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. 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..
Early life and career
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. Early on he moved to Columbia, Missouri
and attended David H. Hickman High School
and the University of Missouri
where he studied economics. He served as president of the Zeta Phi
chapter of the Beta Theta Pi
fraternity at the University of Missouri. He obtained his Doctor of Philosophy
in economics from the University of Houston
in 1970 and went to work at Exxon Mobil Corp. successor of 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 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.
Lay was one of America's highest-paid CEOs, earning, for example, a $42.4 million compensation package in 1999. In December 2000, Lay was mentioned as a possible candidate for President Bush's Treasury secretary along with J.P. Morgan & Co. head Douglas A. Warner III and a few others. 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 1989 to 2001, mostly in stock options. As the scandal unfolded, Lay insisted he wanted to "tell his story." But then he reneged on a promise to testify to Congress, taking the Fifth instead.
Lay had been married to his second wife and former secretary, Linda, for 22 years and had two children, three step-children and twelve grandchildren.
Articles by Ken Lay
Indictment and trial
On July 7
, Lay was indicted by a grand jury
, 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
, 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.
, the biggest in U.S. history when it was filed in December 2001, cost 20,000 employees their jobs and many of them their life savings. Investors lost billions."
Before Lay was put on trial he was estimated to have a gross wealth of approx. 40 million US dollars. It is believed that most of it was spent on 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 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
A number of books have been written on Lay and Enron including Conspiracy of Fools (2005), Icarus in the Boardroom, The Tao of Enron: Spiritual Lessons from a Fortune 500 Fallout (2002), 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.
While vacationing in Colorado
on July 5
, 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 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. 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 Judeo-Christian 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." Reverend 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, asserted that "Ken was the victim of a lynching".
Abatement of conviction
On October 17, 2006, since Lay died prior to exhausting his appeals, his conviction was abated
. Precedent in the Fifth Circuit Court of Appeals
, the federal appellate court governing the district where Lay was indicted, indicates that abatement had to be automatically granted. When abatement occurs, the law views it as though he had never been indicted, tried and convicted. The government opposed Lay's attorneys' motion for abatement, 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. However, according to legal expert Joel Androphy, claimants may not seek punitive damages
against a deceased defendant, only compensatory damages
Timeline of events
- 1965: Economist, Exxon Corporation
- 1969: Assistant professor, George Washington University
- 1971: Assistant to a commissioner, Federal Power Commission
- 1972: Undersecretary for energy issues, Department of the Interior
- 1974: Vice president, Florida Gas
- 1976: President, Florida Gas
- 1979: Executive vice president, The Continental Group
- 1981: President, chief operating officer, Transco
- 1984: Chief executive officer, Houston Natural Gas
- 1985: Enron formed by purchase of Houston Natural Gas by InterNorth
- 1990: Chairman of the Board and chief executive officer, Enron; Co-chairman, organizing committee for G8 summit
- 1992: Co-chairman, President Bush Re-election Committee; Chairman, 1992 Republican National Convention, Houston
- 1993: Member, President Clinton's 'President's Council on Sustainable Development'
- 1994: Assists with campaign of Sheila Jackson-Lee to defeat Congressman Craig Washington
- December 2000: Mentioned as a possible candidate for President Bush's Treasury secretary
- February 2001: Steps aside as CEO in favor of Jeffrey Skilling.
- August 2001: Returns as CEO after Skilling's departure.
- January 2002: Under extreme pressure, Lay resigns as Enron CEO, leaves Board.
- July 2004: Indicted by grand jury.
- May 2006: Found guilty on ten counts of fraud and conspiracy.
- July 2006: Died at age 64, near Aspen, Colorado, while on vacation.
- October 2006: A federal Judge vacates conviction.
Awards and honors
- Anti-Defamation League – Torch of Liberty Award
- Beta Theta Pi (Zeta Phi Chapter) – Wall of Fame
- Beta Theta Pi (National Fraternity) - Oxford Cup
- 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 – 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
- The Ken Lay YMCA in Cinco Ranch in unincorporated Harris 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 70% smaller. 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's official site
- US v. Skilling and Lay, indictment document (2.3MB PDF).
- Autopsy of Enron's Lay shows severe artery blockage
- Film documentary: The Smartest Guys in the Room
- Calling Inquiries a Distraction, Enron Chief Quits Under Pressure, The New York Times, January 24, 2002
- Ken Lay's political donations
- Alternative History: Treasury Secretary Ken Lay
- CNN Money: Jury selected in Lay's trial
- Ken Lay's Political Campaign Contributions
- Some charges dropped, Enron prosecution rests
- MSNBC: Lay, Skilling guilty in Enron Scandal
- Enron's Founder Kenneth Lay, 64, Dies in Colorado
- No Redemption Now: Thoughts on the Death of Ken Lay, JURIST
- KenLayIsAlive.org, A site devoted to finding out the truth about the death of Ken Lay.
- The Times, Obituary
- Mises Economics Blog, Is Ken Lay A Criminal? By William Anderson