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Enron's Lay Dies Of Heart Attack
Six days ago, federal prosecutors sought to seize $6.3 million they said Lay was about to collect from an investment in a Goldman Sachs limited partnership fund. The government also wanted at least $1.5 million more that Lay had borrowed from Enron to pay off the mortgage on the 33rd-floor luxury condominium in Houston where he and his wife lived.
Prosecutors, who declined to comment yesterday, may seek to recover the balance of the money from Jeffrey K. Skilling, Lay's handpicked protege whose abrupt August 2001 resignation from the company sent Lay back into its chief executive post. Skilling's lawyer yesterday called Lay's death a "tremendous loss to Jeff and all the people who worked with Ken over the years." Skilling, who has vowed to appeal, faces an Oct. 23 sentencing alone on 19 fraud and conspiracy charges.
The death of Lay, who walked to and from court each day wearing a signature smile and a red tie, stopped short a life worthy of Horatio Alger, whose namesake award he once won. Lay overcame a hardscrabble upbringing in rural Missouri as the son of an itinerant preacher and collected scholarships to the state university. He cultivated relationships with powerful mentors and ultimately earned a doctorate in economics from the University of Houston.
Early in his career, Lay served in the Navy and as an official at both the Interior Department and what is now known as the Federal Energy Regulatory Commission in Washington. He returned to Texas in 1982 to work for a firm called Transco Energy Co. and then Houston Natural Gas, which, after a merger, he renamed Enron. As his influence grew, Lay evangelized for energy deregulation and donated millions of dollars to Republicans and Democrats alike, becoming a political power broker and a friend of the Bush family. But Bush administration officials did nothing as he pleaded with them to intervene in the waning days of Enron's life in late 2001.
Federal investigators descended on the company within days of its December 2001 filing for bankruptcy protection, uncovering what they called a conspiracy to prop up Enron's stock price and conceal billions of dollars in debt using sophisticated business partnerships. The probe, one of the largest and most sophisticated corporate corruption investigations in history, resulted in guilty pleas or convictions of more than two dozen people, including the former top accountant, finance chief and the only two men to have served as chief executive since Lay founded the company in 1985.
The Rev. William A. Lawson, pastor emeritus at Wheeler Avenue Baptist Church and a leader in Houston's civil rights community, said that in boom years, Lay had "set the standard" for Houston's business elite, making more than $25 million in charitable donations to the United Way, the United Negro College Fund, the NAACP and other causes. At Lay's request, the YMCA in suburban Houston last month stripped his name from the building.
Lay's death set off a bitter debate on the Internet yesterday, as bloggers heaped invective on him and called the death convenient for a man on the eve of forfeiting his wealth and facing a lengthy prison sentence. But Lay's friends, many of whom had spoken with him in the past week, rejected the notion that his death resulted from anything other than natural causes. "The Ken Lay that I knew was much too strong in faith, much too strong in family, to have taken his own life," Lawson said.
Ramin Oskoui, a cardiologist at Sibley Memorial Hospital in the District, said a fatal heart attack would not be surprising in a man who had watched his reputation deflate and saw his liberty fleeing before his eyes.
"It is well known that emotional or physical stress can precipitate a heart attack," Oskoui said, adding that for one in three men, the first cardiac symptoms result in death.
Terry Giles, a Houston lawyer and friend who spoke with Lay by phone last week, said: "I'm always going to believe he died of a broken heart. I think the conviction just really broke his heart."
Friends said Lay continued to express public optimism after the verdict, even in the face of jurors who called his undisclosed stock sales a "disgrace" and news reports that cast him as a villain who symbolized an era of corporate chicanery. But maintaining that facade may have taken its toll.
"Down deep, underneath the exterior, there had to be unbelievable amounts of tumult and stress," Giles said. "After the conviction, there had to be a sense of doom."
Staff researcher Richard Drezen contributed to this report.