How Capitalism Works

The David H. Brooks story hits on all the high notes of capitalist excess: taking advantage of investors, selling the Pentagon defective goods, an ostentatious life style, and perhaps even more.

Kessler, Robert E. 2007. “Former LI military Contractor Is Busted for Living Lavishly with Cash from Investors and Company, Feds Say.” Newsday (26 October): p. A 7.


“The former head of the Long Island company that provided most of the body armor for U.S. soldiers in Iraq and Afghanistan was arrested at dawn yesterday in a Manhattan apartment by FBI and IRS agents on charges of looting the company and investors of nearly $200 million to pay for a lavish lifestyle. That included supporting a stable of trotting horses; a face-lift for his wife; a diamond, ruby and sapphire-encrusted belt buckle in the shape of a U.S. flag; and an $8-million bat mitzvah for his daughter, which featured music stars including 50 Cent and Kenny G, according to Benton Campbell, the U.S. attorney for the eastern district.”

“Brooks allegedly made the huge stock option gain in 2004 by selling shares in the company shortly after he said he had no intention of selling the stock and shortly before the stock plunged because of reports about the quality of its body armor, the indictment said.”


“Brooks pleaded not guilty at arraignment in U.S. District Court in Central Islip and was held without bail by U.S. District Court Judge Joanna Seybert, pending a hearing Monday. Seybert acted after prosecutor Martin said that in the past year Brooks had purchased a single diamond worth $10 million, unspecified millions in gold and had surreptitiously moved $22 million to banks in Switzerland and Senegal. The United States does not have an extradition treaty with Senegal, Martin said.”


Brooks has a history of controversy: In 1992, Brooks and his brother, Jeffrey, are investigated by the Securities and Exchange Commission for insider trading scandal within Jeffrey Brooks’ small brokerage. The firm agrees to pay a $405,000 fine without admitting wrongdoing. In 2005, the company recalls all vests containing Zylon because of concerns over how quickly the fiber degrades. In 2006, DHB’s subsidiaries settle nationwide class-action suits over those vests.


O’Brien, Timothy L. 2006. “All’s Not Quiet on the Military Supply Front.” New York Times (22 January).

“DHB might have remained anonymous if not for a spate of recent events. The quality and adequacy of vests supplied to soldiers in Iraq has come into question over the last year, culminating in a Pentagon study, first reported by The New York Times this month, that said that 80 percent of the Marines who died in Iraq from upper-body wounds might have survived if they had had body armor covering more of their torsos. (It was the military, and not manufacturers, that determined the specifications for the vests DHB supplied the Marines, said DHB).”

“The Marines and the Army recalled about 23,000 Point Blank vests from the field last year after The Marine Corps Times reported that the Marines acquired the vests despite warnings from Army personnel that the vests had what the newspaper described as “critical, life-threatening flaws.” The Marine Corps issued a statement in November saying that there was “no evidence to suggest that soldiers or Marines have been at risk, or that these vests will not protect against the threat they were designed to defeat”.”


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