The Supreme Court last Monday declined to review lower court rulings that vacated the conviction of Enron founder Kenneth Lay for fraud and conspiracy shortly after his death last July.

Former Enron shareholder Russell Butler filed a petition with the high court, seeking to have the conviction reinstated and to receive financial restitution under the Crime Victims’ Rights Act, The Wall Street Journal reported. Butler was seeking restitution for his $8,000 Enron investment, it said.

In October 2006, U.S. District Judge Sim Lake in Houston vacated the conviction of Lay about three months after his death, a ruling that was later upheld by the Fifth Circuit Court of Appeals in New Orleans (see NGI, Oct. 23, 2006). Lake’s decision threw out a May 2006 jury verdict that Lay committed fraud and conspiracy in the months before Enron collapsed in late 2001 (see NGI, May 29, 2006).

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, 2006 while vacationing in Aspen, CO (see NGI, July 10, 2006). He was to be sentenced on Oct. 23, 2006.

Lake, who presided over Lay’s and Enron COO Jeffrey Skilling’s four-month trial in Houston, agreed with Lay’s lawyers that his convictions should be erased because of his death. Lay’s lawyers cited a 2004 ruling by the Fifth 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.

Lake’s ruling and the subsequent appellate court decision prevents the government from seeking about $43 million from Lay’s estate, which it sought because prosecutors alleged that Lay had enriched himself through illegal means by participating in Enron’s fraud.

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