Lay Cleared of Convictions

Kenneth Lay, the founder of the Enron group has been given a clean chit on all his criminal charges, after almost three months since he had passed away.

Lay was convicted of 10 counts of fraud, conspiracy and lying to banks on two different occasions on 25th May. He died of an heart disease on July 5 while on holiday with his wife Linda, in Aspen, Colo.

The federal court in Houston has wiped away the crimes on the ground that since the person is no longer alive, he does not have an open chance to counter the allegations and hence the trial will not be fair.

District Judge Sim Lake agreed with Lay's lawyers that his death required erasing of his convictions. They cited a 2004 ruling from the 5th U.S. Circuit Court of Appeals that found that a defendant's death pending appeal extinguished his entire case because he hadn't had a full opportunity to challenge the conviction and the government shouldn't be able to punish a dead defendant or his estate.

"On behalf of his estate, I'm really quite pleased with the ruling and glad this brings to a close the criminal proceeding against Mr. Lay," said Samuel Buffone, the attorney for Lay's estate.

Lay was the founder and man at the helm of then energy giant Enron. After it collapsed in 2001, it wiped out thousands of jobs along with $60 billion from the market and over $2 billion in pensions.

This further makes the task of the government difficult, which has been trying to seek $43.5 million in non professional gains the prosecutors allege he pocketed by participating in Enron's fraud. The government could still pursue those gains in civil court, but they would have to compete with other litigants, if any, who are also pursuing Lay's estate.

Jeffrey Skilling, Lay's deputy and Enron CEO for several months in 2000-2001, still faces sentencing on Oct. 23. He was found guilty by the same jury on 19 of the 28 counts of fraud, conspiracy and insider trading that federal prosecutors brought against him for his role in the Enron debacle. Skilling, 52, could get 25 years in prison.

The government might well look to seek the entire $182.8 million from Skilling, Lay’s co defendant. Prosecutors initially sought $139.4 million from Jeff Skilling.

Tuesday’s decision will also make it harder for former Enron shareholders and employees to stake claim to the millions in Mr. Lay’s estate because they cannot point to his criminal conviction as proof of misdeeds.