View Full Version : Lay Denies Husband Committed Any Crimes

12-01-2007, 09:57 PM
Lay denies husband committed any crimes
Widow's filing answers complaint that seeks assets


Nov. 30, 2007, 10:53PM

The widow of former Enron Chairman Ken Lay denies he committed any crimes, according to a filing Friday in the government's civil forfeiture case that is seeking nearly $13 million from his estate, including the upscale condominium they shared.

On Nov. 14, U.S. District Judge Ewing Werlein Jr. denied Linda Lay's request to dismiss the case, which was filed after Ken Lay died of heart disease in July 2006.

Werlein concluded that the government had made "ample allegations" of criminal activity tied to the cash and property in question and could pursue the case.

Linda Lay's filing Friday answers the government's original forfeiture complaint, which alleges Ken Lay's estate contains ill-gotten gains subject to seizure.

The filing said Linda Lay "denies any criminal activity on the part of Kenneth L. Lay, including his alleged participation in securities fraud, wire fraud, conspiracy or money laundering."

In addition, she denies that any property sought by the government was acquired with ill-gotten money. She is identified in the filing as an "innocent owner" of the property the government aims to seize, with no knowledge of "fraudulent and conspiratorial activities" alleged by prosecutors.

The U.S. Justice Department declined comment.

Lay died about six weeks after he was convicted of six counts of fraud and conspiracy for crimes at Enron and four counts of bank fraud and lying to banks in a separate case stemming from his personal banking. He was never charged with money laundering in a criminal case.

Former CEO Jeff Skilling was convicted of 19 crimes alongside Lay in the larger fraud and conspiracy trial, and is in federal prison while his case is appealed.

Because Lay's death came before he had been sentenced or launched an appeal, U.S. District Judge Sim Lake wiped his record clean more than a year ago.

With his convictions erased, the government would have to reprove his guilt to win the right to seize his estate's assets at a trial in the forfeiture case. The burden of proof in a civil case isn't as stringent as in a criminal case.

Both sides have asked for a jury trial, but no date has been set.

Specifically, the government contends that Ken Lay gained $99 million from criminal activity, mostly by repaying Enron loans with company stock throughout 2001 when the company was in financial trouble.

Prosecutors say they can trace and recover nearly $13 million of that — including $2.5 million Lay used to pay off the mortgage on the couple's condominium days after Enron went bankrupt.

The rest includes $10 million that was controlled by a partnership named for the couple and about $22,000 in a bank account.

Harris County tax records show the condominium is appraised at about $6 million.