Lonnie Brantley Jr. avoided prison by striking a plea deal for lying to federal housing regulators during an investigation into his troubled mortgage lending business.
But almost three years after his 2015 conviction, Brantley is facing the prospect of being locked up. That’s because he has repeatedly dodged his $3.3 million restitution obligation, prosecutors say, while living in a 5,300-square-foot Southlake home, driving luxury vehicles and taking lavish vacations to Horseshoe Bay outside of Austin and other places.
The government is asking a judge to find Brantley, 55, in default and force him either to sell his home and other assets and increase his monthly payments to $2,775 or to send him to prison.
Бизнес партнерство и бизнес-идеи
White collar criminals typically end up owing hefty financial restitution payments to their victims, who can be businesses, individuals or the government. Some try to hide assets and soon learn that the government has a host of tools to enforce the payments and collect.
Government lawyers are aggressive — some would say overzealous — in using their powers to seize and sell assets, even homes. All income is fair game, including retirement accounts, legal settlements and inheritances.
Restitution orders don’t go away in bankruptcy. Prosecutors can question offenders under oath about their finances and go after their assets for up to 20 years. And as the Brantley case illustrates, shirking restitution while living a cushy life can land a person on probation behind bars.
Brantley, prosecutors say, fraudulently transferred his assets to his wife in a post-nuptial agreement to "shield" them from his restitution order.
"If anything, his continued excessive spending, lack of contrition and litany of excuses demonstrate that he does not feel he owes the full restitution amount, nor will he cooperate and make all efforts to pay it in full," Assistant U.S. Attorney Mark Tindall said in a court filing.
U.S. Magistrate Judge Jeffrey Cureton on Feb. 13 agreed to give both sides two weeks to settle the matter before he rules on the government’s motion. Brantley’s lawyer has asked for more time. The government had not responded as of Wednesday evening.
Brantley hid his financial ties to an entity involved in his mortgage business, RH Lending, which provided federally insured housing loans for manufactured homes. Prosecutors say he improperly funneled federal housing money to himself via Sky Contractors and later denied having any connection to it.
He was initially charged with a felony and later pleaded guilty to a misdemeanor charge of lying to the U.S. Department of Housing and Urban Development.
Brantley received five years of probation.
His lawyer, Warren St. John, said after the hearing where his client was put on notice that the government doesn’t want to put his client in prison, it wants his money.
Tindall told the judge that the government doesn’t believe prison is appropriate now, but said it could become a "hammer," if needed.
"We need to have more transparency from the defendant," he told Cureton.
Steve Jumes, a Dallas attorney and former federal prosecutor, represents clients who owe millions of dollars in restitution. Jumes said the only way to avoid paying is to be genuinely broke.
"All of them are shocked about the breadth and power of the government’s capacity to collect," he said. "The great majority have no idea what’s in store for them during next two decades after they have paid their debts to society."
Tindall said in court filings that Brantley is able to pay an additional $1,275 per month toward his restitution, and he is asking the judge to order the higher amount.
Brantley argued in court filings that he has not delayed or refused restitution beyond the minimum court-ordered payments of at least $1,500 per month.
"Brantley has no assets to live a lavish lifestyle," said St. John, his lawyer.
He said his client has so far paid $350,000 toward his restitution. But Tindall said he only voluntarily paid $36,000 of that. The balance came from government enforcement actions, he said.
If you dodge restitution payments, you can easily find yourself in more trouble than you originally had.
A Wisconsin man, John E. Henricks III, used his vehicle businesses to file fraudulent claims with insurance companies and was sentenced in 2014 to a decade in federal prison. Hendricks was resentenced the following year for hiding assets and was given the maximum of 12 and a half years. He had used a sham divorce and other methods to avoid paying his court-ordered $1.3 million restitution, a judge ruled.
Jumes said a surefire way to bring the full power of the government down upon you is to play games with your assets.
Prosecutors could even seek a separate indictment against someone for intentionally avoiding their restitution obligation, he said. A whole different criminal case could mean additional fines, expenses and penalties including prison.
Restitution is paid to victims of a crime — either people or businesses — and is separate from asset forfeiture, which is punitive. One does not offset the other.
The U.S. attorney’s office in Dallas, concerned that Brantley was not being forthcoming about his finances, used its powers to force him to sit for a deposition last year so lawyers could question him under oath. As Tindall put it, the intent was to "flush out the family finances."
In community property states like Texas, the income of an offender’s spouse can be garnished even though the spouse did nothing wrong. Alan Banks’ wife found that out after retiring in 2012 as a Dallas County probation officer. A federal judge ordered the following year that her county retirement account be garnished to pay her husband’s restitution for a 2007 fraud conviction.
And Janice Stallons and her husband may lose their $750,000 Fort Worth house due to her 2012 bank fraud conviction. The government in December moved forward with its civil lawsuit against them, seeking to take the homestead in a foreclosure action given that Stallons still owes more than $7 million in restitution, court records show.
The government previously won judgments garnishing the Stallons’ financial accounts and selling other real estate they owned.
U.S. attorneys’ financial litigation units routinely obtain credit reports and subpoena banks and other financial institutions to track money and assets belonging to offenders and their spouses.
One Dallas fraudster, Howard Kent Baldwin, is still having his bank accounts garnished by the government — some containing only a handful of dollars — 17 years after his federal conviction for stealing money from Parkland Memorial Hospital. Baldwin, whose former company was a contractor for the Dallas hospital, owed $985,000 as of August 2016, court records show.
It’s all legal under the Mandatory Restitution Act of 1996. Monthly restitution payments typically are due immediately after conviction, even if the defendant is serving prison time.
Such was the case with former Dallas Cowboy Eugene Lockhart, who was sentenced in 2012 to four and a half years in prison for mortgage fraud. The government took steps four months later to garnish the couple’s community property, including bank accounts and his NFL pension, to apply toward his $2.4 million restitution.
Since getting out of prison in 2015, Lockhart has tried unsuccessfully to have his restitution reduced. As of August 2017, he still owed $2.2 million, the U.S. attorney’s office said.
Lockhart also learned that even though he paid one of his victims $10,000 in a 2016 civil settlement, he still owes the full amount of his restitution.
Jumes said the government’s mentality is often to seek collection regardless of whether or not there are still victims. A lot of restitution enforcement, he said, is about the fight.
"This is more about law than it is about justice," Jumes said. "This is driven by the fact that the law says you can."
Tindall says that in the months leading up to his 2015 guilty plea, Brantley was spending $8,000 on Las Vegas weekends, and thousands more at Neiman Marcus, Louis Vuitton and other high-end stores.
Even after his conviction, Brantley had trouble giving up the good life, according to Tindall. His monthly expenses included $621 on landscaping and $112 for a "Pooper Scooper service," court records show. His net worth was more than $900,000 in 2016, Tindall said in a legal filing in the case.
"Brantley and his family grew accustomed to his lavish lifestyle, supported by his fraud, and have lost touch with what an average family subsists on in Tarrant County," Tindall wrote in 2016.
Tindall filed a motion in October, saying Brantley has for more than a year "demonstrated a wanton disregard for his restitution obligations." Brantley obstructed justice by "thwarting" the government’s requests for financial information and its attempts to collect, he said.
After Brantley refused to sell his luxury SUVs and buy a less expensive car, U.S. marshals in September 2016 seized his Chevrolet Suburban from his home, court records show. But when they couldn’t find his 2015 Cadillac Escalade to seize, they agreed to let him sell it and keep $15,000 from the proceeds to buy a less expensive vehicle, according to records.
But Brantley was not willing to downgrade his ride, the government says.
He instead used the money to lease a 2016 Cadillac Escalade, Tindall said. He then titled it in his mother-in-law’s name "in an attempt to disguise the transaction" even though his wife, Anna, uses the vehicle, the government motion said.
Brantley started a new business called Advantage Heating, Air Conditioning & Plumbing after the government banned him from issuing Federal Housing Administration mortgages. But he has ignored the government’s demands to see the air conditioning business records, the motion said.
Brantley put the business in his wife’s name, and Anna Brantley earns about $120,000 per year despite not playing a large role in the company, Tindall said.
Brantley earns just $36,000 per year from the business despite working 80 hours a week, Tindall said. Their business earned over $1 million in revenue in 2016, Brantley told prosecutors.
The government says Brantley also improperly transferred "substantially all of his assets" to Anna in a "post-nuptial agreement" they signed months before his November 2015 plea deal and sentencing. Brantley told the government during a court-ordered deposition last year that he did it "for the best interest of my wife and my children and myself.
The couple is using the agreement as a "shield" to block the government’s attempt to get him to pay his restitution, Tindall said in his motion.
Despite government warnings that Brantley needed to curb his spending, he continues to pay for pool service, a concierge doctor and expensive hotels, Tindall said. Brantley, for example, stayed at an Omni Hotel in San Antonio for $400 per night in February 2016. And he spent more than $5,000 at Horseshoe Bay Resort near Austin.
Brantley has resisted the government’s efforts to get him to sell his Southlake house, valued at about $939,825, saying he needs it based on his family’s size and the school district, court records show. If he did sell, about $500,000 in equity he owns could go toward his restitution, Tindall said in his motion.
Brantley says in court documents that his mother-in-law is leasing the Escalade for her daughter and noted that it is his wife who owns the heating and air business.
Brantley’s attorney told the judge in court filings that his client has taken their four children out of private school to cut expenses. Brantley said he also surrendered his 401k and his children’s college funds to the government.
"Brantley’s credit has been ruined because of this case and he does not possess any credit cards in his name," St. John said.
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