JURIST Contributing Editor Nancy Rapoport of the University of Houston Law Center says that the sudden death of Enron founder Kenneth Lay before he was even sentenced has a variety of legal implications, but its greatest consequence may be the loss of any opportunity for his redemption by appeal or rehabilitation…

It's safe to say that Houston was stunned to hear of Ken Lay’s death, one day after Independence Day. I heard about it around 9:15 a.m., and by that time, the whole network of Enron news junkies was abuzz. So far, two Enron executives have died since the collapse of the company: Cliff Baxter’s death (ruled a suicide) was first, on January 25, 2002.

Wild men who caught and sang the sun in flight,
And learn, too late, they grieved it on its way,
Do not go gentle into that good night.[1]

Did Lay go gentle into that good night? Was his death a suicide? The autopsy results say no, although the gossip here in Houston is that Lay had stopped taking his heart medication and then headed off to the thin air of Aspen, expecting the (inevitable?) result.

Imagine what it must have been like for the Lays — they were back in Aspen, where they had once owned several houses, surrounded by people who likely were still wealthy, wondering whether they would be accepted in others’ Aspen homes, and facing the possibility of life in prison. Lay, who had been considered affable and avuncular for most of his life, had been convicted in part because the trial revealed another side of his persona — an arrogant, nasty side (even during Lay’s direct examination). Now the days of influence and ease were at an end. If it is ever found that Lay did hasten his own death, would it really be that surprising? Suicides are always tragedies for the survivors, and death is always hard for the families and friends of the deceased. But what are the other aftereffects of Lay’s death?

The criminal case. I’m no criminal law expert, but a quick scan of treatises tells me that the conviction (which Lay had planned to appeal) goes away, the prosecutors’ forfeiture motion withers on the vine, and Skilling’s case progresses as before, with October 23 still being the revised target date for the sentencing.[2] Given that the traditional rationales for punishment (e.g., deterrence, retribution, rehabilitation) don’t make much sense when the defendant is dead, unwinding the whole shebang makes sense.

The civil case. It goes forward, of course, and if the plaintiffs win, then they will look to the Lay estate for satisfaction of the award, which leads us to . . .

Linda Lay’s assets. If I were Mrs. Lay, I’d be very, very worried about creditors getting their hands on my assets, and I’d think long and hard about the possibility of filing a Chapter 11 bankruptcy to avoid any piecemeal attachments of assets. Although her husband would have had a difficult time homesteading their condo in Houston, thanks to one of the 2005 amendments to the Bankruptcy Code [3], Mrs. Lay probably can take advantage of Texas’s generous homestead exemptions.

The lost opportunity for redemption. With his death coming so soon after his conviction, Lay never had a chance to progress through his appeal, and from there, either to vindication or to possible rehabilitation while serving his time. His death freezes his iconic image as corporate villain, even though other similarly vilified corporate miscreants have overcome (at least, to some degree) their sullied reputations. Mike Milken is one such example:

Take a look at this snippet from BUSINESSWEEK ONLINE:

As far as Milken is concerned, he has paid his penalties—a total of $1.1 billion—and done his time. But that doesn't mean he has faded from the scene. Far from it. For the past six years, Milken has used every waking moment to rebuild his life and his reputation. First, he became a major cancer philanthropist, raising some $75 million for research and appearing regularly on such TV programs as Larry King Live and The Charlie Rose Show to push efforts to cure prostate cancer. And since 1996, he's moved back into business in a big way, founding Knowledge Universe (KU), a new venture that he hopes to build into a huge presence in the $800 billion educational-services industry. Together, his twin pursuits have given Milken a new platform from which, on his own terms, he is once again a player.[6]

Milken for sure; maybe Martha Stewart as well, in time. Who knows what Lay would have done in prison? With his doctorate in economics, he certainly could have worked to help educate other inmates. He could have written books.[7] He could have come to terms with his own rise and fall. He might even have come to accept his own part in Enron’s downfall. All of those options are gone now, ended at 3:11 a.m. Aspen time on July 5, 2006.

Lay was the son of a preacher, and as such, he was probably well-versed in all of the traditional themes of Christianity, including sin and redemption. Maybe he was familiar with Dylan Thomas’s earlier poem about death:

And death shall have no dominion.
No more may gulls cry at their ears
Or waves break loud on the seashores;
Where blew a flower may a flower no more
Lift its head to the blows of the rain;
Though they be mad and dead as nails,
Heads of the characters hammer through daisies;
Break in the sun till the sun breaks down,
And death shall have no dominion.[8]

Most of us see Enron’s demise as part of a classic Greek tragedy with Lay and Skilling both the traditional protagonists, with great potential thwarted by hubris. But stories are supposed to have a beginning, a middle, and an end, and Lay’s death leaves us without the closure of a tidy ending. His death, like Enron’s demise, still leaves us wishing for a redemption that will never come.

(c) 2006 Nancy B. Rapoport. All rights reserved.

Notes

[1] Fourth verse of Do not go gentle into that good night, Dylan Thomas (c.1951), available at http://en.wikipedia.org/wiki/Do_not_go_gentle_into_that_good_night. Most people don’t know much about the form of this poem (a villanelle). For information on villanelles, see http://en.wikipedia.org/wiki/Villanelle.

[2] Had the prosecutors already seized Lay’s assets, apparently the federal government wouldn’t have had to return them.

[3] See 11 U.S.C. § 522(q) (capping the state homestead exemption to $125,000 for debtors with certain types of fiduciary violations or securities law violations).

[4] Kathleen Morris, The Reincarnation of Mike Milken, BUSINESSWEEK ONLINE (May 10, 1999), at http://www.businessweek.com/1999/99_19/b3628001.htm. If I didn’t think my dad would wince at the comparison, I’d make more out of the fact that Richard Nixon, too, managed to progress from shamed former president to elder statesman, at least in certain circles, before he died.

[5] Although he probably couldn’t have pocketed the profits from those books.

[6] Last verse of And death shall
have no dominion, Dylan Thomas (c. 1933 or 1936), available at http://en.wikipedia.org/wiki/And_death_shall_have_no_dominion.

Nancy Rapoport is professor of law at the University of Houston Law Center
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