A few of my PBN websites have been hacked and used to send mass spam or setup for phishing. My bad - poor security. This happens often. I remove it and get on with my life.
However during that time, some of these PBN sites have been reported to Google and now give the "This site may harm your computer" warning when found in the SERPs and the big warning when you try to visit directly in Chrome or FF.
As the website is still indexed in Google, toolbar PR still high, and in some instances, has cached version still in the index, do you think PR is still being passed through those links? Or, are you aware that when a Malware/Phishing report is accepted by the Google machine, does PR become void?
If not, is there any legitimate documentation/references to confirm your personal opinion?