- Category : Criminal - Fraud
- Type : GE
- Profile : 5/2 - Heretical / Hermit
- Definition : Single
- Incarnation Cross : LAX Limitation 1
Kenneth Lee "Ken" Lay (April 15, 1942 – July 5, 2006) was an American businessman. He played a leading role in the 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 1985 until his resignation on January 23, 2002, except for a few months in 2000 when he was chairman and Jeffrey Skilling was chief executive officer (CEO).
On July 7, 2004, Lay was indicted by a grand jury on 11 counts of securities fraud and related charges. 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. However, he died while vacationing in Snowmass, Colorado, on July 5, 2006, about three and a half months before his scheduled October 23 sentencing. Preliminary autopsy reports state that he died of a heart attack caused by coronary artery disease. As a result of his death, on October 17, 2006, the federal district court judge who presided over the case vacated Lay's conviction. There have been conspiracy theories surrounding his death.
Lay was born in Tyrone, Texas County, Missouri, the son of Ruth (née Rees) and Omer Lay. His father was a Baptist preacher and some-time tractor salesman. When Lay was a child, he delivered newspapers and mowed lawns. Early on, he moved to Columbia, Missouri and attended David H. Hickman High School and the University of Missouri where he studied economics, receiving a B.A. in 1964 and an M.A. in 1965. He served as president of the Zeta Phi chapter of the Beta Theta Pi fraternity at the University of Missouri. He went on to earn his Ph.D. in economics from the University of Houston in 1970 and soon after went to work at Exxon Mobil Corp., the successor to Humble Oil & Refining.
Lay worked in the early 1970s 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 Transmission. By the time energy was deregulated in the 1980s, Lay was already an energy company executive and he took advantage of the new climate when Omaha-based Internorth bought his company Houston Natural Gas and changed the name to Enron in 1985. The much larger, better capitalized and more diversified Internorth was then used as an asset to propel his efforts at Enron. He also was a member of the board of directors of Eli Lilly and Company and was also a director of Texas Commerce Bank which later was taken over by JPMorgan Chase.
Lay was one of America's highest-paid CEOs, earning a $42.4 million compensation package in 1999. Lay dumped large amounts of his Enron stock in September and October 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 1998 to 2001, mostly in stock options. As the scandal unfolded, Lay insisted he wanted to "tell his story," but later reneged on a promise to testify to Congress, taking the Fifth instead. Condé Nast Portfolio ranked Lay as the 3rd worst American CEO of all time.
Lay had been married to his second wife and former secretary, Linda, for 22 years and had two children, three stepchildren, and twelve grandchildren.
Ken Lay was a close friend of the Bush family. He first established a relationship with Vice President George H. W. Bush, making large campaign contributions to him and heading several critical committees in the Republican Party. Lay was co-chairman of Bush's 1992 re-election committee as well as the chairman of the Republican National Convention. At the request of George H. W. Bush, Mr. Lay helped to orchestrate the World Economic Summit in Houston. Lay was a prolific Republican Party contributor nicknamed "Kenny Boy" by President George W. Bush, he was also Houston's most influential power broker for a decade. Mr. Lay remained close friends with Mr. Bush, eventually establishing a close relationship with his son, then Texas Governor George W. Bush.
When Governor George W. Bush ran for president, Lay served as host at big fund-raisers and contributed plenty of his own money to the effort. After Bush won, the new President and his wife flew to Washington with Mr. Lay on an Enron corporate plane. In December 2000, Lay was mentioned as a possible candidate for President Bush's Treasury Secretary along with head Douglas A. Warner III of J.P. Morgan & Co., but Paul O'Neill was eventually selected.
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 "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. It cost 20,000 employees their jobs and many of them their life savings. Investors lost billions of dollars. Before Lay was put on trial he was estimated to have a gross wealth of approximately 40 million US dollars. It is believed that most of it was spent on his legal defense.
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. It was reported that Lay's congenial reputation took a blow as he appeared confrontational and irritable at several points during his testimony. On May 25, 2006, Lay was found guilty on all six counts of conspiracy and fraud by the jury. In a separate bench trial, Judge Lake ruled Lay was also guilty of four counts of fraud and making false statements. Sentencing was scheduled to take place on 11 September 2006, but was later rescheduled for 23 October 2006.
A number of books have been written on Mr. Lay and Enron including Conspiracy of Fools (2005), Icarus in the Boardroom, The Tao of Enron: Spiritual Lessons from a Fortune 500 Fallout (2002), Enron: Anatomy of Greed (2001), The Smartest Guys in the Room (2003), 24 Days, Business Fairy Tales 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.
Lay died on July 5, 2006, while vacationing in Colorado. The Pitkin Sheriff's 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. The autopsy indicated that he died of a heart attack brought on by coronary artery disease, and found evidence that he had suffered a previous heart attack.
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. 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, who did not speak.
Vacating of conviction
On October 17, 2006, since Lay died prior to exhausting his appeals, his conviction was vacated. Precedent in the Fifth Circuit Court of Appeals, the federal appellate court governing the district where Lay was indicted, indicates that vacation of the conviction had to be automatically granted. When vacation occurs, the law views it as though he had never been indicted, tried and convicted. The government opposed Lay's attorneys' motion, and the Department of Justice issued a statement that it "remains committed to pursuing all available legal remedies and to reclaim for victims the proceeds of crimes committed by Ken Lay." Civil suits are expected to continue against Lay's estate. According to legal expert Joel Androphy, claimants may not recover punitive damages against a deceased defendant, although claimants may recover compensatory damages.