Ken Lay's money

The subject of what happens to the allegedly ill-gotten gains Ken Lay owned now that he's dead was raised yesterday as the news of his death came out. Today, the Chron takes a closer look.

When the criminal case is vacated, so too are the prosecutor's efforts to seize assets from Lay. The government could file motions to seize assets through a civil proceeding, however. That move by the government seems likely, said David Smith, a forfeiture expert with English & Smith in Alexandria, Va., and former deputy chief of the asset forfeiture division of the U.S. Department of Justice.

"I don't see any way the government can get around this on the criminal side," Smith said.

The two main civil cases, a massive shareholder suit that was granted class-action status on Wednesday and the suit brought by former Enron employees can continue to seek damages, but the estate of Ken Lay will take the place of the man as a defendant.

It's not clear what will happen with the civil suits however.

When former Enron executive Cliff Baxter killed himself in early 2002, attorneys representing the shareholders decided to drop his estate from the case.

Attorneys for the shareholders could not be reached for comment Wednesday

Robin Harrison, an attorney representing the former Enron employees, said he had hoped to begin discussing a possible settlement with Lay and co-defendant Jeff Skilling, Enron's former CEO, later this summer because they were the only two parties left who had not either been dismissed or reached a settlement.

"It's too early to tell what might happen to our efforts to resolve the case," Harrison said.

If any of Lay's assets were frozen by the government the freeze would go away as the case was vacated, Smith said. That means the plaintiffs in the civil cases would have to scramble to get a lock on those assets, which would be particularly hard to do in the civil arena.

Perhaps even more significant for the civil cases, once the case is vacated it's unlikely Lay's prior indictment and conviction could be used as evidence in any ensuing trials, Smith said.

"They would have the burden of proof to prove his guilt all over again," Smith said. "It's a mess for the government and the victims, who were probably already counting the money."

I find that all very strange and a little hard to understand. Ken Lay was indicted and convicted. Yes, I know there's precedent in the common law, yes, I understand the rationale of not visiting his sins on his heirs, and yes, I agree that as long as an appeal is in process his story has not been fully written yet. It's still feels wrong to me that the plaintiffs in the civil matters that are pending against him have been dealt such a blow. I just think they should not be denied the opportunity to use what we all know and saw happened in their litigation.

Be that as it may, that's how it is. I agree with Loren Steffy when he writes that Lay's death does not bring closure to the Enron saga, but that it "opens the wound anew, and once again underscores the human toll extracted by Enron's tragedy." I can feel sympathy for Ken Lay, as Tom does, even if I disagree with the assertion that Lay was unfairly hunted by the federal prosecutors. But at the end of the day, my sympathies really lie with the people who were hurt by Enron's fall. Whether you believe Ken Lay had a direct role in causing that hurt or not, I believe they deserve it more.

Posted by Charles Kuffner on July 06, 2006 to Enronarama | TrackBack