If Found Liable, Simpson Faces More Modest Lifestyle

As they await a verdict, the attorneys pressing a civil lawsuit against O.J. Simpson are gearing up for a possible second phase of his trial by examining new documents about Simpson’s finances.

Though the documents--which the defense turned over this week--are sealed, sources close to Simpson say legal fees have gobbled up large pieces of his fortune. He does retain some substantial assets, the sources said, including pension funds worth $2.5 million that are largely protected from creditors, and several pieces of property. But he is also in debt to several creditors, including his attorneys.

If he is held liable for the deaths of Nicole Brown Simpson and Ronald Lyle Goldman and ordered to pay hefty damages, Simpson could be forced to sell his home, his cars, even his football trophies.

To be sure, even if jurors slap a multimillion-dollar judgment against him, O.J. Simpson will never be forced onto skid row. California law protects him from that fate. But the man who embodied the rags-to-riches American Dream--scrapping his way from the ghettos of San Francisco to the glitz of Brentwood--would have to auction off his Bentley auto, give up his tennis courts and adjust to a decidedly more modest lifestyle if jurors vote a big award to the plaintiffs.

Simpson would be able to tap his pension funds only for reasonable, everyday expenses, such as grocery bills or rent payments or off-the-rack clothes, according to business lawyers. If he used his retirement funds to buy anything a judge deemed too pricey or indulgent--or even if he deposited the money in a bank account--his creditors could go after it.

“If he used it to buy a $20,000 Honda, that Honda would be subject to levy” by creditors, including the plaintiffs if they win a judgment against him, said Richard Brunette Jr., a Los Angeles attorney who specializes in finance law. “The court is not going to permit him to live a luxurious lifestyle . . . but he will not be required to sell pencils on the street.”

Simpson’s current financial state will become public record only if jurors find him liable in the civil trial.

In their current round of deliberations, which began Tuesday, they are weighing one immediate money issue: whether Simpson should compensate Goldman’s parents for the loss of their son, and if so, how much he should pay. But the court has ordered them to decide that issue without considering Simpson’s finances at all.

If the verdict goes against Simpson, the trial will move into a second phase, dedicated to testimony about Simpson’s financial assets. Jurors will then determine how much Simpson should pay the victims’ relatives in punitive damages--which are designed to punish a wrongdoer for his misdeed.

Under California law, jurors must take three factors into consideration when calculating punitive damages: how reprehensible the defendant’s misconduct was, how much economic damage it caused, and how wealthy the defendant is.

In the Simpson case, there’s little debate about the brutal nature of the slayings. The economic loss is also uncontested; lawyers on both sides agreed that Goldman’s ruined clothes were worth about $100 and Nicole Simpson’s dress cost $250. So the main point of contention will be Simpson’s wealth.

“If someone’s net worth is zero, it only takes a $1 judgment to punish him,” said Beverly Hills attorney Paul Kiesel, who handles many wrongful-death lawsuit. “O.J. is going to attempt, without question, to represent to the jury that he is penniless.”

Already during the civil trial, several hints have been dropped that he’s just about broke.

One of his expert witnesses, Dr. Michael Baden, told jurors that he had to cut his customary fee because Simpson could not afford to pay him the full rate. And Simpson himself testified that his onetime fortune of $10 million has all but evaporated because of his legal expenses. “Now I know a lot of rich lawyers,” he told jurors ruefully.

The sources familiar with Simpson’s finances agreed that he has been scrambling to pay off his legal debts. But they acknowledged that Simpson may have more assets than they are aware of.

Indeed, in a court document filed this week, the plaintiffs spoke of assets beyond those the sources mentioned. They indicated that Simpson’s pension plans “had a combined value of several million dollars as of February 1996.” They also mentioned that Simpson recently sold Pigskins Inc., a corporation they said was valued at more than $1 million a year ago. Finally, the document alluded to stakes Simpson once owned--and may have sold--in a medical building and an unspecified real estate venture in Kentucky.

Records show that Simpson has used some of his property to pay his legal bills.

He obtained a line of credit for up to $3 million from Hawthorne Savings & Loan during the criminal trial, with his Rockingham Avenue estate as collateral. He also sold his New York apartment for $1.1 million, using that money to pay off some of the bank loan, one source said. And a partnership he belongs to has sold some Orange County condominiums, according to sources.

In addition, Simpson sold his red Ferrari for about $100,000. (The Hertz Corp., which owned his infamous white Bronco, has taken that vehicle back. Simpson now owns a Bentley and a Chevrolet Suburban.)

Simpson also raised up to $2.5 million in jail by selling autographed football cards, bronze statues, photo rights to his homecoming party and his book “I Want to Tell You.” Still, he owes his criminal defense lawyers at least $500,000, according to one of his friends.

To save money in the civil trial, Simpson has put up his out-of-town counsel in Kato Kaelin’s old room. But costs keep mounting, and sources said Simpson still owes money to his lead civil attorney, Robert C. Baker, who bills at $250 an hour.

According to knowledgeable sources, at least some of Simpson’s expenses in the civil suit are being paid by the underwriter of his homeowner’s insurance policy. And Simpson has signed papers that effectively entitle Baker to claim a stake in the Rockingham estate if the rest of his fees are not paid. The estate was once valued at $5 million.

But though his legal bills continue to mount, Simpson is far from destitute.

Public records show that he recently paid off two overdue tax bills topping $706,000. And last Friday he complied with a court order and paid $9,500 to an attorney who represented several entrepreneurs whom Simpson sued in a civil suit that was recently dismissed.

With his tax bill paid off, Simpson’s San Francisco house is free of liens. So it would be relatively easy for the plaintiffs to seize if they win a judgment against Simpson. Doing so, however, would mean displacing Simpson’s wheelchair-bound mother, Eunice, who lives there. The plaintiffs could also go after Simpson’s other property, which sources said includes land in Cabo San Lucas and condominiums near the Laguna Niguel Ritz Carlton that he owns with partners.

If they win a big judgment, the plaintiffs could hound Simpson for the rest of his life--or at least until they collected every last penny he owed them. Attorneys familiar with procedures for collecting awards said the plaintiffs would have several ways to pursue Simpson’s funds.

They could hire marshals to seize Simpson’s bank accounts. They could send investigators to scour the world for hidden assets. And they could garnish 25% of his future earnings, including the royalties he earns from his books and movies.

“They will grind Mr. Simpson, no doubt about it,” civil attorney Brian Lysaght said.

California law would allow Simpson to keep some of his assets no matter how big the judgment against him. He could retain $75,000 in home equity, plus a car valued at $1,900. He could hold onto $5,000 worth of jewelry and art. And he could keep furniture and clothing that are deemed “ordinarily and reasonably necessary”--which means a bed but not a Jacuzzi, a fridge but not a Rolex, a television set but not an original Warhol lithograph.

Even Simpson’s fat pension funds, which were first reported in this week’s Time magazine, are not completely out of his creditors’ reach.

He established two funds through his businesses, and is entitled to pensions from the National Football League and the Screen Actors Guild, sources said. Simpson has already borrowed money from some of the funds, they said. If he needs more, he can cash out the funds for about half their value, or he can draw roughly $6,000 a month from them once he turns 55 in five years, the sources said.

But if he takes the money out of the retirement trusts, he exposes it to his creditors unless he uses it right away to pay off reasonable, everyday expenses, according to business lawyers.

“If he took out $100,000 and put it in his bank account, the plaintiffs could attach it,” said Encino business attorney Ronald Michelman, who specializes in debtor law. “If he buys a suit for $5,000, that may be worth something [to his creditors as well]. But if he buys a suit from Sears, he’s probably OK.”

To protect some of his assets should the verdict go against him, Simpson’s best bet might be to move to a state with more liberal protections for debtors.

In Florida, for example, creditors are not allowed to seize a debtor’s home, no matter what its value. So in theory, Simpson could liquidate all his assets and buy a Miami home that the Goldman and Brown families would never be able to touch, even if they win the civil trial.

Even in Florida, however, there’s a catch: A debtor can keep only $1,000 worth of household goods out of his creditors’ reach.

Declaring bankruptcy in the face of a massive verdict against him would not help Simpson much at all. In fact, several attorneys suggested that the plaintiffs might try to force Simpson into bankruptcy if they win a big judgment against him.

If Simpson entered bankruptcy, all his creditors could file claims with a court-appointed trustee. Those with secured claims would collect first--Baker, for example, would get a share of the proceeds from the sale of Simpson’s Rockingham house. Any money left over would be divided among the remaining creditors.

Once those assets were gone, most of Simpson’s debts would be discharged. Even if his criminal trial attorneys had received just 10 cents for every dollar they were owed, they could not pursue him further. But the judgment in the civil case would remain in effect. So the plaintiffs would be able to pursue any assets Simpson accumulated in the future, without competition from other creditors. The plaintiffs can renew the judgment every 10 years until it is paid in full.

“The Browns and the Goldmans could chase Mr. Simpson for the rest of his life,” Brunette said. “It would give them a free pass in the future to go after Mr. Simpson’s other assets.”

The first money Simpson produced to pay off any judgment against him would probably go to cover the costs plaintiffs’ lawyers incurred while working on the case.

That tab does not include the attorney fees. But it does include expert witness fees and travel bills--plus copying costs, transcript fees, deposition expenses, and the price tag for preparing all the exhibits used during the trial. In the Simpson case, outside lawyers estimate that the plaintiffs’ expenses could hit $1 million.

After the costs are covered, any money that Simpson paid would be divided among the three plaintiffs--and their lawyers.

To maximize the punitive damage award, if the trial reaches that stage, the plaintiffs’ lawyers plan a full-court press to convince jurors that Simpson is a wealthy man. Even if his bank account looks bare, they hope to convince jurors that simply being O.J. Simpson is an asset, worth millions in book deals or autograph sales or speaking tours.

But determining the value of Simpson’s name is a dicey proposition.

Though Simpson did make money off his notoriety during the criminal trial--he received a $1 million advance for “I Want To Tell You”--his most recent commercial venture, a video proclaiming his innocence, was a bust. He has lost his job as a spokesman for Hertz. And whatever the verdict in the civil trial, Simpson is unlikely to land any new jobs as a corporate pitchman or any lucrative offers to sit on boards of directors.

“The name O.J. Simpson,” Lysaght said, “might have a negative value.”

Times staff writer Matt Lait contributed to this report.