Human Capital & Careers

DOL Recoups $12 Million from Lay’s Heirs

The Labor Department had charged that the late Enron chair failed to properly oversee the fiduciaries he named to run the company's pension plans.
Stephen TaubSeptember 7, 2006

The Department of Labor say it has settled with the estate of former Enron chairman Kenneth Lay, granting a $12 million claim against his estate on behalf of participants covered by Enron’s pension plans.

The proposed settlement must be approved by the U.S. District Court for the Southern District of Texas. Although the proposed agreement provides a $12 million claim against Lay’s estate, the final recovery will depend on the total amount of assets available for distribution from the estate, the Labor Department reported.

The agreement does not settle the DOL’s claims against Jeffrey Skilling, the ex-chief executive of Enron who earlier this year was convicted along with Lay, who died on July 5, for their role in Enron’s collapse.

On June 26, 2003, the Labor Department sued Lay and others for mismanagement of the company’s pension plans in violation of the Employee Retirement Income Security Act. The DOL charged that Lay failed to properly oversee the fiduciaries he named to run Enron’s plans, misrepresented Enron’s financial condition to employees and plan officials, and encouraged them to buy Enron stock when he knew that it was imprudent to do so.

Lay was also sued as a member of Enron’s board for failing to properly appoint and monitor a trustee to oversee the company’s employee stock ownership plan.

In previous settlements, the Labor Department and private plaintiffs recovered more than $220.8 million for the pension plans. Besides recoveries from Enron, pensioners recouped from company directors, officers, and fiduciaries who served on the plans’ administrative committee.

Separately, the Department of Justice filed a draft of a proposed law that would prevent judges from vacating criminal convictions if a defendant dies before going through the entire appeals process, according to the Houston Chronicle. Defendants currently can have their indictments and convictions thrown out if they die before their appeals are exhausted.

DOJ Prosecutors want U.S. District Judge Sim Lake to delay ruling on a motion until after Oct. 23, which is the scheduled sentencing date for Lay and Skilling, so Congress can consider a proposed law, according to the Chronicle.

“It erases the hard-won verdicts against those who have wronged them, verdicts that might aid crime victims in civil litigation,” the DOJ reportedly asserted in a draft of the proposed law.