A federal judge yesterday wiped out the criminal conviction of Enron Corp. founder Kenneth L. Lay, ruling that his July 5 death denied him the chance to appeal a Houston jury's fraud and conspiracy verdict.

The ruling by U.S. District Judge Sim Lake, who presided over the 16-week trial last spring, will make it tougher — though by no means impossible — for prosecutors and private plaintiffs who are trying to recover money from Lay's estate, legal experts said. A Justice Department spokesman said yesterday the government would continue to pursue restitution of $43.5 million from Lay's estate.

Lake also dismissed the original indictment under which Lay had been brought to trial. In a 13-page ruling, Lake cited a 2004 decision by the 5th U.S. Circuit Court of Appeals vacating the conviction of a defendant who died while his appeal was pending.

The Justice Department's Enron Task Force so feared this outcome that last month it unsuccessfully appealed to Congress to pass a law abolishing the legal doctrine under which Lake threw out Lay's conviction.

The doctrine "unnecessarily harms crime victims," prosecutors Sean M. Berkowitz and John C. Hueston wrote Lake in a motion asking him to delay action until Congress had a chance to consider legislation. "It erases the hard-won verdicts against those who have wronged them, verdicts that might aid crime victims in civil litigation," they wrote.

Congress recessed without considering the legislation, and in any case, it might have been seen as an unconstitutional interference with the courts, said Carl Tobias, law professor at the University of Richmond. "It certainly raises a red flag," he said.

Lay died of a heart attack at age 64 while vacationing with his wife, Linda, near Aspen, Colo.

Along with his protege, former Enron Chief Executive Jeffrey K. Skilling, Lay was convicted of fraud and conspiracy charges arising from the energy-trading company's collapse into bankruptcy in late 2001. Enron's implosion cost thousands of jobs and wiped out billions of dollars of stock-market value at a company that once had been a darling of Wall Street.

Skilling is scheduled to be sentenced Monday and is expected to receive a prison term of at least 20 years.

The government said it would go ahead with efforts to obtain restitution.

"Today's ruling does not change the fact that Mr. Lay was found guilty after a four-month jury trial and a separate bench trial," Justice Department spokesman Bryan Sierra said in a statement. "We will continue to pursue all remedies available for restitution on behalf of the victims of the fraud at Enron."

Prosecutors are seeking $182 million in restitution and penalties from Skilling at the time of his sentencing. According to Bloomberg News, that sum includes $43.5 million initially sought from Lay. The Justice Department did not say whether it would pursue a separate civil suit. The Securities and Exchange Commission already has a civil suit pending against Lay and Skilling.

"On behalf of the Lay estate, we are pleased with the opinion," said lawyer Sam Buffone of the firm of Ropes & Gray in Washington. Given the legal precedents in the federal 5th Circuit Court of Appeals, which includes Houston, he said there was "no other outcome possible."

The amount of the Lay estate's remaining fortune is in dispute. Prosecutors believe he transferred tens of millions of dollars to relatives, but Lay testified at trial that he was nearly broke.

In his ruling, Lake wrote that the law allows a court to enter an order of restitution only when sentencing a defendant, and because of his death, Lay was never sentenced.

Lay's estate, and Skilling, still face a massive consolidated shareholder lawsuit, whose lead plaintiffs are represented by the San Diego firm of Lerach Coughlin Stoia Geller Rudman & Robbins.