Thursday, August 17, 2006

Will Prosecutors Really Oppose Lay's Motion to Abate the Conviction and Indictment?

With the court granting the motion to permit Ken Lay's widow, Linda, to appear on behalf of his estate, her attorneys have filed a motion to abate the conviction and indictment so that there will be no official record of him having been prosecuted for crimes related to Enron.  The scope of the abatement doctrine in the Fifth Circuit is clear from that court's en banc decision in United States v. Estate of Parsons, 367 F.3d 409 (5th Cir. 2004), which held that "the appeal does not just disappear, and the case is not merely dismissed. Instead, everything associated with the case is extinguished, leaving the defendant as if he had never been indicted or convicted." (citations omitted)  With a case so clearly on point, what is amazing is that the brief covers three pages (motion available below).

But perhaps even more amazing is a statement accompanying the motion that the Enron Task Force "will oppose the motion."  It's not clear what grounds the government can advance to oppose the request of Lay's estate when the Fifth Circuit's case law is so clear on the issue of abatement.  It may be that the government wants to preserve the conviction for the purpose of pursuing the criminal asset forfeiture, although as noted in an earlier post (here), prosecutors have now asked that co-defendant Jeffrey Skilling be held liable for the full amount of the forfeiture, including Lay's portion.  A criminal forfeiture proceeding is against the individual, while a civil forfeiture is directed against the tainted property and proceeds (in rem), and is a more difficult case to win, especially with an innocent owner defense available.  As I've come to learn, courtesy of Prof. Gerry Beyer of the Wills, Trusts, and Estates Law Prof Blog, Texas is a community property state so Linda Lay has a 50% ownership interest in all community property, and the government is unlikely to be able to reach her portion unless it can show her involvement in the underlying criminal conduct.

In the end, it's not clear what the government would gain in opposing a motion that is clearly governed by recent circuit case law.  It may be that the effect of the abatement doctrine is to create a windfall for Lay's heirs, and the desire to recover assets may be so strong that one might be able to make a passable appeal to equity in not giving complete effect to the doctrine.  The fact that an argument makes it past the laugh test does not mean it's a good one, though. (ph)

Download laymotiontovacateconviction.pdf

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He didn't file the appeal yet. There is a good argument that abatement doesn't apply in that circumstance. If I was his lawyer, I would go on and file the appeal anyway.

Posted by: Rob Leonard | Aug 19, 2006 3:18:06 PM

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