Enron founder Ken Lay dies
64-year-old former energy executive was awaiting sentencing for fraud.
By Shaheen Pasha, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Kenneth Lay, who rose from a poor preacher's son to become a millionaire before being convicted of corporate fraud, died early Wednesday in Aspen, Colo., a family spokeswoman said.

Lay, 64, was awaiting sentencing after being found guilty of conspiracy and fraud in the Enron trial in May.

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In a statement, spokeswoman Kelly Kimberly said, "The Lays have a very large family with whom they need to communicate, and out of respect for the family we will release further details at a later time."

"Apparently, his heart simply gave out," said Lay's pastor, Dr. Steve Wende of Houston's First United Methodist Church.

An autopsy indicated Lay died of coronary artery disease, Mesa County, Colorado coroner Robert Kurtzman said. There was "no evidence of foul play," he added.

Toxicology reports are still pending and won't be completed for two to three weeks, Kurtzman told reporters late on Wednesday.

A spokeswoman for Aspen Valley Hospital confirmed that Lay arrived at the hospital at 1:41 a.m. MT and was pronounced dead at 3:11 a.m. MT.

(Watch what penalties Lay would have faced -- 1:54)

On May 25, Lay was found guilty of 10 counts of fraud and conspiracy related to the collapse of Enron, the energy company he founded that eventually grew into the nation's seventh largest company before it imploded after an accounting scandal.

It was an astounding fall from grace for the Houston businessman who was affectionately called "Kenny Boy" by President Bush. Lay had raised funds for Bush earlier in his political career.

In the Enron trial, Lay was accused of lying to investors and Wall Street about the health of Enron in late 2001 even as he enriched himself by selling millions of dollars in stock.

But Lay maintained his innocence to the end.

In a May 25 interview, Lay's lead attorney, Michael Ramsey, who was forced to take a backseat midway through the trial after he underwent vascular surgery, said that "Enron was his creation, he nursed it like a child, and the death of Enron was like the death of a child to him."

"He lost a fortune, his family lost a fortune, he can certainly feel the pain of the people that lost money in it, he will feel that till the day he dies," Ramsey said.

Lay was scheduled for sentencing on Oct. 23 along with Enron's former chief executive Jeffrey Skilling, who was found guilty of 19 counts of conspiracy, fraud, making false statements and insider trading.

Both men faced 25 to 40 years behind bars, legal experts said.

Presiding Judge Sim Lake originally scheduled sentencing for Sept. 11.

While it's still unclear whether Lay's sudden death will have any impact on Skilling's sentencing, legal experts said it was unlikely that Judge Lake would grant another postponement.

But Lay's family may still face the music when it comes to the barrage of civil lawsuits filed against him.

Jacob Zamansky, principal at Zamansky & Associates, a law firm that represents shareholders, said Lay's estate is still liable for damages.

"Lay's passing isn't going to have any material effect on the civil suits," Zamansky said. "His testimony is still out there."

Legal observers were surprised at Lay's demeanor during his testimony as the former executive known for his congenial persona, appeared brash, abrasive and unwilling to accept any responsibility for Enron's demise. After the guilty verdict was issued, jurors said his performance on the stand worked against him.

Having taken the stand in his own defense - a decision that many legal experts questioned - Lay's words could still work against his estate in civil litigation.

Still, how much of the pot will be available to claimants is uncertain. Lay testified that he had lost millions after Enron's collapse and most of his estate was depleted in order to pay legal costs and living expenses.

And Joel Androphy, partner at Houston-based law firm Berg & Androphy, said that if a defendant is deceased, civil claimants can't seek punitive damages. Any civil lawsuits would have to be limited to compensatory damages, or those losses that were actually incurred by an individual, he said.

It's also unclear whether Lay's estate will be responsible for any forfeiture of assets mandated by the court. The government filed a motion on June 30, asking the court to order both Lay and Skilling to hand over almost $183 million as a result of their conviction.

According to court papers, that hefty figure includes bonuses received by both Skilling and Lay during their involvement in the conspiracy, proceeds from Enron stock sales and the use of Lay's Enron line of credit, which Lay used to pay off more than $100 million in personal debt.

Of that amount, the government seeks to retrieve $43 million from Lay. Also at risk for seizure is Lay's posh Houston condominium and $6.3 million he had in an an account at Goldman Sachs.

Department of Justice spokesman Brian Sierra said "out of respect for the family," the government wouldn't issue any statement on whether it will continue to seek forfeiture of those assets from Lay's estate.

But the Securities and Exchange Commission, which sought $90 million in damages, said that in pursuing civil trials against the deceased, anything considered to be "ill gotten gains," will still be pursued on behalf of investors.

Enron filed for bankruptcy in December 2001 after investigators found it had used partnerships to conceal more than $1 billion in debt and inflate profits. Enron's downfall cost 4,000 employees their jobs and many of them their life savings, and led to billions of dollars of losses for investors.

The collapse was the first of the high-profile corporate scandals that later rocked WorldCom, Global Crossing, Adelphia and Tyco.

The wave of fraud led to the passage of the Sarbanes-Oxley legislation meant to tighten oversight of how American companies were audited.

Lay, the son of a Baptist preacher in Missouri, worked his way up to become a corporate titan. He earned his Bachelor's and Master's degrees at the University of Missouri and went on to earn a Ph.D. in economics at the University of Houston. He served in the U.S. Navy from 1968 to 1971, during which he received the Navy Commendation Medal and National Defense Service Medal.

He is survived by his wife Linda Phillips Lay, five children and twelve grandchildren.

-- CNNMoney's Grace Wong and CNN's Jon Schienberg and Maria Gavrilovic contributed to this report

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Related: Enron on trial  Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.