There were many dark ironies shrouding the Enron scandal of the early 2000s and its founder and CEO, Ken Lay. The energy company, based out of Houston Texas, claimed nearly $101 billion in earnings. However, in reality, Enron was participating in one of the largest cases of corporate fraud in American history. Almost overnight, the company went from one of the most well respected and prosperous businesses in the nation to a bankrupt stain on corporate history. Thousands of unsuspecting employees and investors were left devastated by the fallout. Yet, the elites of Enron all claimed ignorance when questioned.
One of the “innocent” felons was Ken Lay. Lay was insistent that the true culprits of the company’s collapse were short sellers, rogue executives, and the news media. He also claimed that he had been unaware that any of these scoundrels were participating in the fraud. This naiveté would be rather odd considering that cracks had been showing in Enron’s empire for years. The irony in it all? Enron’s slogan was, “Ask Why.” If Lay really was as oblivious to the company’s corruption as he claimed, it would have done this CEO well to heed his own catch phrase.
Early Life of Ken Lay
Ken Lay has been labeled one of the worst CEOs of all time by the likes of Business Insider and Portfolio. However, there was a time when he was considered one of America’s greatest success stories. Born to a Baptist preacher in rural Missouri, Lay was a true rags to riches story. The man had a drive not seen amongst many. He pursued higher education and eventually earned his Doctor of Philosophy in economics from the University of Houston in 1970. He also joined the navy and advanced to the rank of lieutenant, serving at The Pentagon.
In 1974, he left his work in the military to use his degree in business. Lay had one success after another and had a bigger and better title at each company he worked with. Finally, in 1985, Lay reached, what some might call, the peak of the American Dream. He bought the Houston energy company he was currently the chairman and CEO of and renamed it, Enron.
A True Success Story?
To the world, Lay was a self-made success story. He owned a $100 billion organization that was named “America’s Most Innovative Company” 6 years in a row by Fortune, was a personal friend to President George H.W. Bush, and the Houston community loved him for his generous acts of philanthropy in the community. Yet, the looming glass walls of Enron did not reflect its level of transparency. Under Lay’s supervision, the company culture became slowly more and more poisoned by nasty characters with less than ethical intentions. This was true from Enron’s trade floor to the top dogs’ offices.
Ken Lay’s Legacy
Kenneth Lay is a name associated with one of the biggest scandals in Houston’s history. 20,000 employees lost their jobs and, in some cases, their life’s savings to Enron’s downfall. For a very bright individual, Lay seemed incapable of grasping the depth and breadth of Enron’s crimes and his part in it all. Even after being convicted for all charges pressed against him, Lay declared, “I firmly believe I’m innocent in the charges against me.” This seems a bit hard to believe. Yet, Lay’s personal estate is the biggest piece of evidence that he might have had partial ignorance of Enron’s state.
Many of the key players in this scandal had strategically planned for Enron’s bankruptcy. They came out with their personal finances relatively intact. Yet, Lay’s fortune was all but eradicated in the wake of his criminal charges. Kenneth Lay actually died before his sentencing. Thus, he never felt the full impact of his loss of affluence. The one’s who did, were his family. To this day, Ken Lay’s wife is still (quite literally) paying for his sins.
While the more obvious moral of the story here is, “don’t break the law,” this is also a valuable lesson in getting your affairs in order. Estate Planning is a crucial step towards the safe transfer of your finances. As such, it should be handled by knowledgeable attorneys in the field. You do not want to take the risk of putting the ones you love in a nasty drawn out and expensive case of probate if you can avoid it. If you would like to learn more about taking proper measures to protect your own wealth and legacy, contact the Mendel Law Firm, L.P., for a free initial consultation on estate planning, trust planning, and/or probate issues.
Sources:
https://abcnews.go.com/Business/LegalCenter/story?id=2003728&page=1
https://en.wikipedia.org/wiki/Kenneth_Lay
http://content.time.com/time/specials/packages/article/0,28804,1903155_1903156_1903186,00.html
https://www.forbes.com/sites/peterjreilly/2011/09/08/estate-of-enron-ceo-kenneth-lay-wins-in-tax-court/#348a0bf598d3
https://www.chron.com/business/enron/article/Lay-s-will-leaves-all-of-his-assets-to-his-wife-1481076.php
Stephen A. Mendel, Estate Planning Attorney
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