Maybe color blindness is the reason everyone misses the “red flags.”
The Securities and Exchange Commission charged a supplier of body armor to the U.S. military for engaging in what it called “massive accounting fraud.”
The SEC alleges that DBH Industries, now known as Point Blank Solutions Inc. (PBSOQ), “engaged in pervasive accounting and disclosure fraud through its senior officers and misappropriated company assets to personally benefit” its former chief executive, David Brooks.
The regulator also charged outside directors Jerome Krantz, Cary Chasin and Gary Nadelman for their parts in the scheme, saying they were “willfully blind to numerous red flags” signaling the fraud.”
“As the fraud swirled around them, Krantz, Chasin, and Nadelman ignored the obvious and submitted to the directives and decisions of DHB’s senior management while themselves profiting from sales of the company’s securities,” said Eric Bustillo, director at the SEC’s Miami office.