DHB Industries Founder/Chairman David H. Brooks was placed on indefinite "administrative leave" Monday (July 10) by the company's board while DHB is being investigated for state, federal, and internal inquiries.
In a federal lawsuit filed by DHB shareholders, Brooks is cited for "a history of serious securities law violations," as well as making "false and misleading statements" to boost the stock's value.
New York Newsday reports that critics were further angered by reports that Brooks spent nearly $10 million on a November 2005 bat mitzvah party for his daughter at Manhattan's Rainbow Room.
The event included performances by 50 Cent and Aerosmith frontman Steven Tyler.
Brooks will continue to be on leave pending the outcome of the investigation, according to the company. DHB, a Westbury, N.Y.,-based body armor manufacturer, is at the center of investigations by the Securities and Exchange Commission and the U.S. attorney's office in Brooklyn for a possible "pump and dump" scheme by senior executives.
In the meantime, the company has installed DHB president Larry Ellis as acting chief executive and board member William Campbell as chairman, a DHB statement said.
"All of us at DHB are working diligently to address the issues at hand and restore confidence in our company and its leadership," said, Ellis, a retired four-star general, via a statement. "Collaboratively, with the support of the talented and committed leaders or our organization, it is our goal to restore shareholder value over the long term."
Authorities began looking more closely at the company after shareholders filed a series of lawsuits when DHB revealed a year ago that its top executives made $200 million when trading in shares. The bulk of the money went to Brooks.
Late last month, the company's stock was delisted from the American Stock Exchange after missing several filing deadlines for annual and quarterly reports, according to Newsday.
The paper also reports that DHB contracted for a new finance chief and two other executives from the Manhattan-based turnaround firm AlixPartners.