Buckle down, David Brooks, buckle down
It’s one thing to have bling - say, a Super Bowl ring – awarded to you. It’s quite another to purchase a big, fat, piece o’bling – say, a $100K belt buckle – and expense it to your public company.
But this is, apparently, what David Brooks of DHB Industries, did. DHB – now doing business (and filing for bankruptcy) under the name Point Blank Solutions – is a maker of body-armor for the military, police, and anyone else in need of body-armor. (Thankfully, the only body, mind, and soul-armor I’ve needed in marketing has been metaphorical.)
The belt buckle is one of the more fascinating exhibits in a trial that’s winding down in U.S. District Court on Long Island, in which Mr. Brooks is being tried for fraud, insider trading, and, I guess, padding his expense account. (Source: NY Times.)
Curious to know what a $100K belt buckle looks like? Sorry the image isn’t that clear, but you get the patriotic motif – all those diamonds, rubies, and sapphires. Long may it wave! But this is just one of the dubious expenses claimed by Brooks. Others included:
…university textbooks for his daughter, pornographic videos for his son, plastic surgery for his wife, a burial plot for his mother, prostitutes for his employees.
A little something for everybody.
And, yes, I know that a mind is a terrible thing to waste, but when I read that list, why oh why, did I end up with Gene Autry spinning “Here Comes Peter Cottontail” in my ear?
He's got jelly beans for Tommy
Colored eggs for sister Sue
There's an orchid for your mommy
And an Easter bonnet too.
And, just as in the 50’s Tommy got the jelly beans and sister Sue got the hard-boiled eggs, you’ll note that the daughter got textbooks while the son got porn. Not that sister Sue would have wanted the porn, mind you, but some things never change.
I’m also reminded of some expenses that were paid out in a company I worked for years ago. This company was an agglomeration of a number of small businesses lumped together with little or no integration or, ahem, synergy. One of those businesses had apparently had an open checkbook expense account for its president. Which he continued to use even after his little company had been merged in with the others. The key expenses I remember were fertility treatments, Porsche repair, and taxidermy bills. Personally, I always felt bad for this guy who, while essentially useless, was essentially a nice guy – unlike a number of other principals of this company who were scheming, nasty bastards.
Personally, I never went in for expense-padding.
The one and only time I ever got a expense report rejected was when I was at Wang. Wang had a $30/per diem food limit. Even in the late 1980’s, this wasn’t all that much, especially in NYC, where I traveled weekly. While there, I always stayed with my sister Trish so that I could both visit her and avoid staying in the tawdry hotels that Wang put us up in. (In Chicago, I stayed once in a motel surrounded by a chain link fence topped with coils of razor wire.) I usually got around the $30/per diem by having someone in the field buy my lunch, and by eating dinner at Trish’s. (I’d spring for a bag of groceries at Key Food.) One time, I splurged and took her out for Chinese in her ‘hood. Since I was saving Wang a hotel bill (however minimal) every time I stayed with my sister, I really didn’t think they’d mind if I – just this once – exceeded the food per diem. Which I did by $1. My expense report was rejected, and I had to refile.
I never would have gotten away with a $100K belt buckle – not with those canny accounting folks at Wang.
Anyway, the Brooks trial has been going on for months, and, while I wouldn’t want to get stuck on a lllloooonnnnggggg jury, if you do get stuck, it might as well be an interesting case.
Oh, I’m sure that The Times pulled out the good bits, but here’s at least some of what the jury heard:
- That Brooks had investigated slipping his CFO a memory-erasing pill, so that she couldn’t testify against him.
- That Brooks had falsified information —” including significantly overstating the inventory of bulletproof vests” — to boost stock performance.
- Brooks’ lawyer asking for a mistrial, claiming that the prosecution’s picture of the defendant had focused on “irrelevant evidence to portray Mr. Brooks ‘as a sex-obsessed, tax-cheating boor’”, and that this had “’incurable prejudiced the jury.’”
Somehow, I don’t think that mentioning the words “sex-obsessed, tax-cheating boor” in the same sentence as your client’s name is great legal strategy, but what do I know.
Brooks’ lawyer further tried to rally the jury to their side by painting Brooks as the apotheosis of the American dream, making a buck while doing his patriotic duty. The defense also stood up for spending on the prostitutes that the company hired to take care of employees and board members (which may explain why these expenses were approved).
Hiring some working girls was a legit expense “’if Mr. Brooks thought such services could motivate his employees and make them more productive.’”
Forget “Good to Great”. Forget “Seven Habits of Highly Effective Managers.” Think Sex Drive!
Our Mr. Brooks, who is only 55, faces more than 30 years in the stir – sans belt buckle, I imagine.
Okay, he’s not going to prison for expense account fraud – although Brooks’ lawyers may well be correct that this info will tip the jury: it’s a lot easier to follow and understand than accounting-based fraud. But wouldn’t you think that someone running a public company might think twice about crazed expenses like the ones he claimed? Why didn’t he just finagle himself a bigger salary (adjusted, of course, for taxes).
What’s with people, huh?
It’ll be interesting to see what the jury does with this one, but I’m thinking ‘say hello to Bernie Madoff.’
Labels: business stupidity