Legal experts say that the untimely death of former Enron founder and chairman Kenneth L. Lay, prior to his being sentenced to prison for his role in the massive collapse of Enron, could possibly save his family's assets from creditors, though it is hard to assign an exact dollar-figure to those assets.
Lay, who rose from humble roots to found what was, at its height, the seventh-largest publicly traded company in Enron, only to later become a symbol of corporate greed and malfeasance, died of a heart attack at his vacation home in Aspen, Colo., on July 5. He was 64.
The standard practice when a defendant dies before sentencing is for prosecutors to drop all criminal proceedings, though civil lawsuits would still continue. According to court documents, Lay's peak net worth was some $400 million before Enron came crashing down, and earlier this year, the fallen businessman claimed his worth had dropped to just $650,000, with weighty legal bills topping $25 million. Federal prosecutors have argued that Lay should also be held liable for another $33 million in bad loans, as well as his $10 million Enron bonus and a $6.3 million Goldman Sachs account.
Lay, along with former Enron chief executive Jeffrey Skilling, was convicted in May in a Houston court of conspiracy, securities fraud and wire fraud stemming from Enron's 2001 collapse. Both men were scheduled for sentencing in October. Lay faced a potential 45-year prison term.
A native of Tyrone, Mo., Lay's father ran a general store and sold stoves before becoming a minister. The younger Lay, who performed a series of odd jobs, including mowing lawns and delivering newspapers, to help his family make ends meet, attended the University of Missouri. He eventually earned a Ph.D in economics. Following graduation, he went to work for Humble Oil & Refining, which was later acquired by what would become Exxon Mobil.
He joined the Navy, and served as an undersecretary for the Department of the Interior before becaming an executive at both Florida Gas and Transco Energy in Houston. He eventually became chief executive of Houston Natural Gas, which later merged with InterNorth in Omaha, Neb., to form Enron.
Enron, which under Lay evolved from an energy pipeline concern to a complex conglomerate trading energy futures and boasting a market cap approaching $70 billion, imploded amidst a series of fraudulent off-balance-sheet partnerships that masked billions in losses from employees and investors.
The Enron debacle, and later, the $11 billion bankruptcy at WorldCom, helped spark the 2002 passage of the Sarbanes-Oxley Act, as part of a series of reforms including the creation of the Public Company Accounting Oversight Board. The Enron scandal also led to the collapse of its auditor, former Big Five firm Arthur Andersen.
During the four-month trial, both Lay and Skilling maintained their innocence, claiming that the company's collapse was due to negative publicity and a jittery stock market.
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