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Judge throws out David Brooks fraud convictions

David Brooks leaves the federal courthouse with

David Brooks leaves the federal courthouse with his attorney on Friday, January 18, 2008 in Central Islip, New York. Credit: Howard Schnapp

A federal appeals court in Manhattan on Wednesday wiped out the fraud convictions of David Brooks, the body-armor magnate who died in prison last year while serving time for looting his publicly traded Westbury company.

The 2d U.S. Circuit Court of Appeals said that since Brooks was still appealing a jury’s guilty verdicts on securities, mail and wire fraud and obstruction of justice at his death, the convictions and a related $91 million restitution order to victims never became final and were extinguished.

“When a criminal conviction abates upon the death of a defendant, any restitution ordered as a result of that conviction must also abate,” wrote appeals court Judge Christopher Droney.

The court did let stand Brooks’ guilty plea to tax charges that was not appealed and $2.8 million in restitution to the government on those charges, and said millions in cash security posted by Brooks and his family that was forfeited for bail violations could not be recovered by the family.

Although the larger restitution order stemming from the fraud convictions was knocked out, the Brooklyn U.S. Attorney’s office is still pursuing a civil forfeiture action against Brooks’ assets that could produce a fund for victims. The 2d Circuit said $160 million is frozen.

Brooks, whose DHB Industries made body armor for the military and bulletproof vests for police, was convicted in Central Islip federal court in 2010 on a 17-count indictment that accused him of looting $6 million from his company and making $185 million by inflating the stock price.

He was serving a 17-year sentence when he died at age 61 last year at the federal prison in Danbury, Conn.

When he was charged in 2008, Brooks was released on a $400 million bond. His bail was later revoked for hiding assets overseas, and about $19.5 million remains of the cash security that was forfeited, the court said.

Brooks’s death did not entitle his estate and family members to recover that money, the 2d Circuit said, because the bail violation was separate from the criminal convictions that were appealed and then extinguished by his death.

“A forfeited bail bond is not a punishment for a criminal offense that ceases to have purpose after a defendant’s death, but instead is a remedy for a breach of the terms of the bail release order,” the court said.

A spokesman for the Brooklyn U.S. Attorney’s office declined to comment on the decision. A lawyer for Brooks did not comment, and lawyers for his wife Terry and his three children did not return calls for comment.

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