Why does L & L Energy continue to trade OTC even though it's been defunct for years and its former CEO is in jail?

The OTC Pink (formerly Pink Sheets) is one of the least regulated. The bar for maintaining a listing is very low. If the brokers are still quoting prices to buy or sell the stock then they will continue to trade on the Pink Sheets.

From the OTC Markets FAQ:

Can companies get "delisted" from the OTCQX, OTCQB and Pink markets?

Companies that no longer meet the requirements, or request to be removed, will be removed from OTCQX and OTCQB. Generally, those securities will begin trading on the Pink market. The only way to remove a company from the Pink market is for all of the broker-dealers to stop quoting it. Companies are required to contact FINRA Operations if their securities no longer exist, but are still being quoted. FINRA will investigate and, if appropriate, eliminate the trading symbol and inform OTC Markets Group that they have done so. OTC Markets Group will then remove the quotations in this security.