Dhb Industries Fraud Effect
II. CAUSE AND EFFECTS
The fraud at DHB Industries developed directly from collusion of upper-management, poor oversight by the board of directors, and equity based compensation. Knapp and Knapp (2012) note the constant involvement of Brooks, Hatfield, and Schlegel in falsifying accounting records and attempting to conceal the fraud. With the ability to override controls within the company which identify such irregularities, the involvement of practically all executives allowed for the concealment of the fraud to occur. As Eaglesham (2013) points out, frauds which involve upper management typically go on for longer periods of time. Although the fraud was inevitably exposed, the direct involvement of upper-management prolonged an earlier exposure …show more content…
These guidelines will assist key decision-makers at ADS Ventures in steering clear of investing in businesses which may be committing accounting fraud. Such investments would negatively impact ADS Ventures; therefore, management must be proactive in avoiding potential money losing investments.
DHB Industries fraud affected not only the executives involved, but also the soldiers who used their flawed vests during combat. These men and women, as Knapp and Knapp (2012) noted, complained that the defective materials used in the vests failed to stop seemingly routine bullet-punctures. In addition, the investors of DHB Industries suffered massive losses. As Brooks, Hatfield, and Schlegel exited their stock positions, other investors were left with huge losses suffered from buying into the fraudulently reported figures as a sustainable business …show more content…
S. (2012). The Evolution of Fraud Theory. Issues In Accounting Education, 27(2), 555-579 Retrieved from http://aaahq.org/fia/MeetingPapers/2012/12-059-POSTER12.pdf
Eaglesham, J. (2013, May 27). Accounting fraud targeted. Wall Street Journal. Retrieved from http://online.wsj.com
Knapp, M. C., & Knapp, C. A. (2013). Of hurricanes and harness racing: the accounting fraud at DHB Industries, Inc. American Accounting Association, 131. Retrieved from http://aaajournals.org
Norris, F. (2011). For boards, S.E.C. keeps the bar low. New York Times. Retrieved from http://www.nytimes.com
Ramamoorti, S. (2008). The psychology and sociology of fraud: Integrating the behavioral sciences component into fraud and forensic accounting curricula. Issues in Accounting Education, 23(4), 521-533.
United States Attorney’s Office Eastern District of New York. (n.d.). United States v. Sandra Hatfield, David Brooks, Dawn Schlegel, and Patrica Lennox. Retrieved from http://www.justice.gov/usao/nye
United States Department of Justice. (2013, August 15). David H. Brooks, founder and former chief executive officer of DHB Industries, Inc., sentenced to 17 years in prison for insider trading, fraud, lying to auditors and obstruction of justice. Retrieved from
The fraud at DHB Industries developed directly from collusion of upper-management, poor oversight by the board of directors, and equity based compensation. Knapp and Knapp (2012) note the constant involvement of Brooks, Hatfield, and Schlegel in falsifying accounting records and attempting to conceal the fraud. With the ability to override controls within the company which identify such irregularities, the involvement of practically all executives allowed for the concealment of the fraud to occur. As Eaglesham (2013) points out, frauds which involve upper management typically go on for longer periods of time. Although the fraud was inevitably exposed, the direct involvement of upper-management prolonged an earlier exposure …show more content…
These guidelines will assist key decision-makers at ADS Ventures in steering clear of investing in businesses which may be committing accounting fraud. Such investments would negatively impact ADS Ventures; therefore, management must be proactive in avoiding potential money losing investments.
DHB Industries fraud affected not only the executives involved, but also the soldiers who used their flawed vests during combat. These men and women, as Knapp and Knapp (2012) noted, complained that the defective materials used in the vests failed to stop seemingly routine bullet-punctures. In addition, the investors of DHB Industries suffered massive losses. As Brooks, Hatfield, and Schlegel exited their stock positions, other investors were left with huge losses suffered from buying into the fraudulently reported figures as a sustainable business …show more content…
S. (2012). The Evolution of Fraud Theory. Issues In Accounting Education, 27(2), 555-579 Retrieved from http://aaahq.org/fia/MeetingPapers/2012/12-059-POSTER12.pdf
Eaglesham, J. (2013, May 27). Accounting fraud targeted. Wall Street Journal. Retrieved from http://online.wsj.com
Knapp, M. C., & Knapp, C. A. (2013). Of hurricanes and harness racing: the accounting fraud at DHB Industries, Inc. American Accounting Association, 131. Retrieved from http://aaajournals.org
Norris, F. (2011). For boards, S.E.C. keeps the bar low. New York Times. Retrieved from http://www.nytimes.com
Ramamoorti, S. (2008). The psychology and sociology of fraud: Integrating the behavioral sciences component into fraud and forensic accounting curricula. Issues in Accounting Education, 23(4), 521-533.
United States Attorney’s Office Eastern District of New York. (n.d.). United States v. Sandra Hatfield, David Brooks, Dawn Schlegel, and Patrica Lennox. Retrieved from http://www.justice.gov/usao/nye
United States Department of Justice. (2013, August 15). David H. Brooks, founder and former chief executive officer of DHB Industries, Inc., sentenced to 17 years in prison for insider trading, fraud, lying to auditors and obstruction of justice. Retrieved from