Lawsuit Settled by Three Former Directors at Military Body Armor Supplier
Three former directors have agreed to more than $1.6 million in monetary sanctions to settle charges by the US Securities and Exchange Commission alleging they were involved in an accounting fraud at a major supplier of body armor to the U.S. military and law enforcement agencies.
The settlements agreed to by Cary Chasin, Jerome Krantz and Gary Nadelman – former members of the board of directors at Pompano Beach, Fla.-based DHB Industries – would impose permanent officer-and-director bars in addition to the monetary sanctions. The settlements are subject to court approval.
“These directors failed to comply with their responsibilities by ignoring the repeated red flags of the massive accounting fraud that senior management orchestrated at DHB,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.
“While we won’t second guess the good-faith efforts of most company directors, we will hold accountable those who completely abdicate the duties they owe to the companies and shareholders they represent.”
Earlier this year, the SEC separately charged DHB Industries and Chasin, Krantz and Nadelman. The SEC previously charged former DHB CEO David Brooks as well as two other former DHB senior officers for their roles in the fraud. DHB Industries is now known as Point Blank Solutions.
The proposed final judgments filed by the SEC in U.S. District Court for the Southern District of Florida would find Chasin liable for disgorgement of $100,000 plus prejudgment interest of $5,723 and a penalty of $100,000; Krantz liable for disgorgement of $375,000 plus prejudgment interest of $21,464 and a penalty of $100,000; and Nadelman liable for disgorgement of $820,000 plus prejudgment interest of $46,935 and a penalty of $100,000.
The proposed final judgments would bar Chasin, Krantz and Nadelman from acting as officers or directors of any issuer that has a class of securities registered pursuant to Section 12 and 15(d) of the Securities Exchange Act of 1934. Chasin, Krantz and Nadelman agreed to settle the SEC’s charges without admitting or denying the allegations.
The SEC’s civil litigation against Brooks and the other two former DHB officers is stayed pending the resolution of criminal actions filed against them by the U.S. Attorney’s Office for the Eastern District of New York.