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KENNETH LAY

Kenneth Lay
Born April 15, 1942
Tyrone, Missouri.
Died July 5, 2006
Old Snowmass, Colorado

Kenneth Lee "Ken" Lay (April 15, 1942 – July 5, 2006), was an American businessman, best known for his role in the widely-reported corruption scandal that led to the downfall of Enron Corporation. Lay and Enron became synonymous with corporate abuse and accounting fraud when the scandal broke in 2001. Lay was the CEO and chairman of Enron from 1986 until his resignation on January 23, 2002, except for a few months in 2001 when he was chairman and Jeffrey Skilling was CEO.

On July 7, 2004, Lay was indicted by a grand jury on 11 counts of securities fraud and related charges.[1] On January 31, 2006, following four and a half years of preparation by government prosecutors, Lay's and Skilling's trial began in Houston. Lay was found guilty on May 25, 2006, of 10 counts against him; the judge dismissed the 11th. Because each count carried a maximum 5- to 10-year sentence, legal experts said Lay could have faced 20 to 30 years in prison.[2] However, he died while vacationing in Old Snowmass, Colorado on July 5, 2006, about three and a half months before his scheduled October 23 [3] sentencing. Preliminary autopsy reports state that he died of a heart attack caused by coronary artery disease. Toxicology reports are to be released in the following weeks.[4]

Contents

Early life and career

Dr. Kenneth Lay was born into a poor family in Tyrone, Missouri. When he was a child Ken delivered newspapers and mowed lawns. His father, Omer, was a Baptist preacher and some-time tractor salesman. He attended the University of Missouri where he studied economics. He has been described by his undergraduate classmates at the University of Missouri-Columbia as industrious and high-minded[citation needed], and served as president of the Zeta Phi chapter of the Beta Theta Pi fraternity at the University of Missouri. He got his doctorate in economics at University of Houston in 1970 and went to work at Exxon Mobil Corp. predecessor Humble Oil & Refining upon graduation.

Lay worked in the early ‘70s as a federal energy regulator. He then became undersecretary for the Department of the Interior before he returned to the business world as an executive at Florida Gas. By the time of the Reagan administration, when energy was deregulated, Lay was already an energy company executive and he took advantage of the new climate by merging Houston Natural Gas Co. with Nebraska-based Inter-North to form Enron in 1985.

Lay was one of America's highest-paid CEOs, earning (for example) a $42.4 million compensation package in 1999.[5] He dumped large amounts of his Enron stock in September and October of 2001 as its price fell, while encouraging employees to buy more stock, telling them the company would rebound. Lay liquidated more than $300 million in Enron stock from 1989 to 2001, mostly in stock options.

Lay had been married to his wife, Linda, for 24 years and had two children, three step-children and twelve grandchildren.

Indictment and trial

On July 7, 2004, Lay was indicted by a grand jury in Houston, Texas, for his role in Enron's collapse. Lay was charged, in a 65-page indictment, with 11 counts of securities fraud, wire fraud, and making false and misleading statements. The trial commenced on January 30, 2006, in Houston, despite repeated protests from defense attorneys calling for a change of venue on the grounds that that "it was impossible to get a fair trial in Houston – the epicenter of Enron's collapse. Enron's bankruptcy, the biggest in U.S. history when it was filed in December 2001, cost 4,000 employees their jobs and many of them their life savings. Investors lost billions."[2]

During his trial, Lay claimed that in 2001 Enron stock made up about 90 percent of his wealth, and that his current net worth (in 2006) was in the negative by $250,000. He insisted that Enron's collapse was due to a "conspiracy" waged by short sellers, rogue executives, and the news media.[6] It was reported that Lay's congenial reputation took a blow as he appeared confrontational and irritable at several points during his testimony.[2] On May 25, 2006, Lay was found guilty on all six counts of conspiracy and fraud by a jury of eight women and four men. In a separate bench trial, Judge Lake ruled Lay was guilty of four counts of fraud and false statements. Sentencing was scheduled to take place on 11 September 2006, but was later rescheduled for 23 October 2006. [7]

A number of books have been written on Lay and Enron including Conspiracy of Fools (2005), Icarus in the Boardroom, The Smartest Guys in the Room (2003), 24 Days, and Power Failure. The Smartest Guys in the Room was adapted into a documentary film titled Enron: The Smartest Guys in the Room, released in 2005.

Death and abatement of conviction

While vacationing in Colorado on July 5, 2006, Kenneth Lay died. The Pitkin Sheriffs Department confirmed that officers were called to Lay's house in Old Snowmass, Colorado, near Aspen at 1:41 AM MDT. Lay was taken to Aspen Valley Hospital, where he was pronounced dead at 3:11 AM MDT. Autopsies indicate that he died of a heart attack brought on by coronary artery disease, and found evidence that he had suffered another heart attack previously.[3] Pending toxicology reports will be completed later in July.

A popular conception is that the stress of trial and probable incarceration contributed to or exacerbated Lay's heart disease, resulting in his death. There is no medical basis for this speculation, however, as Lay's case does not fit the profile of acute stress (such as death from extreme reaction to, for example, hearing the verdict) or long-term stress (which takes a decade or more to develop). University of Miami cardiologist Robert Myerburg has said that Lay's death does not fit either the short-term or long-term pattern of stress as a contributor to heart disease.[8] Forensic pathologist Robert Kurtzman's autopsy report, released July 19, 2006 found a pair of stents, evidence of prior heart attacks and "showed that three of Lay's arteries were 90 percent blocked."

Since Lay died prior to exhausting his appeals, according to Roma Theus of the Defense Research Institute (an organization of defense attorneys), his conviction is considered abated [9] pursuant to precedent in the Fifth Circuit Court of Appeals, the federal appellate court governing the district where Lay was indicted;[10] however a formal filing must first be made. When abatement occurs the law would view it as though he had never been indicted, tried and convicted.[11][3] However, a report on the filing stated that "Lay's attorney Michael Ramsey had 'conferred with (prosecutor) Kathy Ruemmler who indicated the government will oppose this motion.' ... 'The Department of Justice remains committed to pursuing all available legal remedies and to reclaim for victims the proceeds of crimes committed by Ken Lay,' said Justice Department spokesman Bryan Sierra."[12] Civil suits are expected to continue against Lay's estate. However, according to another legal expert, claimants may not seek punitive damages against a deceased defendant, only compensatory damages.[13]

A private funeral with around 200 in attendance was held in Aspen four days after his death, his body cremated and the ashes buried in a secret location in the mountains.[14][15][16] A memorial was held a week after his death at the First United Methodist Church in Houston, attended by nearly 1,200 guests including former president George H. W. Bush. The speakers who touched on Lay's conviction were unanimous in their defense of Lay; former Enron President and "longtime friend" Mick Seidl spoke, describing Lay as a "straight arrow -- a Boy Scout, if you will -- who lived by Christian-Judeo principles," adding "I am saddened he will be remembered for the Enron indictment and trial," and "An overzealous federal prosecutor and the media have vilified a good man. It was total character assassination." Rev. William A. Lawson, "a veteran local civil rights leader with whom Lay worked during Enron's heyday to support projects in Houston's black community" went so far as to claim "Ken Lay was neither black nor poor, but he was a victim of a lynching" and even compared Lay with Martin Luther King, Jr. and Jesus.

Timeline of events

Awards and honors

  • Anti-Defamation League – Torch of Liberty Award
  • Beta Theta Pi (Zeta Phi Chapter) – Wall of Fame
  • Brunel University (London) – Honorary Doctor of Social Sciences
  • Child Advocates – Super Hero Honoree Award
  • Episcopal High School – Campaign Fundraiser Award
  • Gas Daily – Man of the Year Award
  • Horatio Alger Association of Distinguished Americans – Annual Membership Award
  • Houston Area Women’s Center – Honoree
  • Houston Children’s Chorus – Honoree
  • Houston Community Partners – Father of The Year
  • Kenneth Lay Day – Proclaimed by Kathryn J. Whitmire, Mayor of Houston, Texas
  • Kiwanis Club of Houston and the Greater Houston Partnership – International Executive of the Year
  • March of Dimes – Award of Distinction
  • NAACP Freedom Fund Banquet – Mickey Leland Humanitarian Award
  • National Conference of Christians and Jews – Brotherhood Award
  • Oswego State University – Honorary Doctor of Humane Letters Degree
  • Phi Beta Kappa – Outstanding Alumnus Award
  • Private Sector Council – Annual Leadership Award
  • Stanford Business School Alumni Associations – Houston Business Man of the Year
  • Texans For Lawsuit Reform – Award
  • Texas Association of Minority Business Enterprises – Texas Corporate Partnering Award
  • Texas Business Hall of Fame – Inductee
  • Texas Navy Admiral – Commissioned by William P. Clements, Jr., Governor of Texas
  • Texas Society To Prevent Blindness – Man of Vision Award
  • The Brookwood Community – Honoree Award
  • The Rotary Club of Houston – Distinguished Citizen Award
  • The Wall Street Transcript – Chief Executive Officer Award
  • United States Energy Association – United States Energy Award
  • U.S. Navy – Navy Commendation Medal & National Defense Service Medal
  • University of Colorado, College of Business and Administration – Ben K. Miller Memorial, International Business Award
  • University of Houston – Distinguished Alumnus Award
  • University of Houston System – Honorary Doctor of Humane Letters Degree
  • University of Missouri – Honorary Doctor of Law Degree; The Hebert J. Davenport Society Benefactor Award
  • Volunteer Houston – Honoree Award

Trivia

  • The Ken Lay YMCA in Cinco Ranch in unincorporated Fort Bend County, Texas was named after Ken Lay. Following the collapse of Enron and Lay's subsequent accusations of fraud and questionable accounting tactics, the name outside the building was made significantly smaller decreasing 70% in size (though not shrunk as much as the company itself). Lay later asked for his name to be removed from the YMCA in June 2006. The YMCA is, as of 2006, called the "Katy Family YMCA" after the city of Katy.
  • Ken Lay and Enron were given "special thanks" in the tongue-in-cheek credits of the 2005 film Fun with Dick and Jane along with other corporations or persons who were responsible or involved in some of the greatest financial collapses in American business history.
  • Both Lay and Skilling were members of Beta Theta Pi.

See also

References

  1. ^ Crawford, Kristen (2004-7-12). Lay surrenders to authorities. CNN Money. Retrieved on 2006-05-25.
  2. ^ a b c Pasha, Shaheen and Jessica Seid (2006-05-25). Lay and Skilling's day of reckoning. CNN Money. Retrieved on 2006-05-25.
  3. ^ a b c Death Puts Lay Conviction in Doubt. Los Angeles Times (July 6, 2006). Retrieved on 2006-06-06.
  4. ^ Carrie Johnson, Enron's Lay Dies Of Heart Attack, Washington Post, 6 July 2006.
  5. ^ Kenneth Lay: Bush Pioneer. Texans for Public Justice. Retrieved on 2006-06-07.
  6. ^ Jeremy W. Peters and Simon Romero (5 July 2006). Enron Founder Dies Before Sentencing. The New York Times. Retrieved on 2006-06-06.
  7. ^ Enron founder Ken Lay dies (5 July 2006).
  8. ^ Enron's Ken Lay Dies, Was It Stress?. WebMD.
  9. ^ Experts See Lay's Death Erasing Conviction. The New York Times (July 7, 2006). Retrieved on 2006-06-07.
  10. ^ See United States v. Asset (PDF), 990 F.2d 208 (5th Cir. 1993); United States v. Estate of Parsons (PDF), 367 F.3d 409 (5th Cir. 2004).
  11. ^ Can't the Feds Get Lay's Money? Slate, as corrected July 7, 2006.
  12. ^ Hays, Kristen (August 16, 2006). Prosecutors to oppose wiping Lay's record clean. Chicago Sun-Times. Retrieved on 2006-08-16.
  13. ^ Enron founder Ken Lay dies. CNN.com (July 5, 2006). Retrieved on 2006-06-06.
  14. ^ Lay Is Remembered As a 'Straight Arrow'. The Washington Post (July 13, 2006). Retrieved on 2006-13-07.
  15. ^ Lay victim of `lynching,' speaker at service says. The Chicago Tribune (July 13, 2006). Retrieved on 2006-13-07.
  16. ^ Ken Lay's memorial attracts power elite. CNN (July 12, 2006). Retrieved on 2006-13-07.

External links

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