Reynolds likely safe from forfeiture in case
With its former chief executive facing federal tax evasion charges, one lingering question is: What will become ofReynolds& Reynolds, the Kettering-based company he once led?
The chances that the federal government could seize any part of the auto dealer software producer in the case against Bob Brockman are slim, according to Brian Hayes, an attorneywhopractices in the area of white collar defense and investigations.
Last month, prosecutors in San Francisco announced that a federal grand jury returned a 39-count indictment charging Brockman — the former CEO of Reynolds & Reynolds — with tax evasion, wire fraud, money laundering, andother alleged offenses.
Reynolds is mentioned in the 39-count federal indictment against Brockman, but the company faces no criminal or civil charges or allegations of wrongdoing.
At the time the indictment wasmade public last month, Brockman was Reynolds’ chairman and chief executive. Late last week, Reynolds said Brockman has stepped down from those roles. Tommy Barras, a longtime executive with thecompany, is now the CEO.
But defense attorney Brian Hayes doubts the government could end up owning any part of the company through forfeiture laws. The chances of that are “low,” he said.
“Criminal forfeiture is tied to the property of the defendant,” Hayes told the Dayton Daily News. “So if the company is not a defendant in the criminal case, forfeiture could not be imposed against the company.”
He added, “Now if the defendant, Mr. Brockman, has an ownership interest, the government could seek to forfeit that as a substitute asset, given the way the indictment reads now.”
AspokesmanforReynolds was adamant Tuesday that Brockman has no ownership stake in the business, which employs more than 1,000 workers on a Miami Valley Research Park campus.
“Mr. Brockmanhasnorole withReynolds after stepping downasChairmanandCEO,” Reynolds& Reynolds spokesman Thomas Schwartz said in an email to the Dayton Daily News. “Mr. Brockman is not a shareowner in the company.”
Schwartz did not respond
to questions about when Brockman relinquished or sold his stake with the company.
AReynolds spokeswoman told the Dayton Daily News last month that its business will continue.
“The allegations made by the Department of Justice focus on activities Robert Brockman engaged in outside of his professional responsibilities with Reynolds & Reynolds,” said a statement from the company last month. “The company is not alleged to have engaged in anywrongdoing, and we are confident in the integrity and strength of our business.”
The government has not alleged that company property is directly forfeitable, Hayes said. The government cannot generally restrain a defendant’s assets prior to conviction and sentencing, without a seizure order or somekind of authorityissued by a court, he said.
There are sometimes cases in which the government will ask a judge to issue a seizure order to control a defendant’s assets.
“As far I can tell from the public record, that doesn’t appear to have happened in this case,” Hayes said.
Other assets, like real estate or vehicles “are easier to forfeit and thuswould be more likely substitutes, meaning the chances of the company itself being subject to forfeiture are low,” Hayes’s lawfirm, Chicago-basedHolland & Knight, said in a brief mention of the case against
Brockman on its web site.
Brockman founded the companythatacquiredReynolds& Reynolds 14 years ago.
In 2006, Brockman was a 65-year-old entrepreneur who ranUniversalComputer Systems, a Houston company he started in his living room more than three decades before, when he took over what was then a much larger competitor, Dayton-based Reynolds and Reynolds Co., in a $2.8 billion deal.
Brockman took Reynolds to private ownership, and it remains privately held today.
In their indictment last month, federal prosecutors said a Brockman subsidiary, Dealer Computer Services Inc., borrowed $2.4 billion to finance themerger of Universal Computer Systems and Reynolds, paving theway to his ownership of the local company.