industries, is to be forfeited to the government.

Also at issue at the hearing before U.S. District Judge Joanna Seybert is how much of the $5.9 million gained by Sandra Hatfield, Brooks' convicted co-defendant and former DHB chief operating officer, is to be forfeited.

In addition to the forfeiture, Seybert also will eventually determine how much of the money will be returned to stockholder victims.

Assistant U.S. Attorney James Knapp and Judd Burstein, another of Brooks' attorneys, sparred Monday over the testimony of the chief government witness at the hearing, Lawrence Harris, a finance professor at the University of Southern California.

Harris admitted that there was no single way to determine how much of the DHB stock price was the result of the fraudulent activities of Brooks and Hatfield. Brooks sold 9.5 million shares of DHB stock between November and December 2004 and Hatfield 270,000 shares.

Using four different standard accounting techniques, Harris said under questioning by Knapp that Brooks' fraudulent gains from the sale of the stock ranged from $85 million to $138 million, while Hatfield's ranged from $2.5 million to $3.9 million.

Averaging out the results of the techniques and weighting them for their reliability, Harris estimated that Brooks illegally made $95.8 million through his manipulation of DHB's accounting and Hatfield $2.7 million.

But Burstein got Harris to acknowledge a number of problems in the techniques he used, as well as some mathematical errors in his calculations, and the inclusion of more than $6 million in an inventory fraud that occurred after the sale of the stock.

The hearing procedure did not permit Harris to talk about what the value of the stock would have been, and who would have bought any shares, if the investing public had known about the various frauds that Brooks and Hatfield are convicted of.

"They're only talking about the nose of the elephant, not its entire body," said David Cohen, a former DHB attorney, who is suing Brooks for $588,000.