Thursday, July 06, 2006

KEN LAY'S PASSING -- It has been big news, so here's a brief round-up:

The Man:

NYT opines: "A true bootstraps story, Mr. Lay's life seemed at first scripted by Horatio Alger, now by Theodore Dreiser. With his folksy charm, the preacher's son who grew up poor in Missouri captivated the nation's attention in a way that Jeffrey Skilling, the former McKinsey consultant who was Mr. Lay's co-defendant, never could. A boardroom Icarus, Mr. Lay made a spectacular fortune and befriended the president before his beloved company evaporated, taking the dreams and retirement accounts of workers and investors with it and utterly changing the way corporate books and decisions are scrutinized."

Peggy Noonan opines: "Putting aside all judgments and conclusions, all umbrage, outrage and indignation, and all debates on who was most responsible for the Enron scandal--putting all those weighty and legitimate concerns aside--isn't it obvious that Ken Lay died of a broken heart? We forget that people do, or at least I forget, but they do."

Steven Pearlstein opines: "The remarkable rise and tragic fall of Ken Lay is really a story about a man whose optimism was finally outrun by reality. Early on, he found he could succeed by putting the best face on things, stretching the truth, dismissing the doubts of naysayers. But in the end, those habits became his undoing."

The Case:

NYT reports that his death complicates the government's forfeiture effort: "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."

WaPo adds: "Lay's death all but ensures that defense lawyers will seek to throw out his criminal conviction -- and casts serious doubt on the ability of the government and investors to recover money from the Lay estate, legal experts said. Barry Boss, a Washington lawyer not involved in the Enron case, said Lay's death complicates prosecutors' request Friday for a $43.5 million money judgment against him because it is not clear whether the government can seek restitution against someone who has died. 'Under the prevailing case law . . . I don't see any way they can proceed against Lay for restitution in the criminal case, or anything else for that matter,' said Boss of Cozen O'Connor."

Forbes explains:
With his death from a massive heart attack today, Ken Lay cheated justice. And then some. Not only will the Enron founder not end his days in prison, but according to legal precedent, his entire case will be erased from the records.

That means that, in legal terms at least, Lay was never convicted, tried or even indicted for Enron misdeeds.

For Lay's estate, and his widow Linda, the positive implication of this grim day is that the government now has no means to collect on its forfeiture claim against Lay for $43.5 million.
But the Houston Chronicle reports the civil cases will proceed anyway: "The two large civil lawsuits against him and others linked to Enron will also move forward, but it's not yet clear if either will continue to seek damages from Lay's estate."

Pot Pourri:

WSJ Law Blog has reactions, questions and answers, and a wikipedia update tick-tock.