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."
As for the criminal case against Lay, his family certainly seems to think it's over. "We are pleased with the ruling, and are glad that this brings to a close, the criminal proceedings against Mr. Lay," said Lay family attorney Sam Buffone. The government may not agree. "They opposed vacating [the case], so there's no reason not to appeal it," says former federal prosecutor Michael Wynne. "That's the only way the law is going to change."
If appealing doesn't work, the other way to change the law is going through Congress but prosecutors have already tried that route, in vain. Lay's conviction was vacated because he died in July. Federal prosecutors tried to get a bill introduced letting criminal convictions stand even if the defendant dies before sentencing and appeals and sought to make it retroactive to a few days before Lay died. But no legislators sponsored the bill, and it wasn't discussed before Congress adjourned. Still, Lay attorney Michael Ramsey says he will be shocked if the closing of the criminal case is appealed. "It's over with," he told TIME. "The civil cases will grind on forever."
Skilling's sentencing, meanwhile, brought some cause for celebration for Enron victims, and not just because of the prospect of him behind bars for a long, long time. A criminal forfeiture and restitution agreement was announced the same day about $45 million will be dispersed by U.S. District Judge Melinda Harmon to victims in pending civil lawsuits. Judge Sim Lake originally ordered a $5 million fine to be paid to the U.S. Government, but then changed his mind. "No fine it will all go to the victims," he said. Seattle attorney Lynn Sarko, who represents employees in Enron retirement fund lawsuits, said in court that the settlement was a fair resolution. "It will provide the victims a large amount of money much sooner," Sarko said.
Still, while that may be settled, Skilling doesn't think his fate is. The former Enron CEO told Judge Lake that he is innocent and plans to appeal his case. Lay's lead criminal attorney thinks Skilling has a good chance. "This case is going to be reversed," Ramsey said at the courthouse."The Fifth Circuit has bounced back or modified virtually every Enron-related conviction." Which means that even after the issue of money is put to rest, the Enron case may not be.