Enron's Ken Lay has died.- Page 4

[DG]

Posted: 7/6/06 at 12:49am

ZONE - it really isn't the concept of defending him - I already said I pretty much agree with your appraisal of his life. I just don't get the 'dancing on a grave' mentality.

Believe me, I KNOW I'm outside the norm on this. I lived in Colorado when the whole Ted Bundy thing occurred - in one of the towns where he escaped from jail, in fact - and I remember being just as stupified at the 'celebration parties' during his execution.

If anything, I see this as a catalyst for sober reflection.

[PalJoey]

Posted: 7/6/06 at 1:38am

The New York Times

The Legal Case

Lay's Death Complicates Efforts to Seize Assets

By SIMON ROMERO
Published: July 6, 2006

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.

NY TIMES: Lay's Death Complicates Efforts to Seize Assets

[jimnysf]

Posted: 7/6/06 at 3:37am

The NY Post




http://www.nypost.com/news/nationalnews/lay_him_low__enrons_chief_crook_ducks_big_house_by_dropping_dead_nationalnews_marsha_kranes.htm


LAY HIM LOW: ENRON'S CHIEF CROOK DUCKS BIG HOUSE BY DROPPING DEAD
By MARSHA KRANES

July 6, 2006 -- Enron founder Ken Lay, the slippery schemer convicted of fraud and conspiracy in the energy giant's monumental collapse, dodged jail after all.

Lay, who faced up to 45 years in prison at his scheduled October sentencing, died of a heart attack early yesterday while vacationing with his wife Linda in Colorado.

His death at age 64 came six weeks after his conviction, and just five days after federal prosecutors asked a judge to force Lay to forfeit $43.5 million he pocketed while conspiring to defraud thousands of investors and employees of his once-mighty international energy conglomerate.

Lay - free on $5 million bond that allowed him to stay in either Houston or Colorado while awaiting sentencing - was on a week's vacation in the posh Aspen resort area when sheriff's deputies and the local ambulance corps received a "medical emergency" call at 3:41 a.m. Eastern time.

They rushed to a house in Old Snowmass and transported Lay to Aspen Valley Hospital. He was pronounced dead there at 5:11 a.m., said Joe DiSalvo, investigations director for the Pitkin County Sheriff's Office.

An autopsy performed by the Mesa County coroner showed he had died of heart disease.

The coroner, Dr. Robert Kurtzman, said the autopsy also revealed that Lay had suffered a heart attack in the past.

"It's a very sad ending for the whole Lay family saga. There are very few people of his age and abilities who flew as high or who fell so low," said John Olson, an analyst who enraged Lay with his incredulous reactions to Enron's often indecipherable financial reports.

Lay's pastor said the ex-Enron exec had succumbed to "a massive coronary."

"His death was totally unexpected. Apparently, his heart simply gave out," said Steve Wende, pastor of the First United Methodist Church of Houston, which the disgraced Enron founder and his wife attended regularly.

A Lay family spokeswomen said the family would have no immediate comment.

"The Lays have a very large family with whom they need to communicate, and out of respect for the family, we will release further details at a later date," said Kelly Kimberly.

It was not known if Lay had been ailing recently. But during his grueling four-month trial - at which he told jurors he had "achieved the American nightmare" - he often appeared fatigued.

Lay, who enjoyed living large, once owned four homes in Aspen's exclusive Roaring Fork Valley, and continued to visit the popular resort even after he was forced to sell all his houses in the wake of the 2001 Enron collapse.

The Old Snowmass house where he was vacationing is owned by I.V. Pabst, according to public records.

Fighting back tears at the end of her driveway yesterday, Pabst refused to disclose whether Lay had rented her house or was staying there as her guest.

"Ken was a wonderful, kindhearted, generous neighbor, friend and father," she told reporters. "In my humble opinion, he was sorely maligned by a bunch of people who didn't know who he was."

"He loved being here," she said. "He was happy, happy, happy."

Former Enron CEO Jeff Skilling, who was convicted of fraud with Lay on May 25 for hiding the company's failing finances, refused to comment on his co-conspirator's death when reached by phone by the Associated Press.

But Skilling's attorney told the Houston Chronicle, "Jeff is devastated by Ken's passing."

"Jeff worked closely with Ken for many years and Ken's passing is a tremendous loss not only to Jeff but to all of the people who worked with Ken and got to know his. He was a good man," said lawyer Daniel Petrocelli.

Both Lay and Skilling steadfastly insisted there was no wrongdoing or conspiracy behind Enron's bankruptcy. But a jury determined that the company's finances were based on a tangled web of fraudulent partnerships and schemes, not the eye-popping profits that it reported to investors and the public. Lay claimed the company was brought down by bad press, colluding short-sellers, and the corruption of former Enron chief financial officer Andrew Fastow.

He painted himself as a victim of Enron's collapse and planned to appeal his conviction.

"He was proceeding with his appeal, and was about to retain me to do it," Sam Buffone, a Washington, D.C., appeals lawyer, told the Houston Chronicle.

Buffone said that in recent weeks, he had met with Lay to discuss his case, and had been helping prepare for Lay's sentencing hearing.

During his trial, Lay, known as an affable charmer, became irritable and combative, and sometimes self-pitying, on the stand.

He testified that he and his wife, Linda, were once worth $400 million, and complained that it was "all gone."

He said he had to sell his Aspen houses and three homes in Galveston, Texas, to pay his debts and legal fees, and claimed that his only remaining assets were his $4 million Houston condo and his three cars.

Federal prosecutors disagreed. They claimed he and his wife still had millions in annuities and other investments.

Lay arrogantly defended his post-Enron extravagant spending - including $200,000 on his wife's birthday party - despite $100 million in personal debt.

"It was difficult to turn off that lifestyle like a spigot," he told the jurors. In addition to the fraud and conspiracy conviction, Lay also was found guilty at a separate, nonjury trial of bank fraud and making false statements to banks about his personal finances.

In Washington yesterday, White House spokesman Tony Snow distanced President Bush from the former confidant and big-time contributor he had nicknamed "Kenny Boy."

"The president has described Ken Lay as an acquaintance, and many of the president's acquaintances have passed on during his time in office," Snow said.

Lay was born into poverty.

The son of a poor Baptist preacher in Tyrone, Mo., he spent his childhood helping his family make ends meet by delivering newspapers and mowing lawns.

At the University of Missouri, he found his calling in economics. And after graduation, he found his future - in energy - when he went to work for Humble Oil & Refining, which later became part of ExxonMobil.

After a stint in the Navy and a job as an Interior Department undersecretary, he returned to the business world, becoming an executive at Florida Gas, then Transco Energy in Houston, and later as CEO of Houston Natural Gas.

In 1985, Enron was created when HNG merged with InterNorth of Omaha, and Lay was named its chairman and chief executive officer.

The ever social and personable Lay quickly transformed a staid natural gas pipeline company into an international energy powerhouse that reached No. 7 on the Fortune 500 list in 2000 and claimed $101 billion in annual revenues.

He was making big money - and living big, too. Between 1999 and 2001, he earned $220 million.

He contributed generously to the social, cultural and charitable causes - and to the political campaigns of Bush and others.

And he used his cash and newly won connections to head the lobbying effort on behalf of energy deregulation.

During Enron's meteoric rise, his sometimes golfing buddy, President Bill Clinton, helped him land a $3 billion Power-plant project in India.

And he won renown for Enron when he got the Houston Astros to name their stadium after the company.

When the Enron scandal erupted, Lay hoped his connections would help him out with a government bailout or a face-saving merger - but none of his friends wanted to risk going to bat for the corruption-scarred company.

[lildogs]

Posted: 7/6/06 at 8:05am

DG, if I'm going to reflect soberly (first of all, i don't do anything completely sober) it's not going to be prompted by Ken's death. Gwen Verdon, yes, but not Ken.

[RobbO]

Posted: 7/6/06 at 8:46am

wait. gwen's dead, too?

[sabrelady]

Posted: 7/6/06 at 2:19pm

Well my suspicious nature held me in good stead. His family will recieve life insurance and their needs will be met comfortably. We'll see if the biblical phrase about the sins of the fathers will also transfer along w the $$$.