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Editor's note: We now (Dec 2002) know what happened to the Lay Family Foundation's Enron Stock: It became worthless before it could be sold.
Shaky Family Foundation
What happened to the Linda and Ken Lay Family Foundation's $48 million in Enron Stock?
by Cursor
POSTED JANUARY 18, 2002 -- What happened in 2001 to $48 million in Enron stock held by the Linda and Ken Lay Family Foundation? The foundation, which reported assets of over $52 million in 2000, is controlled by Kenneth Lay's wife Linda.
In the year 2000 alone Kenneth Lay contributed $14.5 million worth of Enron stock to the foundation -- 183,011 shares valued at $79.46 per share .
In 2000 the foundation gave away $3.6 million and generated revenue of $3.5 million, almost all coming from the sale of Enron stock.
It is not yet known how the foundation responded to the falling share price of Enron throughout 2001. One of three things must have happened to the foundation's Enron stock:
1) The foundation followed examples it set in previous years by only selling enough Enron stock to generate cash needed to meet its financial needs. In this case the foundation would have essentially lost more than 90 percent of its assets, $48 million of which was in the form of Enron Stock.
2) The Foundation sold its Enron stock before the price tumbled. This would have preserved the assets of the foundation, but revealed inside knowledge of the stock's impending fall.
3) Some combination of the above. As the share price fell the foundation sold more and more stock.
These are more than just idle questions. If the foundation sold the Enron stock before it fell in price, it might be revealing insider knowledge of the impending fall. If the foundation listened to the advice Ken Lay was giving Enron employees, it would have held onto the stock and hence lost all its value.
IRS 501(c)(3) charities, which the foundation is, must file their 990 forms - their income tax form - with the IRS by April 15. Most foundations file for an automatic extension, which would give them until August 15 to file. The 990 report requires the foundation to report all stock transactions, so the answers to these questions will eventually be known.
Analysis of the Linda and Ken Lay Family Foundation IRS 990 Form, 2000
The following are six pages from the IRS Form 990 report for the Linda and Ken Lay Family Foundation for the year 2000.
IRS 990 Page 1 - Note the total Contributions - $14 million - all from Ken Lay in the form of Enron stock.
IRS 990 Page 2 - Note the total Assets - $52 million - $48 million of which is in Enron stock.
IRS 990 Page 65 - Schedule of Contributions for 2000 - 183,000 shares of Enron at a Fair Market Value of $14.5 million - all from Ken Lay.
IRS 990 Page 67 - Securities Portfoilio Analysis. Note the $48 million in Enron stock.
IRS 990 Page 80 - Summary of Securities owned. Out of $51 million in securities, $48 million are in Enron stock.
IRS 990 Page 86 - How did the foundation raise cash in 2000? By selling Enron stock - $3.5 million worth.
