US government case set to collapse after Enron boss death

The death of Enron’s former chairman and chief executive Kenneth Lay on 5 July has raised a difficult legal question – whether it will scuttle the US government’s $43.5m (£23.62m) forfeiture claim against him.

And it is looking increasingly likely that the government will not like the answer. US lawyers have warned that Lay’s unexpected death from an apparent heart attack before the appeal of his criminal conviction had completed means that “the entire case is viewed, legally, as never having been filed”.

Lay was convicted in late May along with former Enron chief executive Jeffrey Skilling of defrauding investors and employees of Enron by lying about the company’s strength in the months before Enron filed for bankruptcy protection in December 2001.

Lay was set to be sentenced on 23 October and expected to spend at least 20 years in jail. But under 5th US Circuit Court of Appeals rulings, which covers Houston, where Lay was convicted, following the death of a criminal defendant pending an appeal of their case, “everything associated with the case is extinguished, leaving the defendant as if he has never been indicted or convicted”.