Collecting damages may be hard, legal experts say Combination of laws could be used to protect assets

O.j. Simpson Verdict

February 05, 1997|By BOSTON GLOBE

Now that a jury has determined that O. J. Simpson is liable for the wrongful deaths of his former wife and her friend, it will begin hearing arguments tomorrow to determine punitive damages.

But collecting any punitive damages and the $8.5 million in compensatory damages already awarded by the jury will be difficult for the families of Simpson's victims, legal specialists say.

"The simple fact is that, in the U.S., people who are well-advised and have lots of assets can keep them out of the reach of creditors with impunity," said Elizabeth Warren, a Harvard Law School professor and a leading scholar on bankruptcy laws. "That's a shocking fact."

Regardless of whether Simpson seeks bankruptcy protection, his pensions from the National Football League and the Screen Actors Guild will be untouched.

Two additional pensions set up by Simpson in the 1980s are also likely to be protected from his creditors, experts say. In all, the pensions reportedly are worth about $2.5 million.

Moreover, Simpson could keep up to $125,000 of equity in his heavily mortgaged Brentwood mansion, any life insurance policies and any money he has been able to squirrel away to various havens overseas.

"It's a shocking system, in that it makes people of limited means pay extensively, while letting wealthy people keep large amounts of assets," Warren said.

The nation's laws governing debt collection are already being reviewed by a government commission set up in 1994, partly in response to complaints that too many rich people were using the laws to shed their debts like an old layer of skin.

The National Bankruptcy Review Committee has held hearings over the past two years, with recommendations to be made later this year.

'There's a problem'

"There's no question the commission feels there's a problem," said Stuart Gelberg, a New York bankruptcy trustee. "Will the Simpson verdict have an impact on the recommendations? I don't know."

Under existing law, judgments in cases involving intentional infliction of harm, such as Simpson's, cannot be excused through bankruptcy.

But the list of assets that cannot be touched is long enough to make collection difficult, if not impossible, when a debtor has taken precautions.

Thus, the families of victims Nicole Brown Simpson and Ronald L. Goldman will probably try to reach an agreement with Simpson, under which he would avoid bankruptcy but pay them off slowly, even as he reaps income from personal appearances, card shows and other activities.

"I don't think bankruptcy would help him much," said Ken Klee, a Los Angeles bankruptcy attorney. "If he stays in California, he could use a combination of state and federal laws to protect his assets."

Simpson's home on Rockingham Drive in Brentwood was heavily mortgaged to cover the legal fees from his criminal trial. The amount of equity left in the house is probably less than $125,000, meaning he could keep the house under California law, Klee said.

Still, Simpson might be hard-pressed to cover the costs of maintaining the house, which has a tennis court and swimming pool.

"I don't know that he can afford the property taxes and the upkeep," Klee said. "My house is a mile south of his, and I can say it costs a lot to keep the house going.

"Utilities are $10,000 per year, and then you've got the pool people and the garden people."

Simpson is known to have liquidated some assets -- condos in California and New York -- to pay legal expenses from his first trial. He still owns a condominium unit in San Francisco that his mother lives in, which should be considered fair game for his creditors, lawyers said.

Possible overseas assets

Many people have speculated that Simpson could have moved other assets overseas, given the likelihood of the civil suit after the criminal case. In fact, the Goldman family reportedly has hired a detective to search for any hidden Simpson assets in other parts of the world.

If Simpson does have money invested abroad or put in the names of his children, the court will likely be called upon to determine whether he was deliberately shielding assets. If so, he could be required to turn them over to the Goldmans and Browns.

Most specialists believe that, given the long interval between the criminal and the civil cases, Simpson's advisers probably prepared him for an adverse judgment, shielding as much money as possible.

"Like most of the O. J. debacle has shown, if you have the money the system works for you," Gelberg said. "If you have money, you definitely get a better shake."

Pub Date: 2/05/97

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