In less than a week, Ken Lay’s criminal conviction in the Enron Scandal has been formally thrown out because of his death, and former Enron CEO Jeffrey Skillling has been sentenced to 24 years in prison. But if anyone thinks that means the end of the Enron legal battles, they are as mistaken as the analysts who thought the once high-flying energy trader was a blue chip with a bright future.
Even in death, Ken Lay’s legal odyssey may not be over. Although a Houston judge last week vacated the former Enron chairman’s conviction, some legal observers predict the government will appeal the ruling — possibly all the way to the Supreme Court. At issue is — what else — lots and lots of money: there is a flurry of unsettled civil suits brought by investors, employees and victims against Lay and many others involved with Enron. Even if prosecutors have no illusions of actually having the ruling overturned, they may figure that additional legal fees associated with a drawn-out appeals process will force the Lay family to settle those suits. “They could use it as a negotiating factor to convince the Lays, ‘You pay off the civil factor, and we’ll lay off,'” says Houston attorney Joel Androphy, author of the text White Collar Crime.
Laying off Lay, however, is clearly not on their minds right now. On Monday, the same day that Skilling was sentenced to prison, the government announced that it had filed a civil forfeiture action against the Lay Estate. The government is seeking the $2.5 million condo Linda Lay lives in, more than $10 million in the Lay family investment partnership, and $22,680.14 remaining in Lay’s bank account. “All proceeds were obtained directly, or indirectly as the result of various federal crimes, including securities fraud, wire fraud and conspiracy to commit securities fraud,” the Department of Justice press release said.
Lay attorney Chip Lewis told TIME: “Everybody wants the employees and the folks affected by the collapse of Enron to recover as much of their their losses as possible. However, I don’t believe the vehicle that the government has chosen to pursue is an efficient way to do that. There’s so much civil litigation out there already — now that they do not have a criminal conviction to anchor their forfeiture upon, this is nothing more than another civil suit. It’s a use of taxpayer dollars to attempt to recover in a method that’s really duplicative of many of these civil suits.”