Vested Interests

It's a hot afternoon on July 2 in Baghdad. Inside a silver van, two Iraqi insurgents sit at an intersection. Seventy-five yards away, Pfc. Stephen Tschiderer, a 20-year-old medic from upstate New York, stands guard next to a sand-colored Humvee.

One of the Iraqi men points a video camera, the other a sniper rifle. They're here, on this hot summer day, to kill an American and document the murder.

Tschiderer, wearing body armor from head to toe and carrying an M4 assault rifle, places his left hand on the Humvee and looks down a dusty road. His right side can be seen by the two men targeting him from the van.

"Go ahead," one of the Iraqi men says in Arabic. "Shoot him in the name of God."

"I am waiting for him to straighten up," the other responds.

Just then, Tschiderer turns and walks forward. His entire body faces the van.


The sniper bullet slams into the left side of Tschiderer's chest. He drops, like a boxer who's taken an unexpected uppercut to the sweet spot in his ribs.

"Allahu akbar," the men chant. "God is great."

But as soon as Tschiderer hits the ground, he bounds back to his feet. His body armor clangs against the Humvee's open door as he turns and points his rifle. He then scurries behind the armored vehicle, dazed but alive.

Minutes later, soldiers from the 101st "Saber" Cavalry Division shoot out the tires of the van and capture the two Iraqi insurgents in a nearby neighborhood. Tschiderer and two members of the Iraqi Army find the gunman on the roof of a house. The Iraqi, who had been wounded in the gunfire, surrenders, and Tschiderer bandages the gunman who had earlier tried to kill him.

After months of news reports about increasing violence more than two years after the invasion of Iraq, this was the type of positive story the U.S. Army needed.

The Pentagon released to the news media the videotape obtained from the captured insurgents, as well as photographs of Tschiderer and his body armor. One of those widely disseminated photos showed the only mark that the sniper bullet left on the soldier: a fist-sized black, blue, and red welt.

During one of many media interviews following the shooting, CNN anchor Tony Harris asked Tschiderer solemnly: "Stephen, the vest, it saved your life, didn't it?"

"Yes, the vest definitely saved my life," he answered.

That vest, an Interceptor OTV designed specifically for the U.S. military, was made right here in Broward County by Point Blank Body Armor. The largest division of New York-based DHB Industries, Point Blank operates three factories in Broward and is currently the largest supplier of body armor to the U.S. government.

Like a number of companies nationwide that consider the Department of Defense their largest customer, DHB Industries has seen sales skyrocket since 9/11. Thanks to Point Blank's lucrative military contracts to manufacture body armor for thousands of troops stationed in Afghanistan, Iraq, and Djibouti, DHB, a publicly traded company, has grown lightning fast, from $70 million in sales in 2000 to $340 million last year. During that period, DHB's chief executive and board chairman, David H. Brooks (whose initials he shares with his company), rewarded himself with a roughly 3,000 percent raise, from $525,000 in 1999 to $70 million last year.

The war has been good for DHB and its Point Blank Body Armor, which receives roughly 84 percent of its business through government contracts. During a recent deposition, an attorney asked Point Blank Vice President Dan Power to define the goal of his company. "To make the world's best body armor," he answered.

Whether the company succeeds at that goal is debatable. Although the government has not reported deaths or serious injuries attributable to defective body armor, the U.S. military in May recalled more than 5,000 pieces of body armor manufactured by Point Blank. Tests by the government revealed that Point Blank's body armor did not meet necessary safety requirements. And despite demands from military brass that Point Blank increase the quality of its armor, the company continued to send substandard products overseas, according to internal memos from military commanders.

The New York Police Department and the Southern States Police Benevolent Association (SSPBA) have also reported quality problems with Point Blank's body armor. In April, the SSPBA settled a lawsuit with Point Blank after the company agreed to replace an estimated 2,609 potentially defective pieces of body armor. What's more, on August 24, the National Institute of Justice, the federal agency that enforces standards for body armor, issued a study that found that nine of 12 vests manufactured by Point Blank Body Armor failed to meet safety requirements.

The quality concerns at Point Blank should come as no surprise to its low-wage workers. As early as 2002, employees submitted sworn affidavits alleging that Point Blank routinely cut corners to boost profits. In some cases, the company shipped improperly sized vests to fill orders more quickly, the affidavits claim. In others, Point Blank shipped allegedly defective body armor that exposed the shoulders or other parts of the body that should have been protected.

Yet none of these quality concerns has stopped Point Blank from raking in millions in taxpayer dollars. In December 2004, the company won another $190 million contract to supply body armor to the military through 2006.

"We have concerns with Point Blank," says David Goldenberg, legislative director for U.S. Rep. Alcee L. Hastings. "The congressman for a long time has had concerns about the quality of the product that has been coming out of the company and going to the troops overseas."

Point Blank Body Armor has profited handsomely from what the Brookings Institute describes as the most privatized war in U.S. history. Maybe that's what explains all the American flags.

On Point Blank's catalogs and website, Old Glory is draped behind soldiers and the company's trademark: "Protecting America's Heroes." At the company headquarters in Pompano Beach, three flagpoles stand high above a plaque that reads: "These flagpoles erected and dedicated to the memory of America's fallen heroes by Point Blank Body Armor, Inc."

Before those heroes fell, however, there wasn't much to wave a flag about at Point Blank, which was once a struggling, New York-based manufacturer teetering on the brink of bankruptcy. In 1995, another body-armor producer, DHB Industries, rescued the company from insolvency and moved its operation to a factory in Oakland Park. Sandra Hatfield, formerly vice president of a DHB division, Protective Apparel Corp. of America, was named president of Point Blank. Impressed that she was a female executive in a decidedly male-dominated industry, the South Florida Business Journal dubbed her a "steel magnolia" and quoted her as saying: "When am I going to be on the cover of Forbes?"

Hatfield had reason to be cocky. In 1999, only four years after DHB acquired the failing Point Blank, business was growing. The military, the FBI, and law-enforcement agencies nationwide were purchasing Point Blank's body armor, which consisted of a vest stitched around Kevlar, a stronger-than-steel Dupont fiber that, when wrapped over itself in sheets, creates a plate strong enough to stop a speeding bullet. Most of Point Blank's body armor sells for about $400 apiece.

In 1999, DHB Industries, whose Point Blank division accounts for most of its revenue, lost $22.3 million on $35.1 million in revenue. The next year, the company eked out a $5.7 million profit on $70 million in sales. Then came 9/11, and DHB/Point Blank's profits soared. In 2001 and 2002, thanks to several multimillion-dollar contracts from the Department of Defense, which was reacting to a well-publicized shortage of body armor in the military, the company earned $10.1 million and $16 million, respectively, on a combined $228.3 million in revenue.

"We believe the uptick in state, federal, and military spending on body armor is still in the early stages," CEO Brooks told investors on August 6, 2002. "The war on terrorism and a heightened focus on homeland security bode well for the business prospects at DHB."

One day later, Point Blank received yet another order from the military. This one, worth $9.2 million, required the company to manufacture body armor to be used by Army engineers charged with disposing of landmines.

But around the same time, a heated labor dispute exposed a policy at Point Blank that apparently put profits before quality.

Allegations that Point Blank Body Armor has sold defective or improperly sized body armor first came in 2002. That year, factory workers at the company's Oakland Park facility tried to form a labor union under the UNITE (Union of Needletrades, Industrial, and Textile Employees) umbrella. The company's laborers, most of whom did not speak English and were paid at or close to minimum wage, claimed that they were forced to endure poor working conditions, which allegedly included a lack of drinking water in the facility in an effort to curb the frequency of restroom breaks.

On July 18, 2002, at 9:40 a.m., several employees left their workstations and marched toward management's offices to deliver union demands. As they walked to make their delivery, they chanted "¡Si, se puede!" or "Yes, we can!"

Seeing the demonstration, Hatfield immediately called 911. "It looked like a riot, and something was about to occur," Hatfield would later say in a deposition.

Leading the charge was a Haitian-American man named Sadius Isma. He handed over two documents, which included demands for better work conditions and benefits, to company officials. "It will get bad," Point Blank's chief operating officer, Ronda Graves, remembered Isma saying.

And it did. Although eventually successful, the effort to form a union resulted in three lawsuits filed in local and federal courts, including one in which Point Blank alleged that UNITE officials, in their bid to organize employees, defamed the company with claims of quality problems.

"Point Blank in our opinion was as difficult to deal with as any company we'd ever dealt with," remembers Harris Raynor, UNITE's vice president.

To defend itself against Point Blank's claims, attorneys for UNITE in November 2002 submitted to federal court more than 150 pages that alleged quality problems with Point Blank's body armor.

Among the documents was an April 2002 test by the New York Public Employee Safety and Health Bureau of body armor that Point Blank sold to the New York Police Department. The test of 1,000 vests found more than 900 to be defective. The safety bureau discovered that a number of vests were improperly sized, leaving an officer's abdomen exposed. Others did not perform as they should have, failing to stop bullets that they were designed to resist. In one example, the report stated, "The bullet went right through the protective panels. Had this been on the body of a police officer, the officer would have been either seriously injured or dead."

U.S. military troops in Afghanistan reported similar problems. According to a Department of Defense report, 43 percent of soldiers in Operation Enduring Freedom complained that Point Blank's body armor "hindered their mobility." Sizing seemed to be a problem, the report concluded. "One soldier was shot through the side and the bullet passed between the front and rear armor by the sizing strap..." the report noted. "Soldiers complained that the armholes are too small and that they lose circulation."

But even more startling was the fact that Point Blank officials not only knew of quality and sizing concerns but they tacitly condoned the sale of defective or improperly sized body armor, according to 17 sworn affidavits filed by workers in the company's Oakland Park factory. Among the charges:

Umberto de la Cruz, a ten-year employee, claimed that the company sent him to a class on quality control. "I do not know why they had me go through this class," he said. "I've never really been able to use what I learned. I worked nearly two months on quality control in the production line. They stopped having me do that because I found too many quality control problems. Sandra Hatfield would tell people that if [the order] has to go out, then it goes out." De la Cruz also claimed that sizing labels would be changed to fill orders and that defective body armor was knowingly sent to the military. He said: "We shipped an order of around 80 FSBE [Full Spectrum Battle Equipment] vests to the U.S. military in Arlington, Virginia. Where they go after that I do not know. What I do know is that the ballistics, which is the Kevlar protective fabric, was not cut to fit into the shoulders of the outer shell. This leaves the shoulders exposed to bullets getting through the vest. I brought this to the attention of Wayne Kolbeck, the quality control manager. Kolbeck said the order had to be there the next day, so let it go like that. Before the shipment and after, they sent a lot of orders out bad like this."

Ana Garcia, a four-year employee of the company who worked in quality control, claimed that she once inspected 300 to 400 Interceptor OTVs and found that they were labeled "large" despite having medium-sized collars. "I said to Ricky [Brown, the supervisor] that these collars are not made well because the collars are smaller than the jacket," she said. "Ricky went to the office and returned and told me that the vests were OK, that they should pass."

Milagros Santos, who worked at the company for six years sewing jackets, said she would often complain to management that the "ballistics," the protective Kevlar material, were too large or small for the vests into which they needed to be sewed. "When it's cut too large, we try to fix it with scissors," Santos said of the Kevlar plate. "When it is too small, we sew it as best we can. However, we still send out a lot of work which is too large or too small."

Manuela Negreira, who worked at the company for five years sewing jackets, said she would often be ordered to sew small-sized ballistics into medium-sized vests. "When the ballistic is smaller than the cover, it moves around," she said. "I don't think it provides adequate protection."

Miguel Paredes, a machine operator who worked at the company in 1997, claimed that collar buttons often wouldn't snap together correctly and that they routinely changed size tags to fit orders. "I have pointed this out to Joe Aldona, the shipping supervisor," Paredes said. "Joe told me to close my mouth."

Blanca Mas, who worked at Point Blank in October 2001, said it was her job to change size labels. "Sometimes I erase the old size with alcohol, and I use a stamp to place a new size on the vest," she said.

On May 24, 2004, U.S. District Judge Kenneth A. Marra dismissed Point Blank's defamation claims against UNITE. Dan Power, Point Blank's vice president of marketing, recently declined to discuss quality issues at the company, claiming that government contracts prevent him from discussing how body armor is manufactured. "All I will say is that we make the best body armor in the world."

But quality concerns haven't gone away.

As evidence that DHB Industries' Point Blank Body Armor has profited substantially from military engagements around the globe, taxpayers need only look at the company's 2004 Christmas party. Held on Singer Island in Palm Beach County, the 50-person affair rewarded Point Blank's most loyal employees and customers.

It cost the company $207,000, or roughly $4,000 per head, according to court records filed in Miami-Dade County. The host of the party was CEO Brooks, who that year earned $70 million, plus $186 million in company stock sales.

"David H. Brooks is an interesting story," says Sarah Anderson of the Washington, D.C.-based Institute for Policy Studies. Anderson recently co-wrote a study examining the dramatic rise of executive compensation at defense contractors since 9/11. "For some large companies, such as Halliburton, the CEOs would be extremely wealthy even if a war wasn't going on," Anderson says. "But with David H. Brooks, it's clear he's made his millions from this war. We haven't had adequate oversight with what's happening with these defense companies."

While 2005 profits have continued to be good for DHB and Point Blank -- on July 28 the company announced its 22nd consecutive quarter of increased earnings -- the year has been plagued by nagging quality concerns.

On January 3, 2005, the Southern States Police Benevolent Association (SSPBA) filed a class-action lawsuit against Point Blank in Broward Circuit Court, alleging that the company knew its body armor was potentially defective. The models of body armor in question all used Zylon, a synthetic fiber developed in Japan. Because of Zylon's ability to provide similar protection at less weight than Kevlar, the body armor industry in the late '90s embraced the new material. But in 2002, Toyobo, Zylon's developer, discovered that the material degraded in strength over time and particularly fast when exposed to heat. SSPBA alleged that Point Blank failed to notify customers that "under normal expected operating conditions, the vests would not meet the National Institute of Justice standards."

Point Blank body armor made with Zylon would degrade over time to such a point that lives could be endangered, Carter K. Lord, a ballistics expert in Sedalia, Colorado, claimed in an affidavit submitted as part of the lawsuit. "Law enforcement officers will be (and are) wearing vests which no longer can protect them from threat rounds being fired at them," Lord said.

In April, Point Blank settled the class-action lawsuit, agreeing to replace an estimated 2,609 pieces of body armor sold to law-enforcement agencies nationwide. As part of the settlement, which is worth an estimated $1.6 million, Point Blank did not admit wrongdoing and has since discontinued the use of Zylon.

"Did Point Blank know it was shipping unsafe body armor?" asks Grady Dukes, legal counsel for the SSPBA. "I think if you look at the settlement agreement, none of that is acknowledged. But that was certainly among our allegations in the initial complaint."

Calling the information classified, Point Blank VP Power would not say whether the company's military body armor, the Interceptor OTV, uses Zylon. But the body armor used by troops overseas does appear to have safety problems.

As early as July 19, 2004, according to memos originally obtained by the Army Times newspaper, the Marine Corps found "major quality assurance deficiencies within Point Blank." One month later, on August 24, 2004, the military rejected two orders from Point Blank after tests revealed that the vests did not meet safety requirements.

But at the time, the military faced a severe shortage of body armor. Under pressure to equip troops, Lt. Col. Gabriel Patricio in November 2004 requested that nine Point Blank orders that did not meet safety requirements be sent to troops overseas. "I understand and accept the increased risk posed by accepting the reduced protection," Patricio wrote in a memo to the military's head of contracting.

Point Blank's Power told New Times that the U.S. government has never informed the company of quality concerns. But a memo signed by Point Blank's president contradicts that claim. On November 30, 2004, Hatfield signed a waiver that allowed the release of body armor that the company knew had not met government safety standards.

On May 4, 2005, the U.S. Marine Corps recalled 5,277 Interceptor vests manufactured by Point Blank Body Armor. In a statement provided by Point Blank, Lt. Col. Patricio, who has since retired, said the vests in question later passed independent tests and were not substandard or defective. "I would personally take any vest and plates in the inventory and deploy to Iraq today," Patricio said in his statement.

Perhaps to stave off potential investor fallout, on the day before the recall, DHB Industries promoted Point Blank's Hatfield to DHB chief operating officer and named her successor: retired four-star Army Gen. Larry Ellis, a 35-year veteran who previously led a command of more than 500,000 soldiers.

But the former military man has been unable to prevent DHB's falling stock price. On May 4, DHB closed at $8.33 per share. It's since slid to roughly $3.75 per share. And on September 16, California lawyer David R. Scott filed a class-action lawsuit against DHB, alleging, among other things, insider trading and investor fraud because "the company falsely represented the quality and safety of its body armor products."

At a recent investor conference call, Ellis reiterated that quality is the primary goal at DHB's Point Blank: "DHB has the best body armor product in the industry. This point is dear to my heart and to the values of DHB. We place enormous efforts on product innovations and ensuring that our customers are our top priority. DHB wants to ensure that the men and women who protect this nation, both military and law enforcement, are confident that the protective gear they wear will do what it's meant to do when it's put to the test -- that is, save their lives."

But David Goldenberg, Rep. Hasting's legislative director, still has significant concerns about the quality of the armor strapped to young troops overseas.

"It's beyond irresponsible that troops went into the war with an inadequate amount of body armor and the possibility that the body armor they're wearing is flawed," he said. "Part of what we need to do is guarantee the quality of Point Blank's body armor. But the onus also falls to the military. If the military knowingly accepted defective body armor solely to cover up the fact that it was irresponsible and did a horrible job planning for this war, then those are questions that the president has to answer."

On August 17, more than a month after Pfc. Stephen Tschiderer's body armor stopped a sniper's bullet, national news media were still clamoring over his story. Matt Lauer, of NBC's Today show, was in Baghdad for a story on the war. He pulled Tschiderer into the camera's view.

Dressed in a hat and camouflage, Tschiderer held up a large ceramic plate like the one that was inserted into his Interceptor vest on July 2. "This is a version of the plate that stopped the round and saved my life," Tschiderer said.

Lauer stepped back and held the microphone to his mouth. "So when people say, 'Boy, they wear that body armor, and it's hot, you say, 'Forget the heat. These things save lives. '"

"Oh, yeah," Tschiderer replied.

And saving lives in the body armor business has never been better.

On July 20, 18 days after Tschiderer took a sniper bullet to the chest, Point Blank Body Armor received an additional $10.1 million contract from the U.S. government.

It's going to be another profitable year.

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Trevor Aaronson
Contact: Trevor Aaronson