Brooks Updates (3-15-10)

Recently news regarding the Brooks matter (suspensions, related litigation and actions by trade organizations/breed registry organizations) has been minimal. The latest news reported by Standardbred Canada is shown below.

More Wild Allegations In Brooks Trial

On Tuesday, March 9 in Central Islip, New York, there was more damaging testimony in the trial of ex-standardbred horse owner David Brooks, who is alleged to have erroneously inflated the worth of his bulletproof vest company, DHB Industries, in a ‘pump-and-dump’ scenario before personally cashing out to the tune of $185 million.

According to a report on newsday.com, former DHB Industries chief financial officer Dawn Schlegel has testified that Brooks directed her to issue company cheques for as much as $9,000 in cash to pay for prostitutes. The report states that, according to Schlegel, Brooks openly admitted to his bankers that such payments were used to pay for hookers. According to the article, the amount of money spent on the prostitutes was in the tens of thousands. The report also states that Brooks had a tent set up at a company party in Florida, and that prostitutes were in the tent. According to Schlegel, Brooks told her that her employees were welcome to participate in sexual conduct with the hookers in the tent. The article also stated that Schlegel said that the prostitute issue was discussed during DHB board meetings, yet any reference to the discussion was left off the official minutes. Schlegel also testified that at one point Brooks gave her confirmation that the money was indeed going towards prostitutes by getting one of DHB’s stockbrokers to describe an instance he had with one of the prostitutes.

In addition to the prostitute issue, Schlegel also testified that David Brooks personally obtained $2,500 a week via payments from the DHB Industries-owned company Tactical Armor Products. According to Schlegel, the $2,500-a-week payments were reportedly for a fictitious loan.

More Testimony At Brooks Trial

The most recent report from the ongoing trial of ex-standardbred horse owner David Brooks outlines alleged schemes which saw him benefit financially from his company. Books is on trial in Central Islip,

New York for having allegedly falsely inflated the worth of his bulletproof vest company, DHB Industries, in a ‘pump-and-dump’ scenario before personally cashing out to the tune of $185 million. Newsday.com has reported that Dawn Schlegel, the former Chief Financial Officer for Brooks’ DHB Industries, has testified that Brooks had the company pay for numerous seats for various events at Madison Square Garden. In turn, Brooks is alleged to have sold the tickets and pocketed the cash. According to the report, Schlegel also testified regarding personal expenses that Brooks billed to the company. The report refers a luxury box at MSG, a set of fine china in the six-figure range, and tuition that was paid for one of Brooks’ daughters to attend an Atlanta university. The article goes on to state that Schlegel has also testified regarding DHB Industries’ ex-Chief Operating Officer Sandra Hatfield, who is also on trial. Schlegel is reported to have testified that Hatfield received $600,000 to buy a Florida condominium. She also testified that Hatfield’s son received $95,000 for apparent legal work, and that her husband received tens of thousands of dollars for legal work, yet Schlegel never saw any invoices.

ORC Approves Transfers From Bulletproof

Trot Insider has learned that three horses are among the first approved transfers from Bulletproof Enterprises. As per the January 28, 2010 Notice to the Industry issued by Executive Director John Blakney, one of the conditions of the immediate suspension was that any horse owned by Perfect World Enterprises, Bulletproof Enterprises. Goldfinger Enterprises, Seize the Day Industries & VAE LLC" cannot be transferred to new ownership without the written permission of the ORC.

On February 1, the ORC formed a panel of three Judges – Senior Judge Patricia Webb, William Maertens & Brian Newton to deal with all ownership transfer requests. All prospective owners must provide a written request to the ORC for permission to purchase any suspended horses to be eligible to race in Ontario. The panel of Judges created a five-page questionnaire that all prospective buyers must answer. The panel also developed a "Statutory Declaration for transfer of ownership from a suspended standardbred owner" that is sent to each applicant and must be filled out, witnessed and sent back to the panel for review. The panel of Judges will conduct a due diligence on each request. After going through what is tantamount to a screening process, the panel will make a decision to either approve or deny the request.
The next step is for the buyer to have the hard card registrations, signed by the owner, delivered to the panel of Judges along with a photo copy of a certified check or bank draft payable to the registered owner – in this case Bulletproof Enterprises.

Finally, if the request is approved, the panel of Judges will write a ruling "Ownership Transfer Approved" and deliver this ruling along with the registration papers to Standardbred Canada’s Registrar Pat Kennedy. If the request is denied a ruling will also be written "Ownership Transfer Denied." Locke sent his request for permission to purchase three horses – Amazon Art, Power Off and Waffles And Cream – from Bulletproof Enterprises to the ORC on February 3. After completing all requirements, permission was granted on February 25.