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Judge Revokes Lay's Conviction
Days before Lay's death, prosecutors had filed court papers seeking to extract $43.5 million from his financial holdings, including $6 million in a recently matured investment and at least $1.5 million more that Lay used to cover part of the mortgage on a luxury apartment in Houston. The government said it intended to set aside the money in a special fund for Enron investors and employees. Now, federal prosecutors are seeking to hold Skilling responsible for Lay's share, over Skilling's objections.
Separately yesterday, lawyers for the Lay family asked the court to release a $5 million bond that had been secured by the homes of several of Lay's five children. Federal prosecutors at the Enron Task Force declined to comment.
"Today's ruling does not change the fact that Mr. Lay was found guilty after a four-month jury trial and a separate bench trial," Justice Department spokesman Bryan Sierra said. "We will continue to pursue all remedies available for restitution on behalf of the victims of the fraud at Enron."
Lay, 64, collapsed in a rental home near Aspen, Colo., about a month after a Houston jury found him guilty of conspiring to mislead employees and investors about Enron's mounting financial problems. His death unleashed vicious criticism on the Internet and prompted conspiracy theories that were dispelled by a coroner's report and sheriff's deputies.
A man accustomed to flying in private jets and mingling with the Bush family, foreign diplomats and owners of professional sports teams, Lay was brought low by a widening scandal after disclosures that Enron had disguised billions of dollars in debt and manufactured revenue. He told the jury at his trial earlier this year that he was in the hole $250,000 after years of spending lavishly on homes, vacations and his five children.
Federal prosecutors baited Lay into displaying a short temper and a flair for micromanagement on the witness stand, and pounced when Lay could not explain why he sold more than $77 million in Enron shares back to the company in the months before its demise.
In recent weeks, Lay's family paid an undisclosed sum to settle a smaller civil case filed by former Enron employees over their pension and retirement funds.
Ken Horton, a former Enron manager who was laid off alongside thousands of others in December 2001, said he had steeled himself for the conviction to be extinguished after word of Lay's death three months ago. But Horton, who pegged his retirement and savings plan losses in the six-figure range, expressed "great" concern that he and former colleagues would never be made whole financially. Horton said he has received only $4,000 to date.
"If I got 10 cents on the dollar, I would be elated," Horton said.