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HOUSTON – Lawyers for Enron Corp. founder Kenneth Lay took their first official step Wednesday toward erasing his felony convictions in light of his death last month. Lay, 64, was convicted May 25 of fraud and conspiracy in the federal government’s foremost criminal trial to emerge from the disgraced company’s flameout. His co-defendant, former Enron CEO Jeffrey Skilling, 52, was convicted of 19 counts of fraud, conspiracy, insider trading and lying to auditors. Jurors determined both repeatedly lied about Enron’s financial health when they knew complicated and ultimately unsustainable financial structures hid debt and inflated profits. Lay and Skilling insisted they didn’t lie. Lay’s July 5 death came before he had appealed or been sentenced, so his legal team can ask U.S. District Judge Sim Lake to wipe his record clean. But first, Lake has to approve substituting Lay’s estate for Lay himself so the entity can act on his behalf. In a court filing Wednesday, Lay’s attorneys said that step needs to be taken so Lay’s estate “may move to vacate the convictions of Mr. Lay and dismiss the indictment.” “It’s just to establish an entity in court to do business,” Michael Ramsey, Lay’s lead criminal lawyer, said of Wednesday’s request, which was unopposed by prosecutors. In the trial with Skilling, Lay was convicted of six counts of fraud and conspiracy. Lay also was convicted of one count of bank fraud and three counts of lying to banks in a separate, non-jury trial stemming from his personal banking. Like Skilling, who will be sentenced Oct. 23, Lay faced decades in prison. He died while vacationing in Aspen, Colo., with his wife, Linda. An autopsy said his coronary arteries were more than 75 percent clogged. If Lake eventually vacates Lay’s convictions as expected, federal prosecutors would no longer be able to seize millions they say Lay gained from participating in Enron’s fraud because the company founder’s criminal convictions would no longer exist. Federal prosecutors are seeking alleged ill-gotten gains of $43.5 million from Lay and $139.3 million from Skilling. Lay’s assets could remain targets in civil litigation, but what, if any, assets would be sought hasn’t been specified. During his trial, Lay said he had little left other than his $5 million condominium and a $6.3 million investment, and still owed his lawyers. Skilling is fighting the government’s financial quest, saying in filings that he shouldn’t have to fork over more than $12.5 million. He owes his lawyers more than $30 million, which is in addition to $23 million he earmarked for legal costs when he was indicted in February 2004. The government had already intended to seize about $60 million in Skilling’s cash and property that has been frozen since he was indicted. Lake has yet to rule on a financial judgment against Skilling. Enron collapsed into bankruptcy proceedings in December 2001, obliterating thousands of jobs and $60 billion in market value.

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