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David Brooks arrested for tax and securities fraud

October 25, 2007
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Standardbred owner David Brooks (Perfect World Enterprises) was reportedly arrested Thursday morning at his home in Manhattan by FBI and IRS agents for tax and securities fraud in connection to an investigation into his company DHB Industries. Bloomberg News is reporting that the FBI alleges Brooks planned to siphon off company assets to buy expensive cars and racehorses, and the 54 year old is also charged with lying about inventory and the value of the company.

 

DHB Industries produces body armor for use by the police and the military, and it had a contract to produce body armor for the U.S. military. Last year DHB Industries reached a $35 million settlement with its shareholders and it also acquiesced to corporate governance changes to resolve a second investor suit filed on behalf of the company.

 

Brooks resigned his position as CEO of DHB Industries at the time of the settlements. Two former DHB executives were also indicted last year for allegedly inflating company earnings.

 

If convicted of securities fraud, Brooks could face a prison term of up to 25 years and fines of at least $250,000. According to the Bloomberg report, the government is also seeking forfeiture of about $8 million in illicit profits made from insider trading.

 

Perfect World Enterprises has owned several of the sport’s top stars in recent years, including 2004 Little Brown Jug winner Timesareachanging, who was also voted Dan Patch Award honors as the best of his division that year. Perfect World also owned Western Terror, who finished in first-place dead heat with Timesareachanging in the 2004 Cane Pace. Included among other standout horses it owned are the 2003 Two-Year-Old Colt Pacer of the Year I Am A Fool, Grinfromeartoear and PB Bullville.

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