Lay Cheats Justice
Peter Henning, Wayne State law professor, was quoted several times on the legal ramifications of Enron founder Ken Lay's death prior to his prison term. Not only will the entire case be erased from the records, the government has no means to collect on its $43.5 million forfeiture claim against Lay's estate. Henning said it's hard to believe, but case law on this point is crystal clear. "The idea is that you can't punish a dead person. It's not fair," he said. "Lay didn't get a chance to go in front of a court of appeals, which he had an absolute legal right to do." Henning also said the prosecutors would not be able to contest the situation. Henning posted an item on White Collar Crime Prof Blog that says when a defendant dies before an appellate review of a criminal conviction the death abates the entire criminal proceeding. Citing a recent appellate court decision, he wrote, "The appeal does not just appear, and the case is not merely dismissed. Instead, everything associated with the case is extinguished, leaving the defendant as if he had never been indicted or convicted." Although the decision came out of the U.S. Court of Appeals for the Fifth Circuit, which covers Texas, all the federal courts agree on it, Henning added. He also said the Securities and Exchange Commission is now free to pursue their civil case against Lay, which was stayed pending the criminal case. "The SEC will seek an order of disgorgement against the estate," Henning said. According to Henning Enron shareholders also can pursue their class-action suit against Lay's estate, because his death doesn't directly impact civil lawsuits.