The unexpected death of convicted Enron founder Kenneth Lay may end up saving his family tens of millions of dollars in government fines. Lay's massive heart attack should keep prosecutors from seizing the $43.5 million in assets they had demanded last Friday. How come Ken Lay's estate gets to keep that money?
Now that he's dead, he's no longer a criminal. A jury may have found Ken Lay guilty while he was still alive, but he never received a formal judgment of conviction. (That would have come when the judge handed down the sentence in the October.) Since Lay died before that happened, it's just like he was never found guilty at all. *
Things wouldn't have been any different even if he had gotten the judgment of conviction. The principle of "abatement" lets a defendant off the hook for a conviction if he happens to die before getting through at least one round of appeals. If he doesn't get a chance to file an appeal, he's missed out on an integral part of the legal process, so he gets the benefit of the doubt. In other words, he's innocent until proven guilty, and then proven guilty again. Since Ken Lay died before he could appeal, the courts will abate his conviction and all the punishments he would have received.
A defendant doesn't even have to assert his innocence or file an appeal to score an abatement. If he dies within the window allowed for appeals *, he gets his conviction abated no matter what. That means Ken Lay would still have had his abatement if he'd raced out of the courtroom and shot himself just moments after being convicted.
Most states and almost every circuit in the federal system treat abatements the same way: A defendant's conviction disappears, and his estate can ignore any outstanding fines against him. (If the defendant had already paid some fines, the government gets to keep that money.) The 3rd Circuit provides the exception to this rule: There, a defendant keeps his conviction when he dies. His case freezes—there are no further punishments, but also no opportunities for appeal.
The death of a defendant can also have a big impact on outstanding civil suits. In general, a plaintiff can go ahead and sue a dead man by subbing in the man's estate as the defendant in the case. * But if the dead man's conviction had been abated, the plaintiffs wouldn't be able to use it against him in civil court. That means the plaintiffs would have to argue the facts of the criminal case all over again in front of a civil judge.
There's a catch: Because Lay and Jeffrey Skilling may be named as co-defendants on the civil suits—and because Skilling is alive, well, and unabated—a judge might decide to let the plaintiff lawyers use the Skilling conviction without rearguing the case against Lay.
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Explainer thanks Rosanna Cavallaro of Suffolk University Law School, Charlie Parker of Locke Liddell & Sapp, and Nancy Rapoport of the University of Houston Law Center.
Corrections, July 7, 2007: This piece originally said that the government can't get Lay's money because of the rule of abatement. In fact, abatement doesn't apply to Lay because he hadn't yet received a formal judgment of conviction. That happens at sentencing.(Return to the corrected sentence.) Also, the piece originally described the length of the window for filing an appeal as 30 days. This number changes depending on the kind of trial. Federal criminal defendants have 10 days to file an appeal, and then 30 more days if they miss the regular deadline. (Return to the corrected sentence.) Finally, the piece originally and incorrectly said that a dead man can't be held liable for defamation. (Return to the corrected sentence.)