The estate of Enron Corp's late founder has agreed to pay $12 million to settle claims brought by participants in the failed energy company's pension plans.
The U.S. Department of Labor said that a Houston court still must approve the deal, and the final recovery amount depends upon the total amount of assets available for distribution from Kenneth Lay's estate.
Lay died of a heart attack on July 5, throwing into question whether his estate, or potentially the estate of his guilty co-defendant, former Enron chief executive Jeffrey Skilling, will be held liable for criminal proceeds. Last month, lawyers for Lay filed a motion to dismiss his fraud conviction, a common occurrence when a person dies before exhausting their appeals.
In June2003, the Labor Department sued Lay and others for mismanagement of the pension plans in violation of the federal Employee Retirement Income Security Act. The department alleged that Lay:
- Failed to properly oversee the fiduciaries he appointed to run Enron's plans;
- Misrepresented Enron's financial condition to employees and plan officials, encouraging them to buy Enron stock when he knew that it was imprudent to do so; and,
- As a member of Enron's board of directors, failed to properly appoint and monitor a trustee to oversee the employee stock ownership plan.
The settlement would cover more than 20,000 former employees of Enron.In previous settlements obtained by the Labor Department and private plaintiffs, more than $220 million has been recovered for the pension plans from Enron, its directors, officers and fiduciaries who served on the plans' administrative committee.The Labor Department's similar claims against Skilling have yet to be settled.
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