Death Puts Lay Conviction in Doubt
HOUSTON — The death of Enron Corp. founder Kenneth L. Lay early Wednesday raises the possibility that his conviction could be erased, complicating the federal government's effort to close the books on one of its most ambitious corporate fraud prosecutions.
Lay, who at age 64 succumbed to a massive heart attack at a rented Colorado vacation home, was found guilty by a federal jury in May along with former Enron Chief Executive Jeffrey K. Skilling of conspiracy and fraud. The two were star defendants in the notorious business scandal, which vaporized more than 4,000 jobs and billions of dollars in stockholders' investments.
But when a defendant who pleaded not guilty dies before sentencing, as Lay did, in most cases the conviction is wiped out on the grounds that the defendant did not have the opportunity to appeal, legal experts said.
"Fifth Circuit law in particular is clear on this point," Stanford University law professor Robert Weisberg said Wednesday, referring to the federal region that includes Houston.
Lay and Skilling were scheduled to be sentenced Oct. 23 and were widely expected to face prison terms of more than 20 years. They were convicted of lying to Enron employees and the public as part of a conspiracy to cloak the deteriorating financial condition of a company that claimed $101 billion in annual revenue at its 2000 peak and ranked No. 7 on the Fortune 500.
Only last week, federal prosecutors filed a motion with the Houston trial court seeking to recover $43.5 million that they said Lay had illegally obtained through Enron bonuses and a line of credit extended by the Houston energy company. Weisberg and other experts said that Lay's death might pose obstacles to that effort but that they expected the government to pursue restitution.
"I foresee them fighting tooth and nail," Houston lawyer Philip H. Hilder said.
The Justice Department declined to comment Wednesday. "We'll make a statement at the appropriate time, and the only thing we know is the appropriate time is not today," spokesman Bryan Sierra said.
Lay's death will have little effect on the pending civil fraud lawsuit brought by the Securities and Exchange Commission, or on the massive consolidated lawsuit brought by former Enron employees and shareholders, scheduled for trial in Houston on Oct. 16, said Patrick J. Coughlin of San Diego law firm Lerach Coughlin Stoia Geller Rudman & Robbins, lead counsel in the case.
- U.S. Moves to Speed Lay's Bank Fraud Trial Apr 05, 2005
- Ex-Enron Executive Pleads Guilty to Fraud Oct 06, 2004
- Lay Seeks Separate Juries for Two Trials Mar 15, 2005
