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Archive for Tuesday, January 29, 2002

Enron workers file class-action suit over ‘staggering losses’ in 401(k)s

January 29, 2002

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Enron employees past and present who suffered "staggering losses" in their retirement funds filed a lawsuit Monday seeking reimbursement from top Enron executives.

The legal action came as the wife of ousted Chairman and Chief Executive Kenneth Lay said in a TV appearance that the couple is nearly broke.

The group of more than 400 Enron employees, whose 401(k) retirement plans are now virtually worthless, contend in the federal lawsuit filed in Houston that employees were urged to invest in Enron stock but were not told how fragile the company's financial condition was.

Enron filed for bankruptcy protection on Dec. 2.

The suit names as defendants Lay, former Chief Executive Jeffrey Skilling and former Chief Financial Officer Andrew Fastow, among others. Those three executives sold more than $198 million in stock, the suit alleges. The suit also names Northern Trust Co., trustee for the retirement plan, and Andersen, Enron's accountant.

"Enron executives were profiting from an elaborate shell game, using the hard-earning retirement savings of their loyal employees," Randy McClanahan, a lawyer representing the group, said in a statement.

This is the latest in dozens of lawsuits filed against current and former Enron executives, accusing them of misleading investors. The company and its officers have repeatedly denied any wrongdoing.

So did Linda Lay, who defended her husband in a taped interview aired Monday morning on the "Today Show" as an "honest, decent, moral human being who would do absolutely nothing wrong."

Linda Lay, appearing bitter and emotional, told NBC News correspondent Lisa Myers that everything the family owns is for sale except the opulent Houston home where the interview took place during the weekend. Kenneth Lay, Myers noted, has been advised by his lawyers to avoid speaking to the media.

Lay was surrounded by the five children that she and Ken Lay brought to their marriage, a second for both. They have been married for 20 years.

Lay acknowledged that her husband earned "a massive amount of money." However, she added: "It's all gone. There's nothing left. Everything we had mostly was in Enron stock."

The couple's wealth has been further drained by cash calls on other long-term investments, and the Lays are nearly bankrupt, she said. She said she understands the anger that is focused on her husband.

Public relations professionals, who asked not to be identified, saw the interview as a desperate move to humanize Kenneth Lay but one that may not play well.

"I don't know what they were thinking," one said.

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