Bill seeks to maintain convictions after death

WASHINGTON —  Two senators hope to end the legal precedent that let Enron Corp. founder Kenneth L. Lay’s fraud conviction be cleared from his record after he died.

The development has hurt prosecutors’ efforts to take $43.5 million in restitution from his estate.

Working with the Justice Department, which asked for similar legislation shortly after Lay died in July, Sens. Dianne Feinstein (D-Calif.) and Jeff Sessions (R-Ala.) introduced a bill this week that would keep federal convictions in force when a defendant dies, allowing victims to continue seeking restitution.

Courts traditionally have interpreted the law differently, erasing the convictions of defendants who die before having the chance to appeal.

The bill would make the changes retroactive to July 1 so they would apply in the Lay case.

“When a criminal conviction involves financial restitution to the victims of the crime, or when the conviction could be used in a later civil lawsuit, those effects of the conviction should not be erased by the death of the defendant,” Sessions, a former U.S. attorney, said in a statement. “It is wrong to force the victims or the government to start over from scratch.”

Lay was convicted May 25 on 10 counts of fraud, conspiracy and lying to banks in connection with the energy conglomerate’s financial collapse, which wiped out billions of dollars in market value and pension plans.

He faced the prospect of spending the rest of his life in prison, but he died of heart disease while vacationing in Aspen, Colo., before being sentenced.

At the request of Lay’s attorneys, a federal judge erased his conviction Sept. 17, despite a request from the Justice Department to postpone the decision so Congress could consider a Justice proposal to change current law.

Legal experts said the decision to clear Lay’s record was consistent with long-standing precedent because Lay had not had the opportunity to appeal.

Federal prosecutors could still win the $43.5 million they say Lay gained from Enron’s fraud, but they have to do so through civil proceedings in competition with other litigants and without the benefit of a criminal conviction in hand.

Along with clarifying the law on maintaining convictions, the bill would allow a representative of a deceased defendant to act on the defendant’s behalf in an appeal, and it would give the government extra time to file parallel civil lawsuits to try to recover unlawfully obtained assets.