from article>
In yet another bizarre twist to the Enron saga, the sudden
death of Kenneth L. Lay on Wednesday may have spared his
survivors financial ruin. Mr. Lay's death effectively voids
the guilty verdict against him, temporarily thwarting the
federal government's efforts to seize his remaining real
estate and financial assets, legal experts say.
speculation from an internet discussion group>
Speculation is rife that Lay was murdered by the CIA because
he was about to cut a deal with prosecutors. In exchange for
a much shorter sentence, Lay said he was going to reveal
hitherto undisclosed recordings he made of the secret energy
policy talks he had with Vice President Dick Cheney at the
beginning of the Bush presidency. "I made the
administration's energy policy," Lay said last Monday to
reporters. "The fix was in, and when the tapes are released
Bush and Cheney are going down with me." Lay was scheduled
to be sentenced Oct. 23. He faced decades in prison.
one more 'convenient' death for the neocon pirates...
rkm
______________
Original source URL:
http://www.nytimes.com/2006/07/06/business/06legal.html?_r=1&th&emc=th&oref=slogin
July 6, 2006
THE LEGAL CASE
Lay's Death Complicates Efforts to Seize Assets
By SIMON ROMERO
HOUSTON, July 5 - In yet another bizarre twist to
the Enron saga, the sudden death of Kenneth L.
Lay on Wednesday may have spared his survivors
financial ruin. Mr. Lay's death effectively voids
the guilty verdict against him, temporarily
thwarting the federal government's efforts to
seize his remaining real estate and financial
assets, legal experts say.
"The death of Mr. Lay in all likelihood will
render the government's hard-fought victory
null," said Christopher Bebel, a former federal
prosecutor based here who specializes in
securities fraud.
But while the death of Mr. Lay may have limited
government efforts in his criminal case, he
remains the subject of civil lawsuits by the
Securities and Exchange Commission and former
investors and Enron employees. Those lawsuits
could still proceed, with the aim of taking
control of some of Mr. Lay's remaining assets.
Mr. Lay and Jeffrey K. Skilling, the two chief
executives who guided Enron through its rise and
fall, were found guilty in May of fraud and
conspiracy, and were free on bail pending their
sentencing.
Just last Friday, the Justice Department had
moved to seize a total of $183 million in assets
belonging to the two men.
The bulk of those assets belong to Mr. Skilling.
Five years ago, Mr. Lay's personal fortune was
valued as high as $400 million. But a large part
of that was tied to the value of Enron's stock,
which is now virtually worthless.
Mr. Lay testified at his trial that his net worth
had declined to liabilities of $250,000, hampered
by mounting legal bills and poor-performing
investments. But his finances were apparently not
so dire. According to legal documents filed at
the federal courthouse here Friday, Mr. Lay had
holdings in an investment account at Goldman
Sachs valued at $6.3 million.
In addition, prosecutors said that Mr. Lay's
full-floor luxury apartment in this city's River
Oaks district had at least $1.5 million in value
that could be forfeited to the United States.
The government's forfeiture effort ahead of the
planned sentencing of Mr. Lay and Mr. Skilling
this fall, however, has been thrown into doubt,
at least in relation to Mr. Lay's assets since
the death of a criminal defendant before his
sentencing and the appeal process may void the
criminal case against him.
"Technically, he was found guilty, but that's
extinguished as of today," said Joel M. Androphy,
a prominent defense lawyer in Houston.
A person involved in the government's action
against Mr. Lay, who did not want to be
identified because of the sensitivity of the
case, said that Mr. Lay's death did not
necessarily rule out proceeding with forfeiture
actions, explaining, "The family at the end of
the day cannot sit on the fruits of the fraud."
But, this person said: "Even if the verdict is
nullified, he paid for his actions with his life.
That is more tragic."
The civil lawsuits against Mr. Lay may continue
with efforts to seize his remaining assets, but
even those moves may be complicated by his death
since technically there was no conviction of Mr.
Lay in the criminal case to rely upon as proof.
Still, lawyers in the civil lawsuits may proceed
against Mr. Lay's remaining assets through
motions inspired by admiralty law. Under that
law, the government or a private party can take
action against property (or the ship) without
going after the owner (the captain), legal
experts said.
Lawyers involved in the civil lawsuits, however,
have already signaled that they were more
interested in seeking compensation from
institutions with deeper pockets that may have
profited from improper dealings with Enron, like
Wall Street investment banks, rather than
focusing on Mr. Lay. Shortly after Enron filed
for bankruptcy protection in late 2001, Mr. Lay
still had extensive real estate holdings,
including three beachfront homes in Galveston,
Tex., and two luxury homes in Aspen, Colo., one
with five bedrooms and the other with four
bedrooms. All those properties have since been
sold.
Any life insurance policies bought by Mr. Lay may
also be shielded from federal seizure efforts
since state laws normally cover such payments.
While jurors found Mr. Lay guilty, his death may
also complicate any efforts to go after life
insurance proceeds, even if the original policies
were acquired with ill-gotten gains.
Attention now shifts to Mr. Skilling, Mr. Lay's
protégé. The sentencing of Mr. Skilling is now
set for October instead of September at the
request of his Los Angeles-based lawyer, Daniel
Petrocelli, who had a previously scheduled trial
involving the rock band The Eagles.
Mr. Skilling has more assets open to federal
seizure than Mr. Lay had, including more than $50
million in cash and securities in a Charles
Schwab account, $4.6 million in value at his
9,000-square-foot home in Houston and a
condominium worth nearly $580,000 in Dallas,
according to the government's forfeiture
documents.
Mr. Petrocelli said the government's efforts to
go after the assets of his client and those of
Mr. Lay illustrated an overreaching of federal
authority. "The issue is the recklessness and
overzealousness with which the government has
pursued the Enron case right from the inception,"
Mr. Petrocelli said.
At issue, too, are Mr. Skilling's obligations to
his lawyers. Mr. Petrocelli's law firm, O'Melveny
& Myers, is awaiting more than $20 million of
payments from its client for work carried out
since last September. "Jeff wants to pay his
lawyers, to whom he owes tens of millions of
dollars," Mr. Petrocelli said, "and would like to
satisfy family obligations including child
support."
Lawyers for Mr. Lay may also be left with unpaid
invoices. Michael Ramsey, a lawyer for Mr. Lay
who experienced his own heart problems during the
trial, declined to comment on Wednesday, saying
simply, "I am not well."
For Mr. Skilling, an even more pressing concern
may be his sentencing before Judge Simeon T. Lake
III, with sentencing experts saying Mr. Skilling
could get more than 20 years of jail time in a
medium- or maximum-security prison, in line with
federal sentencing guidelines. If anything, Mr.
Lay's death may warrant even harsher scrutiny of
Mr. Skilling's crimes by Judge Lake.
"Jeff Skilling is quite literally the last man
standing in the Enron scandal," said Robert A.
Mintz, a former federal prosecutor now in private
practice in New Jersey.
Alexei Barrionuevo contributed reporting for this article.
Copyright 2006 The New York Times Company
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