Judge Revokes Lay's Conviction

Ruling Rankles Enron Workers, Investors

By Carrie Johnson

Washington Post Staff Writer
Wednesday, October 18, 2006; Page D01

A federal judge in Houston yesterday wiped away the fraud and conspiracy conviction of Kenneth L. Lay, the Enron Corp. founder who died of heart disease in July, bowing to decades of legal precedent but frustrating government attempts to seize nearly $44 million from his family.

The ruling worried employees and investors who lost billions of dollars when the Houston energy-trading company filed for bankruptcy protection in December 2001. It also came more than a week after Congress recessed for the November elections without acting on a last-ditch Justice Department proposal that would have changed the law to allow prosecutors to seize millions of dollars in investments and other assets that Lay controlled.