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Exclusive! First-hand report on David Brooks trial!

January 26, 2010

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Steve Kallas, a New York attorney, longtime Standardbred owner, and correspondent for The Horseman and Fair World magazine, attended the opening day of the trial of David Brooks on Monday and has filed the following report.
Assistant United States Attorney Richard Lunger stood before 20 jurors on Monday morning at 10:55 in Courtroom 1030 in United States District Court in Central Islip, NY, on Long Island and began his opening statement in United States v. Brooks and Hatfield by simply stating that this is a case about “the naked greed of two people” and “the lies and fraud they used to justify that greed.”
In a 45-minute opening statement, Lunger gave the government’s side of this prosecution, essentially that defendant David Brooks “cooked the companies books” and spent millions of dollars for lavish vacations, expensive jewelry and, yes, the funding of millions of dollars for his personal horse business through DHB Industries (“DHB”) and other related entities. 
Luger described a massive scheme to eventually coordinate a “massive sell-off” where defendant Brooks would sell his DHB stock for $185 million just before the stock price plummeted.
Lunger pounded home the notion of Brooks’s lavish lifestyle, stating that Brooks “spent the company’s money lavishly” and then tried “to cover it up.”  The prosecutor went on to say that “DHB paid money to fund Brooks’ personal horse racing business” and that Brooks never told DHB’s shareholders. 
Later on in his opening, the prosecutor also went into some detail about Tactical Armor Products Inc. (“TAP”), a private company owned by Terry Brooks, the wife of defendant Brooks,that did a lot of business with DHB, allegedly making ballistic resistant apparel.  According to the prosecutor, TAP made extraordinary amounts of profit and David Brooks siphoned off about $14 million to pay his horse expenses, including:
1) $6,000,000 to purchase horses;

2) $2,000,000 to pay horse trainers;

3) $1,800,000 to pay “horse groomers”; and

4) $1,000,000 in vet bills.

The prosecutor told the jury that TAP was used as “the main tool” for Mr. Brooks “to pay for his horses.”

Brooks’s Attorney Makes His Opening

After a brief recess, David Brooks’s lead trial attorney, Kenneth Ravenell, a top criminal defense attorney in Baltimore, began his opening statement by telling the jury that “there are two sides to every story.”  During his approximately 90-minute opening, he spoke of how Brooks grew up with a sickly father and brother and how he had to start working at 14 by “grooming horses” (according to Mr. Ravenell, that’s where Mr. Brooks discovered horse racing).  By 16, Brooks was trading stocks and learning that business, all the while learning the “value of hard work” at an early age.

Eventually, Brooks went to New York University while working evenings and, over time, became a very successful and wealthy man.  Even the government admits, according to Mr. Ravenell, that “Mr. Brooks was a wealthy man" before he acquired DHB.

A Key Early Document

Ravenell showed the jury a document that seems to be the main basis for part of the defense: a 1997 corporate resolution that states that Brooks could spend company money for business or personal expenses.  Thus, according to the defense, Brooks had permission to spend DHB’s money lavishly for his own purposes. Whether this document is viewed to be real or fake will be a big issue in this case.

According to Ravenell in his opening remarks, the abovementioned TAP started business in 1999, and it not only sewed vests for DHB but it also made “horse saddle pads and horse accessories.”  Furthermore, according to the defense, owner Terry Brooks could do whatever she wanted with all the profits of TAP which, unlike DHB, was a privately-held company.

First Witness And the $101,190 Belt Buckle

The first witness called to the stand was an employee of an upscale New York City store who was there to authenticate various purchases that Brooks allegedly made with a DHB corporate American Express card.  Indeed, the $101,190 “Belt Buckle Studded with Diamonds, Rubies and Sapphires” (according to the indictment) shaped in the form of the American flag, was purchased by Brooks on Aug. 6, 2002, in Manhattan. It appeared to be the same belt buckle Brooks was wearing when he posed in the winner’s circle after his horse Timesareachanging won the 2004 Little Brown Jug.

The government, for emphasis, put up two photos on a huge screen and other monitors--a close-up of the buckle itself and a picture of Brooks wearing the belt buckle.  For further emphasis, prosecutor Christopher Caffarone asked Judge Joanna Seybert permission to give the belt buckle to the jurors to look at and hold.  Such permission was granted and the jury saw first-hand the expensive belt buckle and other pieces of jewelry allegedly bought by Brooks.

Brooks Still In Jail

After the jury was dismissed for the day, Ravenell again asked the court to set conditions so that Brooks could be released from jail during his trial.  As of Monday evening, Judge Seybert denied that request because, according to the judge, Brooks “has already violated his bail release order” and “has conspired to hide assets in San Marino” in Europe. Ravenell will be allowed to argue this request further in the coming days but, as of Monday evening, Jan. 25, Brooks could not go home.

Horsemen Expected To Testify

According to defense counsel Ravenell, this case will “take a few months,” as he told the jury during his opening.  A prosecutor told The Horseman that the trial is anticipated “to take 20 weeks, maybe a little shorter.”

Apparently, some horsemen--at least one trainer and one horse agent--will be called to testify in the first week of trial.
The trial was scheduled to resume on Tuesday, Jan. 26, at 2 pm.--By Steve Kallas 
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