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Enron founder Ken Lay dies of heart disease

Ex-Enron exec convicted of helping perpetuate huge business fraud

HOUSTON – Enron Corp. founder Kenneth Lay died of a heart attack on Wednesday, still believing he was innocent in the corporate scandal that cost thousands their jobs and pensions and led to billions of dollars of investor losses.

Lay, 64, faced the prospect of the rest of his life in prison after his conviction May 25 of fraud and conspiracy in one of the biggest debacles in American corporate history.

Dr. Robert Kurtzman, Mesa County Coroner, said his autopsy showed Lay died of heart disease while on vacation in Aspen, Colo.

Lay ascended from near-poverty as a minister’s son in Missouri to the pinnacle of corporate America. He was considered a visionary who had President Bush’s ear during Enron’s halcyon days, but his reputation and monumental wealth shattered with that of his company. He spent his last years optimistically insisting he was no criminal, even after he became a felon.

“I guess when you’re facing the rest of your life in jail and in your heart you know you’re an innocent man, I guess it’s too much to bear,” said close friend Willie Alexander.

Lay had stayed out of the public eye since he and former Enron CEO Jeffrey Skilling were convicted of fraud and conspiracy for lying to employees and investors about Enron’s financial health.

Lay, who described himself as naturally optimistic, displayed no signs of ill health throughout the grueling four-month trial that started Jan. 30. His lead lawyer, Michael Ramsey, was sidelined for several weeks during the trial because of heart problems.

Kurtzman said the autopsy revealed that Lay had a heart attack in the past.

“It’s a very sad ending for the whole Lay family saga. There are very few people of his age and abilities who flew as high or who fell so low,” said John Olson, an analyst who angered Lay with his skeptical takes on Enron’s often indecipherable financial reports.

Along with fraud and conspiracy charges, Lay also was convicted in a separate federal trial of bank fraud and making false statements to banks. Those charges related to his personal finances.

  timeline A look at Kenneth Lay’s life
 
1942
Born April 15. Son of a Baptist minister. Grew up in Rush, Mo.
1964
Earned a bachelor’s degree in economics from the University of Missouri.
1965
Earned a master’s degree in economics from the University of Missouri. Worked as an economist at Humble Oil in Houston until 1968.
1968-71
Served in the Navy.
Worked at the Pentagon on a study about the economic impact of pulling out of Vietnam. Was a technical assistant at the Federal Energy Regulatory Commission.
1970
Earned a doctorate degree in economics from University of Houston.
1972-74
Deputy undersecretary for energy matters at Interior Department in Washington.
1974-81
In Florida, was the president of Continental Resources Co., formerly Florida Gas Co., and executive vice president of the Continental Group, the parent company of Continental Resources Co.
1981-84
President and chief operating officer and a director of Transco Energy Co.
June 1984
Joined Houston National Gas as chairman and chief executive officer.
1986
Named chairman and chief executive officer of Enron Corp. following the merger of Houston Natural Gas and InterNorth Inc.
Dec. 2000
Enron announces president and chief operating officer Jeffrey Skilling will take over as chief executive from Kenneth Lay in February. Lay will remain as chairman.
Aug. 2001
Skilling resigns after six months; Lay named CEO again.
Dec. 2, 2001
Enron files for Chapter 11 bankruptcy.
Jan. 23, 2002
Lay resigns as chairman and CEO.
July 8, 2004
Lay surrenders to FBI. Indictment unsealed, accusing him of participating in a conspiracy to manipulate Enron’s quarterly financial results, making false and misleading public statements about the company’s financial performance and omitting facts necessary to make financial statements accurate and fair. Lay pleads innocent.
 
Oct. 19, 2004
A federal judge grants Lay a trial separate from Skilling and Causey on charges of bank fraud and lying to banks about using loans to buy Enron stock on margin, but rules the trio will be tried together on other charges.
Jan. 31, 2006
Opening statements in the Lay/Skilling criminal trial begin in Houston. 
May 25, 2006
Lay is convicted of all six counts against him, including conspiracy to commit securities and wire fraud, and he is convicted in a separate bank fraud case.
 
July 5, 2006
Ken Lay dies of a heart attack in Colorado. He was 64. 
  
SOURCES: Associated Press, MSNBC.com • Print this
 
Lay was scheduled to be sentenced Oct. 23, along with Skilling, who also faces a long prison term.

Skilling, reached by telephone at his home in Houston, told The Associated Press that he was aware of Lay’s death.

“No, I don’t have any comment,” he said quietly. But his lawyer, Daniel Petrocelli, described Skilling as “devastated.”

“Jeff and Ken worked closely over the years, and Jeff will miss him dearly,” Petrocelli said.

Lay led Enron’s meteoric rise from a staid natural gas pipeline company formed by a 1985 merger to an energy and trading conglomerate that reached No. 7 on the Fortune 500 in 2000 and claimed $101 billion in annual revenues. Lay traveled in the highest business and political circles, lived an extravagant lifestyle and gave generously – as much as $6.1 million in 2001.

Lay’s clout evaporated when Enron spiraled into bankruptcy protection in December 2001. The crash obliterated Enron’s more than $60 billion in market value and thousands of jobs, and Lay was pushed out as chairman and CEO in January 2002.

While Ken Lay’s death ends part of the criminal case against him, there are a couple of issues to resolve. First, the government has filed a motion seeking at least $43 million in Lay’s assets. Prosecutors claim he illegally benefited from a line of credit he used at Enron. They also seek money he received in bonuses. The government must decide whether to continue to seek forfeiture of those assets from Lay’s estate.

Second, there’s the question of what Lay’s death will mean to further proceedings against former Enron CEO Jeffrey Skilling. His lawyers might seek to delay sentencing.

— Pete Williams, NBC Justice Correspondent
Read more in The Daily Nightly
 
The government launched a widespread fraud investigation that enveloped Enron’s finance, trading, broadband and retail energy units. The probe amassed 16 guilty pleas from ex-executives, eight of whom testified against Skilling and Lay during their trial.

Lay and Skilling insisted no fraud occurred at Enron except from a few employees who skimmed money behind their backs. Jurors were unconvinced.

“I loved Enron very much. And I loved Enron’s employees very much. I spent half my professional life running Enron. I think we built a great company. We changed energy markets around the world,” Lay testified during the trial.

Prosecutors in Lay’s trial declined comment Wednesday, both on his death and what may become of their effort to seek $43.5 million from Lay that they say he pocketed as part of the conspiracy. The government is seeking $139.3 million from Skilling.

Lay’s death will not affect the government’s case against Skilling, who will appeal his convictions, Petrocelli said.
 
The Pitkin, Colo., Sheriff’s Department said officers were called to Lay’s house in Old Snowmass, Colo., shortly after 1 a.m. MDT (3 a.m. EDT). He was taken to Aspen Valley Hospital, where he died at 3:11 a.m., said Pat Worcester, executive assistant to the Aspen hospital’s chief executive.

Lay’s bond allowed him to travel only to Colorado and in the Houston area.

Pastor Steve Wende of Houston’s First United Methodist Church, said Lay seemed healthy when he attended services in Houston on Sunday, and even believed God may have had a purpose for him in prison.

“He was very much at peace with his future, he had a perspective on what had happened, he even bore no ill will for the jury or all of the people who might want to say terrible things about him,” Wende said.

“Apparently, his heart simply gave out,” Wende said.