Lay appears to have substantial assets at his disposal
Associated Press
Feb. 4, 2002, 6:41PM
If former Enron Corp. chief executive Kenneth Lay is fighting to stave off personal bankruptcy, as his wife says, he appears to have a lot of assets at his disposal.
Two Houston homes and four adjoining apartments in the city have a combined value of $1.1 million. Three beachfront homes and two lots on the west end of Galveston are valued at a combined $1.7 million. Four properties in glitzy Aspen, Colo., could fetch more than $19 million.
Linda Lay said last week on NBC's "Today" show that she and her husband -- who quit the Enron board Monday -- lost their fortune when Enron crashed because most of it was tied up in shares now each worth less than an average cup of coffee.
She said all their homes are up for sale except the $7.1 million, 33rd floor of one of Houston's most exclusive high-rises.
"We're fighting for liquidity," she said.
But if the Houston and Galveston properties are on the market, many real estate agents don't know about it.
A red brick two-story house in Houston, formerly owned by the Lays and valued at $259,300, was sold within the last two months. But the two other homes and four adjoining apartments don't have for-sale signs and aren't listed on the Internet through the Houston Realtors Association.
Neither are the Galveston properties.
Pamela Hughes, spokeswoman for the Galveston Association of Realtors, said they could still be for sale. She said sellers sometimes ask that listings not be published and that for-sale signs not be placed in front of properties while sales are negotiated privately.
But high-end brokers in Houston said the lack of easily accessible listings indicates a low priority to unload property fast -- particularly the apartments and a small, wood-frame house valued at less than $113,000.
Three of the Lays' properties in Aspen are listed, and the sale of a fourth in the winter playground is being negotiated privately, said broker Joshua Saslove.
A five-bedroom and a four-bedroom home in Aspen were each initially listed for $6.5 million, but the five-bedroom has been reduced to $6.15 million and the smaller dwelling is on the market for $6.125 million, Saslove said. An undeveloped lot is listed for $2.95 million.
The Lays' smallest Aspen home, a three-bedroom cottage valued at $4.1 million, also is for sale, but less conspicuously.
"We are negotiating privately with an individual to acquire it," Saslove said of the smaller home. "It is under contract."
Filings with the Securities and Exchange Commission show Lay received about $8.3 million in salary and bonuses from Enron in 2000. Other records show he sold 1.8 million shares of Enron stock for $101 million from October 1998 through November last year.
His lawyer, Earl Silbert, didn't return a call for comment on the sale of Lay's real estate holdings. Silbert said last month that Lay sold millions of dollars in stock because he needed cash to repay loans, not out of concern for the company's health.
Silbert said Lay put up shares of stock as collateral for other investments. At least 15 times from February to October last year, Lay returned Enron shares to the company to repay $4 million he had received through a credit line.
Records show that through December, when Lay resigned from the boards of Compaq Computer Corp. and Eli Lilly & Co., he directly owned $6.7 million in stock in those companies. After his resignations from the boards, he was no longer required to disclose his holdings in those companies.
His Enron stock, at $968,450 as of Monday, was worth less than the beachfront properties. Lay resigned as chairman and CEO of Enron Jan. 23, but remains on the board.
If the Lays still worry about bankruptcy after selling off assets, they don't have to be concerned about losing their penthouse. Texas law guarantees that debtors can keep a primary residence while in bankruptcy, whether it is or a one-room efficiency apartment or a multimillion-dollar mansion.
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Lay steps down from Enron's board of directors
Irate lawmakers working on subpoenas
By JULIE MASON
Feb. 5, 2002, 12:43AM
Houston Chronicle Washington Bureau
WASHINGTON -- Former Enron Corp. Chairman Ken Lay resigned from the company's board of directors Monday, as irate lawmakers prepared subpoenas that would force him to appear on Capitol Hill.
Lay, who resigned as chairman last month, severed final corporate ties with Enron, saying his problems had become a distraction to the company's efforts to emerge from bankruptcy.
"Due to the multiple inquiries and investigations, some of which are focused on me personally, I believe that my involvement has become a distraction to achieving this goal," Lay said in a statement.
The move came during a chaotic day in Washington as lawmakers, stung by Lay's abrupt cancellation of highly anticipated testimony on Capitol Hill, took steps to compel the embattled former executive to appear.
"I understand it would be difficult to come and testify, but he should not have expected it would ever be a walk in the park," said Sen. Byron Dorgan, D-N.D.
Lay withdrew less than 24 hours before he was to appear Monday at the Senate Commerce Committee. He also pulled out of a hearing set for today before the House Financial Services Committee.
In response, the House committee voted unanimously to authorize its chairman to subpoena Lay, and the Senate panel is poised to do the same today.
The Senate panel tentatively set Feb. 12 as the new day to hear from Lay, while the House committee's new date was undecided.
Earl Silbert, Lay's attorney in Washington, D.C., said Monday night he is aware that Lay may be subpoenaed by the House Financial Services Committee and suggested to the committee that Lay could testify on Feb. 12 or 13.
According to news reports Silbert said he did not know where Lay was when he was contacted by the committee about him, but he meant that he did not know where Lay was when the committee staff was speaking to him.
"I knew he had left D.C.," Silbert said.
Kelly Kimberly, Lay's newly hired spokeswoman, said Lay returned to Houston from Washington, D.C., Monday morning.
Lawmakers said they are not inclined to barter immunity for Lay's testimony, and it was unclear whether Lay would invoke his Fifth Amendment right against self-incrimination and refuse to answer questions.
Far from backing down from the heated rhetoric that Lay's attorneys blamed for his withdrawal, angered lawmakers, again lashed out at Enron and its former chairman for failing to appear as promised.
"We have not arrived at any preconceived notions here, but I will tell you it sure appears to me that this company was on the financial equivalent of steroids," said Sen. Ron Wyden, D-Ore. "They inflated those short-term profits and pumped themselves up to the detriment of the long-term health of thousands of families in my home state."
Sen. Ernest Hollings, D-S.C., chairman of the Senate committee, criticized the Bush administration for its ties to Enron and called for a special prosecutor to oversee the criminal investigation.
"I've never seen a better example of cash-and-carry government as this Bush administration and Enron," Hollings said.
Attorney General John Ashcroft recused himself from prosecuting the case, disclosing that he took campaign contributions from Enron for a failed 2000 Senate bid.
Hollings criticized the subsequent choice of Deputy Attorney General Larry Thompson to head up the investigation, noting that Thompson once worked in a law firm that represented Enron.
"In other words, it should be independent," Hollings said.
"Of course, finding someone in this town independent of Enron is easier than finding bin Laden, I can tell you that," he said ironically.
The Justice Department rejected the call to replace Thompson with a special prosecutor.
"No person involved in pursuing this investigation has any conflict, or any ties that would require a recusal," Justice Department officials said.
Lay, who it was hoped would finally break months of silence on the collapse of his one-time empire, was to be the star attraction in a week of intense hearings in both the House and Senate.
Instead, his lawyers cited "prosecutorial" tones in the public remarks of lawmakers preparing to question Lay, in explaining his withdrawal.
Committee members generally scoffed at Lay's response, noting that their adversarial tone has remained largely consistent since he agreed in December to testify.
"The problem for Mr. Lay is that some of the autopsies have already been done on Enron," said Sen. Peter Fitzgerald, R-Ill. "If Mr. Lay wants to correct some of the damning impressions that are coming out of these documents, he ought to come before the American people."
Lay's decision not to appear came the day after a special committee of Enron's board released a 218-page report criticizing company executives, auditors, lawyers and board members for allowing improperly created partnerships to inflate Enron's earnings, hide its debt and wrongfully enrich a handful of insiders.
The report also cited Lay for bearing significant responsibility in the company's collapse.
Lay resigned as chairman and CEO of Enron Jan. 23, saying he could not run the company effectively while facing investigations and lawsuits into Enron's collapse.
His resignation from the board closes 16 years of service at Enron, leaving his diminished stock ownership the only remaining link to the company.
He retired as chief executive in February 2001, but resumed the position when his successor, Jeff Skilling, quit in August.
Lawmakers said Monday that Skilling is still expected to cooperate. Former Chief Financial Officer Andrew Fastow, also scheduled to testify, has notified lawmakers he will not answer questions.
In a brief statement on Lay's resignation from the board, Enron said, "We regret that circumstances have led to this. We wish Ken the best."
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Chronicle reporters Laura Goldberg in Houston and Patty Reinert in Washington contributed to this story. |
