As expected, Judge Sim Lake has wiped the conspiracy and fraud convictions of Enron founder Ken Lay, report the news wires.

The reason: Ken Lay died before he could appeal which means his conviction must be vacated, according to US law. In other words, Ken Lay is not guilty of a fraud that wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans ... because he's dead.

Still, civil action on behalf of Enron might well be on the cards. But it's not going to be easy. The US Government was trying to recover $43.5 million in ill-gotten gains prosecutors claim Lay pocketed. Now technically, the government can still pursue those gains in civil court but it would have to compete with other litigants also pursuing Lay's estate.Significantly, prosecutors had asked the judge to delay ruling until Congress could consider changing the law applying to Lay's situation but Congress never took up the request. Funny that.

Still, Lay's legacy will live on, says the Houston Chronicle's Loren Steffy in his blog:

"In the court of public opinion, Lay's conviction still stands, and always will. A jury found that he committed crimes at Enron, despite his flimsy argument that he didn't know about all the financial shenanigans going on under his nose.
"Lake set aside Lay's conviction. So what? Lay's guilt is revocable by legal technicality only. It remains the defining pillar of his legacy."

The ruling comes at a critical time in the Enron legal fallout.

Lay's co-defendent, Enron CEO Jeff Skilling is due to be sentenced on Monday. He faces up to 20 to 30 years in the slammer. Expect the judge to throw the book at him with Skilling still proclaiming his innocence and showing no remorse. Skilling is expected to appeal.

Meanwhile, the US government is considering an appeal against the lighter-than-expected 6 year sentence handed down to Enron's chief fraud architect Andrew Fastow, reports the Houston Chronicle. Fastow had agreed to 10 years as part of his plea bargain.