What Happens If Your Client Dies While the Appeal Is Pending? (Hint: Appeals Matter)

Alone on a jettyDavid Brooks apparently lived a rather lavish lifestyle. As the head of a successful body armor company, he was rumored to have thrown a $10 million bat mitzvah party for his daughter that included performances by 50 Cent and Aerosmith.

In 2007, the fun came to an end. Mr. Brooks was named in a superseding indictment on charges stemming from his participation in several alleged schemes to the fraud shareholders and obstructing an SEC investigation. He was also charged with tax fraud.

After his guilty plea (on some counts) and conviction (on other counts), he was sentenced to substantial prison time. While in prison, he passed away. In an appeal before the Second Circuit, his family and estate challenge the status of his criminal convictions as well as the very large restitution order against him.

So, what does happen if your client dies during a criminal case? We hope we never have to reach this issue, but the Brooks opinion gives some helpful guidance.

The Pretrial Forfeiture and Bail Bond Issues 

After Mr. Brooks was indicted, the district court issued a pretrial order restraining 14 bank accounts and investment accounts held by Mr. Brooks and his family. The court concluded that those accounts would be subject to forfeiture if Mr. Brooks were convicted.

But the government was not done with its pre-trial and pre-conviction harassment of Mr. Brooks. To avoid pretrial detention, the government asked that he be subject to a substantial bond and full disclosure of his financial holdings. The district court ultimately concluded that he was a flight risk because of his wealth and access to foreign accounts.

The district court therefore issued a bail release order in January 2008. This order restricted Mr. Brooks to home detention, independent auditing of his bank accounts, and prohibited him from holding liquid assets overseas without prior approval. It also imposed a $400 million bond.

Ultimately Mr. Brooks and his family provided $48 million in cash as security for the $400 million bond. At the hearing about the bail situation, the district court reminded Mr. Brooks that the failure to disclose any assets could lead to loss of that cash security. The Second Circuit opinion notes that the court “canvassed” his family members at the hearing as well.

Revoking Bail

In January 2010, just before trial, the government filed a motion to revoke Mr. Brooks’ bail. The government contended that Mr. Brooks and his family had hidden assets in violation of the order.

In a nutshell, the government’s affidavit in support of its motion stated that a confidential source had met with Mr. Brooks and his family members to create various overseas corporate entities and to open overseas bank accounts to hide millions of dollars in assets. According to the grand jury testimony of Mr. Brooks’ pilot, Mr. Brooks another family members “flew to Switzerland in a private plane to deposit assets in Swiss safe deposit boxes.”

The district court agreed and order forfeiture of the $48 million cash security. (The government, of course, sought forfeiture of the entire $400 million bond, even though that amount had not been paid to the court.)

Because there had already been certain approved withdrawals from the $48 million cash security, only $22.5 million was left. Mr. Brooks’ now-ex-wife and his children claimed ownership of $17.7 million, and Mr. Brooks claimed ownership of $1.8 million. The remaining $3 million had gone to legal fees.

The Trial and Its Outcome

Mr. Brooks went to trial in September 2010. After an eight-month trial, the jury returned a guilty verdict against him on all counts. Mr. Brooks then pleaded guilty to one count of conspiracy to defraud the IRS and two counts of tax fraud. With respect to the plea on the tax counts, Mr. Brooks agreed to pay $2.8 million in restitution as to the IRS.

He also waived his right to appeal. (Cue moody music as foreshadowing.)

Mr. Brooks was sentenced in August 2013 to 204 months in prison. That judgment also included a fine of $8.7 million and a restitution amount of $2.8 million on the tax count. It finalized the preliminary order of forfeiture on the non-tax counts.

Next, in March 2015, the district court issued an opinion and final order of restitution pursuant to the Mandatory Victims’ Restitution Act. This order related solely to the non-tax counts. It imposed $53.9 million in restitution to the successor to Mr. Brooks’ his company, and $37.6 million to individual victims of the supposed scheme. It also finalized the $2.8 million that Mr. Brooks had agreed to pay to the IRS on the tax accounts.

Mr. Brooks appealed the convictions and the restitution order. (More moody music.) He also appears appealed the revocation and forfeiture of his billboard. (Same.) The district court agreed to stay the disbursement of assets that were being held with the court.

Post-Trial Motion to Set Aside Bond

Mr. Brooks his ex-wife, Terry Brooks, and his children filed a motion with the district court under Rule 46(f)(2) to set aside the bail bond and release the cash security. They argued that it made no sense to hold the bail bond because he was in custody in a second argument related to the propriety of the superseding indictment.

The district court denied the motion in June 2015, and they appealed. (You get the picture.)

Mr. Brooks’ Death

On October 27, 2016 Mr. Brooks died in prison. The cause of death has not been reported.

The appeal of his convictions and restitution order were still pending at the time.

What Happens to the Conviction, Restitution and Bail Bond Order?

In this appeal before the Second Circuit, Mr. Brooks and his estate moved for an “abatement” of his convictions restitution and forfeiture orders as well as abatement of the fines and forfeited bail bond security.

The Second Circuit first cited well-established law related to the death of a defendant. The court held that when a convicted defendant dies while his direct appeal is pending, “his death abates not only the appeal but also all proceedings had in the prosecution from its inception.” United States vs. Libous, 858 F.3d 64, 66 (2d Cir. 2017).

The question then, was how to apply this abatement doctrine to (1) the convictions, (2) the orders of restitution, and (3) the forfeiture of the bail bond.

The Convictions

The Court of Appeals resolved Mr. Brooks’ convictions easily. Because he died while his appeal of the non-tax convictions was pending, the convictions must abate. Because Mr. Brooks had pleaded guilty to the tax counts and waived his right to appeal, however, the convictions did not abate as to those counts. (See why that music played earlier?)

The Restitution Amounts

Whether the restitution order to Mr. Brooks would abate was an issue of first impression for the Second Circuit. Relying on a 2017 Supreme Court case, Nelson v. Colorado, the court held that “when the criminal conviction abates upon the death of a defendant, any restitution ordered as a result of that conviction must also abate.”

The court of appeals recognized that this result “may work to frustrate the purpose of Congress to compensate victims through restitution, “but the statute requires restitution only when there is a valid (final) conviction. Because the conviction was still on appeal, it was not valid and cannot serve the basis of the restitution order.

The Bail Bond 

Finally, the court reached the issue of the forfeiture of the bail bond after the misconduct of Mr. Brooks and his family. The court of appeals explained that the bail forfeiture hearing was collateral to the determination of guilt or innocence, and to Mr. Brooks’ criminal case. In fact, the forfeiture of a bail bond is damages for breach of a civil contract, not a punishment for committing a crime.

As a result, the Second Circuit concluded that the abatement doctrine “does not apply in the context of bond forfeiture proceedings.”

Appeals Matter

This opinion was not an outright win for Mr. Brooks or his family, because they will not get their money back from the bail security. But it is an interesting lesson on what happens if your client passes away while the case is pending.

It’s also an important reminder as to why filing a notice of appeal—even if you are sure to lose on the merits down the road—may be worthwhile for your client.

This entry was posted in Appeal, Criminal Forfeiture, Restitution. Bookmark the permalink.

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