Sen. Dianne Feinstein (D-CA) has called on Attorney General Alberto Gonzales to appeal the dismissal of the criminal convictions of former Enron Chairman and CEO Ken Lay, who died in July.

In a letter Friday to Gonzales, Feinstein said the decision of Houston U.S. District Judge Sim Lake vacating the conviction of Lay was “disconcerting and demands immediate attention.” Lake on Tuesday threw out the jury’s verdict in May that Lay committed fraud and conspiracy in the months before Enron collapsed in late 2001 (see Daily GPI, July 6; May 26). By doing so, the odds that Enron victims will be able to receive any relief from Lay’s estate has been significantly reduced.

Lay had been convicted on 10 counts of fraud, conspiracy and lying to banks in two separate cases. He died unexpectedly of heart disease on July 5 while vacationing in Aspen, CO. He was to be sentenced on Monday (Oct. 23). Ex-CEO Jeffrey Skilling, Lay’s co-defendant, is scheduled for sentencing on the same day.

Prosecutors lost an attempt to have the Houston court ruling delayed long enough to allow Congress time to consider Justice Department legislation that would change current federal law regarding the abatement of criminal convictions.

Feinstein said she was concerned that the Justice Department failed to notify all members of the House and Senate Judiciary Committees in seeking a legislative fix to Lay’s dismissal, but instead turned to Vice President Dick Cheney and House Speaker Dennis Hastert (R-Il). Feinstein is a member of the Senate judiciary panel.

Lake, who presided over Lay’s and Skilling’s four-month trial in Houston, agreed with Lay’s attorneys that his convictions should be erased because of his death. Lay’s lawyers cited a 2004 ruling by the Fifth U.S. Circuit Court of Appeals, which found a defendant’s death pending appeal extinguished the conviction because the accused had not had a full opportunity to challenge the conviction. The appeals court also ruled in 2004 that the government should not be allowed to punish a dead defendant or the estate of the defendant.

Feinstein argued that the Fifth Circuit decision went far beyond the traditional notions of abatement. While the common-law doctrine of abatement has historically wiped out “punishments” following a criminal defendant’s death, the Supreme Court has never held that it also must wipe out a victim’s right to “compensatory” relief, she said. Feinstein noted there is significant disagreement among the circuit courts on this issue, with the Third and Fourth Circuits refusing to abate a restitution order after a criminal defendant’s death.

Lake’s ruling will prevent the government from seeking about $43 million from Lay’s estate, which it sought because prosecutors alleged Lay had enriched himself through illegal means by participating in Enron’s fraud. The government still could pursue Lay’s estate in civil court, but it would have to compete with other litigants that are also seeking a portion of the estate.

When Congress returns following the November elections, Feinstein said she plans to introduce legislation that would address the issue of abatement following a criminal defendant’s death.

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