The upcoming distribution of a fund of more than $73 million to 'DHB Class Members' with previously recognized claims in ‘In re DHB Industries, Inc. Class Action Litigation’ has been announced.
Robbins Geller Rudman & Dowd LLP and Labaton Sucharow LLP made the announcement on Monday, May 6, 2019.
The contents of the release appear below.
Robbins Geller Rudman & Dowd LLP and Labaton Sucharow LLP (‘Co-Lead Counsel’) are pleased to announce the upcoming distribution of a fund of more than $73 million to DHB Class Members with previously recognized claims in In re DHB Industries, Inc. Class Action Litigation.
This amount represents more than 89.5 per cent of the $81,540,718.81 in recognized claims in the original class action settlement, approved almost 11 years ago. Co-Lead Counsel estimate that distribution of those funds, which are more than double the original cash settlement benefit, will begin in July, after the funds are transferred by the Government and Class Members with recognized claims have had an opportunity to confirm or update their contact and address information.
This case, which is pending in the United States District Court for the Eastern District of New York, originally settled in 2008. That settlement created a cash settlement fund of $34.9 million, less attorneys’ fees and expenses, plus 3,184,713 shares of DHB common stock for the benefit of the Class.
A series of unanticipated events, however, threatened the viability of the original settlement and prevented its implementation. Those events included an appeal in a companion shareholder derivative action, DHB’s bankruptcy filing, and the criminal prosecution of company founder David H. Brooks and other senior executives. These events resulted in disagreements among the settling parties and numerous ancillary lawsuits and proceedings that interfered with the original settlement.
In the many ensuing years, Co-Lead Counsel, with the assistance of bankruptcy counsel at Lowenstein Sandler LLP, have worked diligently to protect the interests of Class Members and preserve and even improve the original settlement. On August 18, 2015, the Court approved a proposed supplemental settlement agreement (the ‘Supplemental Settlement’). The Supplemental Settlement resolved many of the material disputes among key parties to the original settlement and the DHB bankruptcy estate and created a mechanism for sharing any additional future funds that might become available to either the Class or the DHB bankruptcy estate, which was deemed to be a victim of David Brooks’ fraud.
Even then there were major obstacles to the completion of the settlement. Although Brooks was not a party to the Supplemental Settlement, and was serving a 17-year sentence in federal prison for securities fraud and other offenses, he filed an appeal of the order approving the Supplemental Settlement in September 2015. His estate continued to prosecute that appeal after Brooks died in prison in October 2016 and agreed to voluntarily dismiss it only in June 2017.
Later that same year, the principal stakeholders with a claim to Brooks’ assets restrained in connection with the federal criminal proceeding, including Co-Lead Counsel on behalf of the Class, came together in an effort to achieve a global settlement. That effort culminated in a Global Settlement Agreement on October 25, 2018.
To be able to receive its share of the funds negotiated and made available through the Global Settlement Agreement, the Class, through Co-Lead Counsel, petitioned the Department of Justice for a ‘remission’ award from the assets restrained by the Government and ultimately forfeited for the benefit of victims. That remission award was approved in an amount of $73,089,224.23. This amount, less only a cost reserve of $71,581 for the claims administrator’s estimated costs to distribute the fund (as approved by the Government), will be awarded to Class Members, on a pro rata basis, who submitted valid, recognized claims in the Class Action on or before January 26, 2018. 1
“We are pleased to announce this outstanding result for the Class,” said Samuel H. Rudman of Robbins Geller. “Through hard work and perseverance over the course of more than a decade, we were able get investors a remarkable 90 per cent of their recognized losses.” Added Ira A. Schochet of Labaton Sucharow: “This result became possible only through the unrelenting efforts of Co-Lead Counsel and bankruptcy counsel on behalf of the Class.”
Because eligible Class Members have already been found to be entitled to a settlement award, they do not need to take any further action to receive their share, but may wish to update or confirm their contact information on file with the claims administrator, including their mailing address. To do so, they should email the claims administrator at [email protected] no later than Monday, July 8, 2019. When contacting the Claims Administrator, each Class Member should provide as much information as possible, including the member’s claim number(s) if available, the name and mailing address listed on the member’s claim(s), and the member’s current mailing address. If any Class Member is requesting a change of the claimant name originally listed on a claim for payment purposes, the member should also provide supporting documentation for that request.
Class Members with questions about the case should contact Robbins Geller at 800-449-4900 or Labaton Sucharow at 888-219-6877 (or [email protected]).
Co-Lead Counsel represent lead plaintiffs George Baciu and the NECA-IBEW Pension Fund, as well as the certified Class, in the litigation, which is pending before the Honorable Joanna Seybert.
In re DHB Industries, Inc. Class Action Litigation, Inc., No. 2:05-cv-04296-JS (E.D.N.Y.).
Robbins Geller Attorneys
Samuel H. Rudman
Mark T. Millkey
Labaton Sucharow Attorneys
Ira A. Schochet
Nicole M. Zeiss
1 There are 50 eligible Class Members who have tax or other financial obligations to the Government. After the deduction of those liabilities, the Government will distribute any remaining awards directly to those 50 Class Members.
(Robbins Geller Rudman & Dowd LLP)