The Modern Detective PDF

TYLER MARONEY ? 216 pictures taken by other photographers). But even one such story is detrimental to the functioning of a democratic society and a free and accurate press. Casewell's investigation reminds us that the news we con-...

TYLER MARONEY ? 216 pictures taken by other photographers). But even one such story is detrimental to the functioning of a democratic society and a free and accurate press. Casewell's investigation reminds us that the news we con- 10. sume is not always trustworthy and that private investigators occasionally help to restore that trust. If the public does not have faith in the media and if citizens in a democracy do not MARCH ON THE BOSS have a free press, they are not informed citizens. Uninformed citizens cannot make wise choices about how society is gov- erned, which can lead to anarchy or dictatorship or both. In the spring of 2002, an obsoure military contractor Not cousehavioris the oned to the a young india, called Point Blank Body Armor in Pompano Beach, Florida, began to attract national media attention. Time magazine re- union investigator in New York, a brash executive's tabloid- ported that American soldiers in Afghanistan were praising the ready crimes might have gone unchecked. Interceptor, a light flak jacket manufactured by the company that contained Kevlar, ceramic plates, and pouches for muni- tions, handcuffs, two-way radios, and gas masks. The jacket was credited with protecting soldiers from grenade explosions, artillery shellings, and bullets. The Associated Press published a profile of Point Blank, and it was featured on the CBS Eve- ning News. Shareholders of Point Blank's parent, DHB Industries Inc., were rewarded by the attention: revenues increased 40 percent in 2001, and within six months of the September 11 attacks, shares of DHB's public stock increased in value by more than 200 per- cent. Terrorism had galvanized America's warfare industry.  T Y L E R M A R O N E Y ? 2 1 8 219 ? THE MODERN DETECTIVE DHB was formed as DHB Capital Group Inc. in Old But Brooks was industrious. During elementary school, to Westbury, New York, on Long Island in 1992 by its namesake make money he sold fireworks, mowed lawns, painted houses, David H. Brooks, a former securities broker from Brooklyn. washed cars, built docks, and shoveled manure from horse Brooks's strategy for DHB was to acquire insolvent companies stables. in the defense and apparel industries, assume their debts, Reflecting on his teenage years, Brooks confided to a ther- and secure government contracts for the companies' products. apist, "I just started realizing really young that I had to know Point Blank was acquired out of bankruptcy for $2 million in numbers and money a little bit because maybe money could 1995. Among other subsidiaries, DHB owned an athletic- get me out of the situation that I felt I was in... It could make equipment manufacturer, and it sold various kinds of protec- my dad six feet or a foot taller than he was.... It would give tive gear to SWAT teams and police forces. me something that would excuse the other parts of what I had, Brooks was born in 1954 and raised by working-class Jewish of where I came from, what I was, or the environment. So parents under traumatic conditions. His mother, Anna, sur- money became, like, sacred, and I tried to make it in every vived four years at Auschwitz during World War II, where she single way I could. And that became more important to me was sexually abused, according to court records. Near the end of than anything else." the war, she escaped, eventually settling in New York, where she He found solace in legal and illegal gambling: in high married Joseph Brooks. Joseph, who earned a living as a cabinet- school he learned to trade stocks and spent much of his free maker, suffered from a genetic bone disease that stunted his time at the racetrack. growth-and unwittingly exposed his son to constant ridicule. As he grew older, Brooks developed a dysfunctional rela- Friends taunted Brooks about his father's height (he was tionship with money. He told one therapist he "couldn't stand only four and a half feet tall), calling his dad a "midget" and a monthly bills." He often paid cash for what he bought. He "freak." Anna, who was emotionally distant and suffered from once paid $196,000 in cash for a Rolls-Royce Corniche. In anxiety and paranoia, was unfaithful to Joseph, with whom 2002, when his income soared as a result of DHB's success, he she often fought. Brooks's older brother inherited Joseph's brit- bought his family a Learjet 60 airplane for $7 million in cash. tle bone disease and later tried to commit suicide. In 2006, he and his brother, Jeffrey, rented the penthouse in "As a child, people called my family 'diseased," Brooks the Bloomberg building in midtown Manhattan for $75,000 once told a psychiatrist, according to statements in a publicly per month. The same year, his family paid $125,000 per month available court record. to rent a twelve-thousand-square-foot town house in London  TYLER MARONEY ? 220 221 ? THE MODERN DETECTIVE not far from Hyde Park and Buckingham Palace. The home affairs department of UNITE, the Union of Needletrades, In- came with a thirty-five-foot swimming pool in the basement. dustrial, and Textile Employees. Brooks shopped in bulk. He would buy six bottles of co- After studying English and history at Carnegie Mellon in logne, thirty tubes of skin cream, forty pairs of underwear, a Pittsburgh, where he grew up the eldest of four boys with fierce, dozen pairs of sneakers. He would buy every shirt in his size working-class sympathies and an evangelical commitment to that a store stocked. He would buy ten ink refills for every pen social equality, Brindle-Khym lived in Paris for a year. Inspired he owned. To his therapist, he estimated that he owned be- by George Orwell's memoir Down and Out in Paris and Lon- tween five and ten million pens. He would attend ten Ma- don, he spent evenings in the basement of a bistro washing donna concerts in a single tour and buy shopping bags full of dishes and drinking cheap red wine out of plastic bottles. merchandise. "I'll take everything you got in XL," he would Brindle-Khym's only professional experience was in Leso- say to a clothing store employee. tho, a small, mountainous nation tucked within South Africa, Shortly before Brooks got married, his mother revealed to where he spent a few months inspecting garment factories. him that Joseph, the man he grew up calling "Dad," was not, in Stunned by the horrific working conditions he witnessed, he fact, his biological father. Anna confessed that she conceived pledged to embark on a career in the labor movement back in Brooks and his younger brother through artificial insemination; the United States. she didn't want them to inherit Joseph's brittle bone disease. UNITE, which was formed by the merger of two of Amer- If anything, the revelation drew Brooks closer to Joseph. In ica's oldest unions, the International Ladies' Garment Workers' September 1992, as Joseph lay on his deathbed, Brooks got Union and the Amalgamated Clothing and Textile Workers down on his knees. "Two days before he was dead," Brooks Union, was a minor player in a faltering industry. Membership told Joseph that "I was going to turn shit into gold and build a was in decline. Manufacturing had been shifting overseas for billion dollar company for him... in his honor." decades. But UNITE had a scrappy, militant reputation. In Three weeks later, Brooks filed incorporation papers for 2002, it reported having a few hundred thousand members, DHB Capital Group. but, Brindle-Khym told me, it spent more money organizing than did much larger unions. "We punched way above our weight class," he said. On his first day on the job in New York City, Brindle-Khym, 7n 2002, just as Broks was beginning no prosper, vienty- three-year-old recent college graduate named Luke Brindle- who is reed thin with a frenetic energy, attended a press confer- Khym accepted a job offer as a research analyst in the strategic ence at City Hall with his new colleagues, including the union's  TYLER MARONEY ? 222 223 ? THE MODERN DETECTIVE boss, Bruce Raynor, and its southern regional organizing direc- DHB. The company's workers had been complaining to the tor, Scott Cooper. The Democratic city council member Eric union for months that their managers had been pushing them Gioia, chairman of the city's Oversight and Investigations Com- to speed up production and fill orders faster, even though they mittee who had mayoral ambitions, was at the lectern with a knew quality control was suffering. "We thought the 'quality DHB line employee, and they were advocating that the city can- critique of the vests, as we called it, was going to win the cam- cel a contract with DHB, which supplied the NYPD with body paign," said Brindle-Khym. "DHB was churning out bullet- armor, because one of its vests failed a live-fire ballistics test. proof vests that didn't work and now the public knew. This was "During the shooting of one of the vests," a state safety re- going to transform our campaign from a parochial dispute into port reads, "an actual penetration occurred. The bullet went a national story about our troops." right through the protective panels. Had this been on the body UNITE's strategy to gain leverage through DHB's custom- of a Police Officer, this officer would have been either seriously ers was part of a "corporate campaign" in which unions map injured or dead." Similar reports came in from the Pentagon, out and target the structure and vulnerabilities of companies raising questions about DHB's military-grade vests. whose workers they seek to organize and whose managers, It was a chaotic event attended by news photographers and shareholders, and vendors they seek to influence. This includes elected officials. Raynor and Cooper, who had been working to identifying relationships with suppliers, regulators, sharehold- organize some of DHB's workforce in Florida, had been sued by ers, and lenders; discerning lines of business and revenue streams; DHB for defamation. Litigation against a union by a company and figuring out what a company's growth plan is. whose employees it targets can benefit the labor campaign: "At the time, I didn't know much about business or what it companies rack up costs as management becomes distracted. meant to be a public company," Brindle-Khym told me. "I had Most companies would not have incurred such legal ex- just spent a year living in France. I was an idealist. But this was penses, Brindle-Khym told me. He was learning his first lesson concrete." about corporate America: not all corporate executives act ra- He cloistered and immersed himself in the job. He and tionally. Ahmer Qadeer, UNITE's director of strategic affairs, who be- "Brooks owned the majority of DHB's stock, but he didn't gan to mentor Brindle-Khym in the art of investigating a pub- seem to run it like a public company," said Brindle-Khym. "It lic company, spent their days buried in paper and on the phone, was his fiefdom. He took our critiques personally." all with the goal of trying to understand how DHB operated The publicity around the defamation case and the calls to and how it made money. end the NYPD contract helped UNITE's strategy to pressure The flow of capital, disclosure requirements, debt offerings, TYLER MARONEY ? 224 225 ? THE MODERN DETECTIVE communications with shareholders: Brindle-Khym was learn- Before Brindle-Khym joined UNITE, the union had tried ing how public companies were run and transact, how money to organize about three hundred workers at DHB's Point Blank flows through them, how they take on debt, how they tell, or manufacturing plant near Fort Lauderdale. Most of the work- don't tell, their stockholders what they are doing. ers were from Latin America and Haiti. The union sent under- He educated himself on defense contracts, federal regula- cover organizers to meet with employees. tion, the National Labor Relations Board, congressional bud- "That factory had a reputation for being a sweatshop," said geting, procurement standards, lobbying activity. He obtained Brindle-Khym. It was, in labor parlance, a "hot shop" where copies of federal contracts, pored over purchase orders, perused workers are desperate to sign up for the union because they deeds, found internet domain registration records, filed FOIA suffer countless indignities: low wages, few benefits, little or requests, and read postings in investor chat rooms. no time off to visit sick children, filthy bathrooms, poor air- As they had done with the police union in New York, conditioning. In fact, it was the workers who had approached Brindle-Khym and Qadeer also lobbied parties with more UNITE seeking help. leverage than UNITE to act on its behalf. "We tried to insert UNITE also used what unions call a "blitz" tactic that held ourselves into the conversation between the company and its an element of surprise. Scott Cooper, UNITE's organizing customers," said Brindle-Khym. They contacted the Pentagon, leader, dispatched about twenty-five professional organizers spoke with other police unions, wrote press releases, and met and volunteer union members to South Florida. To take the with reporters. initiative, Cooper scheduled the blitz to kick off at 4:00 p.m. Through contacts in the garment industry, UNITE tracked on a Friday, just as the workers were clocking out for the week- down the purchasing officers at police departments that bought end. The blitz organizers, most of whom spoke Spanish or Hai- DHB armor and tried to persuade them that officers might be tian Creole, fanned out across Greater Fort Lauderdale to visit at risk because DHB's equipment was ineffective. To make their workers at their homes on Friday evening, all day Saturday, and argument, they cited the failed NYPD ballistics test results. A Sunday afternoon. This gave them time to meet with as many few departments agreed to buy armor from other vendors. workers as possible over the weekend, before the company was UNITE's success in lobbying law enforcement agencies was able to launch its anti-union campaign. one tactic in a broad strategy, explained Brindle-Khym. Cooper, the lanky son of a Methodist minister who speaks "There are three components to such a tactic: winning, be- with a southern drawl, recalled that first weekend. "They were ing right, and looking good," he said. In the case of DHB, "we ready for the union. You could see it in their eyes." The conver- got all three." sations in those initial house visits "were about much deeper TYLER MARONEY ? 226 227 ?THE MODERN DETECTIVE things than bread-and-butter issues. Instead of 'I need a twenty- tions. You can focus on making money for shareholders." five-cent raise or cheaper health insurance co-pays, workers UNITE, after all, was not asking for much: a contract that were saying, 'My boss talks to me like I'm an animal." It was guaranteed slightly higher wages. easier to mobilize workers "when people are talking about their In response, DHB increased the pressure by firing the em- families, their own dignity, their basic psychological and spiri- ployees it suspected were union sympathizers. UNITE filed a tual needs," Cooper said. "But it was more that they wanted to complaint with the NLRB, alleging that the firings were ille- know 'What's the battle plan?"" gal. The tit-for-tat continued unabated. Workers voted to go on Organizers asked workers to sign "authorization cards" strike. DHB ultimately spent more than $1 million to pay a pledging an interest in voting to unionize. Securing authoriza- phalanx of off-duty Broward County police officers, who wore tion cards from 30 percent of workers is the minimum needed uniforms and brought squad cars to patrol the picket lines and to start the election process administered by the National La- intimidate the strikers. The company had, in essence, hired a bor Relations Board. But UNITE signed up 70 percent. private security force. Meanwhile, the union organized a "march on the boss." DHB's calculation was rational at first glance. "Federal During its morning break on Monday, dozens of employees sanctions for employers who violate labor laws are minimal," gathered quickly, like a flash mob, and walked into the office said Brindle-Khym, who speculates that DHB was willing to of Sandra Hatfield, DHB's chief operating officer, to present a pay fines (to anyone who had the power to sanction DHB) to petition asking for better treatment. Workers later told the get its way and avoid a deal with a union. NLRB they were loudly but peacefully chanting "Sí se puede" The NLRB charges took months to resolve. Even with what (Yes we can) and other slogans. is called "fast track" processing, it took almost six months for Irked by its employees' activism, DHB went on the offen- UNITE's fired members to win a court order for DHB to rein- sive. The company called the police and reported a "riot," and state them with back pay. DHB also continued to sue union dozens of armed personnel raided the Fort Lauderdale factory. officials, including Cooper and Raynor from UNITE, and The UNITE team was taken aback by DHB's ruthless tactics. even the head of a police union. "If you are in the C suite of a large company, you make a The adversaries were at loggerheads, especially since DHB cost-benefit analysis" when presented with an employee de- was making statements to shareholders claiming victory over mand to unionize, said Brindle-Khym. "The rational thing the union. Yet Brindle-Khym and Qadeer were not deterred. may be to settle with the union. You pay a bit more in wages, After a few weeks, they had focused on DHB's Point Blank but have less staff turnover and avoid the legal fees and distrac- Body Armor division, which had secured an exclusive  229 ? THE MODERN DETECTIVE TYLER MARONEY ? 228 Pentagon contract to manufacture the Interceptor vest. It was Diamond, Master of Wars, David the Great, I Am the Prophet. by far the most profitable segment of the business: DHB's cash And Brindle-Khym's favorites: Abolish Unions and Fire Every- body. cow. This, they decided, would be where they would apply Brindle-Khym compiled financials on Brooks's harness- pressure. Brindle-Khym also began to pursue a curiosity he'd no- racing interests, looked for past labor disputes, identified gam- ticed: Brooks's enthusiasm for harness racing. Brooks grew up bling regulators that might have files on Brooks, dug up lawsuits. He acknowledges that at the time he did not know at the racetrack. Gambling on horses was one of the ways he anything about the industry, so he asked gaming regulators in had made money as a teenager. Over the years, Brooks had several states, including New Jersey, New York, and Florida, acquired horse stables including, in the late 1990s, one in Fort for documents that named Brooks and his companies. Lauderdale called Perfect World Enterprises, among the largest in the world. He and his family eventually came to own a One day, Brindle-Khym received a package from the New Jersey Racing Commission that contained copies of seemingly thousand horses. His stable, Brooks once said, broke every trivial correspondence it had with Brooks, including a letter record and, for a time, dominated harness racing in North describing a dispute over a licensing fee and a copy of a check America. for $5,207.36 made out to Freehold Park Racing LP from a During a psychological assessment approved by Brooks and company called Tactical Armor Products, or TAP. his lawyers, Brooks (who, the assessor noted, often pulled on Brindle-Khym recognized the company name, though he his chest hair and chewed on pens) acknowledged some "obses- could not place its purpose or significance. "There were dozens siveness in horse racing." Brooks once said, "I don't think of companies using Brooks's home on Long Island as their there's anyone smarter or sharper [than I am] at trading or mailing address," Brindle-Khym recalled. "We didn't know numbers... and I believe it." how to connect all the dots." Qadeer urged Brindle-Khym to find people involved in After further database searching, he learned that TAP was harness racing who might have a motive to talk to him about incorporated in Tennessee, and documents he obtained from Brooks: jockeys who were unionized, contractors who main- the secretary of state's office there (the agency in each state that tained and renovated Brooks's stables, disgruntled former track maintains corporate records) showed TAP was set up in April employees. 2000. As they dug deeper into the stables' details, the two investi- Other information on the documents intrigued Brindle- gators marveled at the names of some of Brooks's horses: At Khym. Jeffrey Brooks, Brooks's younger brother, was listed as Point Blank, D Interceptor, Precious Joe, Reimburse Me, Blood  TYLER MARONEY ? 230 2 3 1 ? T H E M O D E R N D E T E C T I V E the director, and Anna Jacobs, Brooks's mother, was the incor- remains aware of limits, both his own and what is knowable. It porator of TAP. Brooks's wife's name later showed up on Ten- provides him with a rare combination of conviction, mastery, nessee records as TAP's "registered agent." and humility when he approaches a problem." Brindle-Khym also realized that another address on the Among Brindle-Khym's strategies (he later got a law degree) TAP records matched the address of a DHB subsidiary in Ten- is to persuade people, deploying his close read of the law, to nessee: it was the office of PACA, manufacturer of the Inter- release information. I once witnessed Brindle-Khym chastise a ceptor vest. county clerk in New York who tried to withhold archived court He wondered: Why was a company controlled by Brooks's documents from him. Brindle-Khym had read the statute that brother paying licensing fees to the New Jersey Racing Com- states the record was releasable to a third party, and he quoted mission? What was TAP? And what was its connection to the relevant subsection and paragraph from the statute he'd DHB? Brindle-Khym began to sketch a relationship graphic found online. that eventually came to resemble a spaghetti bowl. It went up Like Indiana Jones declaring that a recovered antiquity be- on Qadeer's office wall. longs in a museum, Brindle-Khym passionately explained that The TAP check Brindle-Khym discovered led him to reex- the documents he sought were part of the public record and amine documents-news reports, quarterly financials, corpo- must be turned over. They were. rate filings?he had previously gathered with an eye toward He is also a fearless interviewer. I once watched him con- uncovering clues about Brooks's financials that he had missed front a witness during a murder investigation in the witness's This is a savvy and effective investigative technique. front yard. Brindle-Khym's presence was not met with appreci- I have known Brindle-Khym for more than fifteen years ation. As the witness was cutting his lawn with a hand mower, and have met few professional detectives or fact finders-not he jabbed it at Brindle-Khym's feet. Brindle-Khym danced investigative journalists, not criminal prosecutors, not game around the blades while he kept up his questions. theorists, not police detectives, not spies-with his instincts. One day Brindle-Khym rewatched a video that had been His ability to find and burrow into massive or little-known posted on DHB's website, a television news report showing data sets and hunt through them like a bomb-sniffing dog factory workers in Tennessee making protective armor for and retrieve answers is astounding. American troops. The clip cast the company as patriotic and "Luke is relentless, has high standards, a solid moral com- employing a proud, diverse, and diligent workforce. But with pass," Qadeer said of his former supervisee. "And yet he his newfound awareness of TAP, Brindle-Khym noticed that  TYLER MARONEY ? 232 233 ? THE MODERN DETECTIVE on one side of the factory floor were DHB employees sewing DHB rented a factory in Florida from a partnership controlled vests while on the other side of the factory floor were TAP by Brooks's wife and owned by his children. The company told employees making ceramic plates-all under one roof. investors about this setup, claiming that "the terms of the lease Brindle-Khym then scoured DHB's regulatory filings with are no less favorable to the Company than terms that would an eye toward finding its disclosure of TAP's relationship to have been obtained at the time of the lease from an unrelated the company. He found no official connection. So the TAP third party." Translation: even though Brooks has an incentive discovery was revelatory. to charge DHB a higher-than-market rent (because that meant "Brooks was buying armor from himself and not telling more money for his family), everything was legal. shareholders," Brindle-Khym said. However, when Qadeer, an economist by training, investi- The seemingly innocuous $5,207.36 TAP check proved gated, he found the opposite to be true. He surveyed real estate valuable in other ways. Brindle-Khym had spent so much time brokers in Broward County, Florida, and calculated the going barnstorming through Brooks and his family members' finan- rent per square foot for similar industrial buildings. It turned cial forms that he began to recognize their handwriting and out that DHB's landlord was making about $9.40 per square signatures. The check was signed in the name of Terry Brooks, foot, while most factory space in the region rented for between Brooks's wife, but it was not signed by her, Brindle-Khym sus- $4.23 and $5.40 per square foot. DHB was spending twice as pected; it was signed by Dawn Schlegel, DHB's CFO, who had much to rent the factory from Brooks's kids as it would have distinctive penmanship, with large, loopy letters. (Brindle- paid an independent landlord. Khym recognized Schlegel's signature because as CFO she was Brindle-Khym and his colleagues calculated that through responsible for signing DHB's financials.) TAP (a private company) and other self-dealing, Brooks was Again he wondered: "Why was the CFO of DHB, a public able to secretly extract millions of dollars from DHB, the pub- company that made body armor, signing checks on behalf of licly traded affiliate of TAP. Brooks's failure to disclose the rela- Brooks's wife (on a checking account owned by a Tennessee tionship confused Brindle-Khym, in part because the company company incorporated by Brooks's mother) to a horse-racing did disclose some related-party transactions, including the fac- regulator in New Jersey?" It seemed a blithe disregard for cor- tory rental and an airplane Brooks rented to the company. The porate formalities: at the least a disregard for the law; at worst TAP fraud, explained Brindle-Khym, was an order of magni- potential financial misconduct. tude larger than published related-party transactions, including This was not the first time that UNITE's team came across the fact that Point Blank rented factory space from Brooks's odd transactions involving members of the Brooks family. wife at an inflated rate.  TYLER MARONEY ? 234 235 ? THE MODERN DETECTIVE "To the public, it looked like TAP was simply a vendor, but Luke did, however, receive an email from a former DHB we suspected it was much more: classic vendor fraud, a hidden ballistics engineer who claimed to have damaging information. interest in a company, undisclosed profits." In short, Brooks was The source said he worked directly for Brooks and had sala- effectively paying himself through the back door: DHB to TAP. cious details to share but refused to email anything and would In June 2003, UNITE sent its evidence to the Securities not divulge specifics over the phone. He insisted on meeting in and Exchange Commission that DHB had violated federal se- person. curities laws. (Members of the public can submit complaints to "Bob Barker," said Brindle-Khym, using the code name he the regulator if they believe they have evidence of wrongdoing.) and Qadeer gave him, "spoke cryptically about how what he The document UNITE submitted was the third formal had was going to be a bombshell." Barker refused to disclose complaint by the union, which also issued a press release on its where he lived, but agreed to meet at the bar of a Sheraton hotel findings. The heart of this complaint was Brindle-Khym's dis- in Philadelphia. coveries, but union officials were unsure of how convincing the When Barker arrived, he seemed anxious. Throughout their complaint would be. conversation, Barker was vague, but he hinted at titillating evi- "I felt it was powerful research," he remembers. "But we dence: "crazy parties" and "scandals." Then he demanded to be had an internal debate about what it meant and how it could compensated. be used." This presented a risk. Brindle-Khym and Qadeer debated Brindle-Khym called every reporter he could find who had the value of the unknowable and its admissibility in court. written about DHB, its affiliates, or the labor dispute to tell "We asked ourselves, 'How good is the information? How them what had been filed. But his alerts were met with skepti- do we use it?' What are we going to say ?that someone on the cism. "It's just a union press release," he was told. inside sold this to us? We had to have a way to corroborate After UNITE filed the complaint, Brindle-Khym and his any leaks." colleagues impatiently monitored DHB and its subsidiaries Barker did a poor job of selling his secrets. He confessed through Yahoo Finance chat boards, the media, and the SEC. he was desperate for money for his family, and his credibility Now that they had seeded the public record with sharp, deeply was questionable. He was unemployed, had been fired from sourced critiques of the company, they expected shareholders, DHB, and had personal run-ins with Brooks and was fright- regulators, and journalists to dig into the leads themselves. But ened of him. Brindle-Khym knew that Brooks terrorized his there was no such activity. employees.  TYLER MARONEY ? 236 237 ? THE MODERN DETECTIVE "We knew that Brooks was unhinged, that he could pop because it provides advice on myriad arcane topics that institu- off, was volatile," he said. "When negotiating with union offi- tional shareholders-such as pension funds, mutual funds, and cials, Brooks would descend into a stream of invective. He hedge funds who control large blocks of stock-don't spend would yell at us through the chain-link fence at the Point Blank time analyzing. factory where we were picketing." Boca Raton Police Depart- "Large investors can't follow every single company whose ment records reflect several complaints in which people (not stock they own, so they pay ISS to advise them how to vote," his employees) alleged that Brooks behaved belligerently dat- Brindle-Khym explained ing back to 1995: confrontations at restaurants, beach clubs, He shared his evidence with ISS and lobbied the company and parking lots. to recommend that DHB shareholders oppose the reelection of Brindle-Khym and Qadeer refused to pay Barker and con- Grant Thornton. ISS was persuaded. "We reframed the TAP sidered him a false lead, but later, upon reflection of how they issue as an auditing failure," Brindle-Khym said. handled him, Brindle-Khym speculated that maybe they could It worked. After the shareholders' meeting, DHB filed a have gotten more out of Barker. Form 8-K with the SEC, which companies are obligated to do "We could have sussed out what he knew and how he knew within four days of "major events," announcing that Grant it without paying him. There are ways to corroborate informa- Thornton had resigned. tion. Maybe he could have led us to other sources, guided us to Yet DHB disclosed no conflicts and cast the resignation as what we needed." benign. But in response Grant Thornton filed its own 8-K to Back at the office, Brindle-Khym was undeterred. He knew correct the record. DHB was scheduled to hold its annual shareholders' meeting Reading from the official record, Brindle-Khym told me, soon and one of the agenda items was to vote on whether to "Grant Thornton said it resigned because 'it identified certain reelect the firm of Grant Thornton as its auditor. Brindle- deficiencies involving internal control it considered to be sig- Khym suggested that the union publicly oppose the rehiring of nificant deficiencies that, in the aggregate, constituted material Grant Thornton, because the accounting firm had failed to weaknesses.... These deficiencies included the failure to dis- spot the TAP transactions. close certain related party transactions.'" Brindle-Khym contacted Institutional Shareholder Services, Brindle-Khym called this "total corporate-speak," adding, a proxy advisory service that recommends how shareholders of "In other words, 'Everything got fucked up. Maybe there's a public companies should vote on issues. ISS is influential, massive fraud. Maybe Brooks didn't tell us about TAP. Maybe  T Y L E R M A R O N E Y? 238 239 ? THE MODERN DETECTIVE our audit sucked, and we missed the fact that TAP existed. Brindle-Khym feels UNITE should have leveraged its new Maybe a few union gadflies and amateur financial gumshoes power. "We could have used the DHB deal to organize the spotted what we couldn't see.'" whole industry. There's not much garment production left in Brindle-Khym waited for Grant Thornton to call UNITE the U.S. except military apparel, and this falls under that to ask for corroboration of the union's findings, but the call umbrella.... Military apparel has to be made in the United never came. "I was dying for them to ask me for our records," he States by statute. We should have used our momentum to go remembers. "I would have turned over all our documentation." after other body armor manufacturers. We settled for pennies Brindle-Khym says that UNITE's third complaint about when we could've got dollars." the TAP fraud and Grant Thornton's resignation were the tip- As Brindle-Khym sees it, the politics of organized labor sty- ping points. mied its own goals. "At the higher levels of the union, they Brooks soon reached out to the union seeking to settle the wanted to notch this as a victory and move on. They can say, labor dispute. UNITE agreed to stop picketing, and by the We settled this case, we organized the workers, we got higher spring of 2004 a deal was reached. DHB would recognize wages. This garners more labor support and more money." the union at one of its plants and agreed to a modest wage in- crease and some improvements in health-care benefits. The union spun the agreement to the media as a major vic- tory. And to a certain extent, it was. "The campaign was about broader social justice," Cooper recalled. "We got to take a big trading, fraud, and tax evasion. Along with Sandra Hatfield, swing at corporate America and corruption. And workers got a DHB's COO, Brooks was accused of inflating the value of the contract and some basic respect." Interceptor vest to meet financial projections and failing to re- But the agreement had its flaws. The actual wage increase port to the IRS millions of dollars in bonus payments. The was small, Brindle-Khym recalled. "And we only got part of indictment acknowledged that the union's complaint to the SEC set the wheels in motion for what ultimately became a the company" in that the union settled on organizing one fac- tory, while DHB kept two of its other factories operating non- criminal investigation. union. During an eight-month trial in Central Islip, Long Island, in 2010, labeled "uproariously and persistently unseemly" by "UNITE's leaders also got distracted trying to orchestrate a merger with another union, which turned out to be a failure The Atlantic, prosecutors laid out proof that Brooks pillaged from the UNITE perspective," said Brindle-Khym. DHB of $190 million, and pocketed $69 million in a single day.  T Y L E R M A R O N E Y ? 2 4 0 2 4 1 ? T H E M O D E R N D E T E C T I V E Prosecutors and defense attorneys argued at length about defendant's table was Gerald Shargel, whom The New Yorker Brooks's mental and emotional health. Brooks's lawyers com- called "one of the most brilliant criminal defense attorneys in missioned an eminent forensic psychiatrist to examine Brooks. America." (Shargel was just one of dozens of lawyers retained One of Brooks's lawyers ended up filing the psychiatrist's by Brooks during his criminal proceedings.) three-hundred-page report as part of an unrelated civil lawsuit Brooks made a brief statement in which he apologized to in another court, where Brindle-Khym discovered it years later. the judge and his family, but not his victims, of which there In September 2010, a federal jury convicted Brooks on were thousands. Critics of the company, led in no small mea- fourteen counts of conspiracy, mail and wire fraud, securities sure by UNITE, which never received an acknowledgment fraud, obstruction of justice, and lying to auditors. Brooks had from the SEC that it had received the union's three complaints, already pleaded guilty to conspiracy to defraud the IRS and exposed a blatant pattern of criminal activity. Battered by filing false tax returns. shareholder lawsuits, criminal investigations, and regulatory Brooks, according to Loretta Lynch, then the U.S. attorney probes, DHB filed for bankruptcy protection in 2010. for the Eastern District of New York who became the U.S. at- Judge Seybert sentenced Brooks to seventeen years in prison torney general during the Obama administration, used the and ordered him to pay more than $70 million in forfeits and company as "a vehicle for plunder and a means to feed his own fines. greed." He "fancied himself a master of the sport of kings," she At the sentencing, Brindle-Khym sat near the back of the said. "In reality, he was a selfish man who looted his company, courtroom taking notes. After it ended, he walked out into the defrauded his investors, lied to the SEC and the investing pub- hallway and waited for Brooks's legal team. Having tracked lic, and sought to profit through insider trading right before Brooks's labyrinthine trip through the criminal justice system the collapse of his house of cards." for a decade, he was curious how his lawyers would react to the Brooks used shareholder money to fund a "brothel tent" at sentence. a company party (this, Brindle-Khym suspected, is what Bob "They were overjoyed," Brindle-Khym said: the govern- Barker was referring to at their meeting at the Philadelphia ment had asked for a thirty-year sentence. Many felt Brooks's Sheraton), spent $35,000 on pens, and flew in Aerosmith, punishment did not match his crimes, but Brooks died in 50 Cent, and Tom Petty to perform at his daughter's bat mitz- October 2016 in prison in Danbury, Connecticut. He was vah. The story was fodder for the tabloids. sixty-one. In August 2013, Brooks was sentenced before the U.S. dis- Brindle-Khym continued to follow Brooks's saga even after trict judge Joanna Seybert. Sitting next to Brooks at the the trial. "The whole ordeal was bittersweet," he remembers.  TYLER MARONEY ? 242 243 ? THE MODERN DETECTIVE "It should have been a major triumph. Here you had hundreds Brindle-Khym is still a staunch advocate of workers in their of immigrant workers who had no political or economic power adversarial posture with management, but the Brooks case has banding together and beating a wealthy, powerful company. It left him conflicted. could have been a place where workers lived with more dignity, "All of that struggle, all of that strife, the picket lines, the had more decency in their lives, established a foothold in part firings, indictments, the lawsuits," he said. "Sometimes I think of the American dream." all of it was pretty much for naught." Brindle-Khym also laments a lost opportunity for the labor movement. "The South is not a stronghold of organized labor, but UNITE had spent decades building a presence there. All of Blower, yes pot and hita proach to the Boles the, the garment factories that worked for the military were in the South?Alabama, Mississippi, Florida." his work, which came at the request of DHB's own embattled UNITE's campaign was, in one regard, disastrous. "Instead employees, would ultimately imperil them. of establishing decent wages and working conditions with de- In the past two generations, the labor movement, especially voted workers who aspired to make it in America, the company in the private sector, has lost significant power. While roughly went bankrupt and all the workers we fought so hard to orga- one-third of government employees now carry union cards, nize lost their jobs," said Brindle-Khym. "All of them." only about 7 percent of their private-sector comrades pay dues. It was a gory wreck. The union too has suffered, not as a This decline in labor's membership has tracked the widening result of the Brooks case, but because of political infighting; chasm of income inequality. Wealth is increasingly concentrated UNITE no longer exists as a stand-alone garment workers' col- in the hands of fewer Americans, and corporate tax rates con- lective. tinue to be slashed. What's more, the social safety nets we built What's more, the criminal case against Brooks unraveled in in the 1960s are being dismantled. Companies are winning; some respects. Because he died while his appeal of the jury's workers are losing. verdict was pending, a federal appeals court vacated most of his Brindle-Khym and his colleagues sought to create a balance convictions in August 2017. of power to counteract vast corporate resources. Their creativ- "Even in death, Brooks was one step ahead of the law," Qa- ity, passion, and partisanship symbolize how the less powerful deer said. Only the tax convictions, to which he had pleaded members of society might mobilize in their own defense in the guilty and were not challenged in his appeal, outlived Brooks. absence of support from the government.  TYLER MARONEY ? 244 2 4 5 ? T H E M O D E R N D E T E C T I V E What's more, Brindle-Khym's investigation filled a vacuum these material events?and, more broadly, of their financials? left by financial watchdogs and helped bring forward the kind are often euphemistic, vague, or short on detail. of information that consumers need if they are to make in- Another regulatory requirement is that companies alert formed decisions when investing in the public markets. shareholders to related-party relationships and transactions Companies whose securities are traded on American stock above a certain dollar threshold. Related parties are people and exchanges, like the Nasdaq and the New York Stock Exchange, companies? such as corporate entities, trusts, and members of are regulated by the Securities and Exchange Commission, officers' immediate families?who do business with the issuer which was formed in the early 1930s to prevent another Great or its affiliates. Depression. (When it created the SEC, Congress also devised For example, if Public Company A hires Private Company a system in which investors could sue companies for fraud and B to build silicon chips that Public Company A uses to con- other violations of securities laws.) struct mobile phones and Private Company B is owned by Among the requirements for listed companies is that they Public Company A's founder's sister, that probably needs to be regularly disclose their financial statements and report what disclosed to investors and the public. Or if a company reim- lawyers call "material," or serious, information in their filings. burses its chairwoman for flights that the CEO takes on the Materiality is a broad concept and encompasses anything that chairwoman's Learjet to attend marketing meetings, that rela- a reasonable investor would consider important to know in de- tionship should probably be disclosed too. ciding whether to invest in a company-for example, the resig- The idea is that transparency will act as a check to deter nation of a CFO, a major acquisition, the receipt of a criminal insiders from abusing their access to the corporate treasury at subpoena, or a substantive civil lawsuit. the expense of the company's shareholders, who, after all, own Such disclosure is crucial because, the reasoning goes, the the company. public must have access to issuers' independently audited, According to a not-for-profit organization called the Finan- management-verified records so investors don't dump their cial Accounting Standards Board, which sets standards for money into frauds, mismanaged companies, or anything in be- general accounting principles, there are specific types of trans- tween. actions considered "indicative" of related-party transactions, What Brindle-Khym knew throughout the Brooks case is such as borrowing money interest-free, selling real estate for a that most companies work hard to disclose as little as possible. price that differs significantly from its appraised value, and They behave as people do: they are reluctant to confess to vul- lending money with no terms for when the debt will be repaid. nerability. And when they do open up, their descriptions of And every public company must hire an outside auditor to.. TYLER MARONEY ? 246 identify transactions that pose a conflict of interest. It is not the transaction that is inherently improper but the failure to disclose it. It is not illegal to hire your son's advertising firm to produce television commercials to advertise the electric cars you manufacture; it is illegal to hide that relationship from your shareholders. Brindle-Khym, who is now my business partner at QRI, and EPILOGUE his colleagues were well aware of how such regulations work and, by extension, how an obscure concept like an undisclosed related-party transaction could be so disastrous for DHB. With- out this kind of investigative mind-set, there would be, I sus- pect, more CEOs like David Brooks running public companies. One afternoon in 20I6, I stood near a dook on the New Jersey waterfront preparing to raid a warehouse full of hard- ware manufactured by Brize Electronics, which makes televi- sions and mobile phones. Six of us had trundled out of a black Suburban: two rookie cops in uniform; John Wideman, a lawyer from Kohler & Stan- ner in New York City, who was responsible for the stewardship of this operation; Nikky Webster, John's summer associate; Hank Danner, a former FBI agent; and me. I wanted to be first to crash through the steel doors, but because I was carrying the iPhone (not the Glock or the seizure order from the court or the locksmith's tools), I fell back. The leads that got us here were some intelligence from someone who previously worked at Brize and whom we had developed as an informant, the results of some controlled buys at a retailer in Newark where we suspected counterfeit phones