Kenneth Lay, the man at the centre of the Enron scandal, dies of heart attack

Kenneth Lay, the former chairman of Enron convicted of presiding over one of the biggest frauds in American corporate history, has died of a heart attack while awaiting sentencing.

The 64-year-old, once one of the nation's business grandees, and an informal adviser to President George W Bush, collapsed at his holiday home near Aspen in Colorado in the early hours of yesterday morning.

His death robs prosecutors of a final, cathartic chapter in their five-year pursuit of wrong-doing at Enron, whose collapse came to symbolise an entire era of corporate corruption. Lay's sentencing, scheduled for October, was likely to see him imprisoned for the rest of his life.

Already, friends were saying yesterday he had died of a broken heart, still mourning the loss of the company he created 20 years ago, and unable to comprehend the guilty verdict against him.

He had protested his innocence to the end, and his lawyers were already preparing a vigorous appeal. No one who knew him, it seems, had suspected his health was failing.

But, at 1.41am local time, ambulances were dispatched to the house in the pretty village of Old Snowcross and, shortly after 3am, Aspen Valley Hospital pronounced him dead.

Steve Wende, Lay's pastor at the First United Methodist Church of Houston, said: "His heart simply gave out."

Just six weeks ago, Lay had been found guilty on six charges of fraud and conspiracy over the collapse of Enron, plus four of making false statements in his personal financial affairs. The verdicts sealed his fall from grace, erasing forever an earlier reputation for business innovation and philanthropic endeavour in his beloved Houston, Texas.

Enron had been doomed to collapse under the weight of billions of dollars of liabilities that were hidden within its deliberately labyrinthine financial structure. The Houston jury decided that the fraud went right to the top, and that Lay misled employees and Wall Street by painting a rosy picture as Enron was unravelling and he was selling millions of shares.

The collapse wiped out the pensions and savings of thousands of employees, most of whom lost their jobs. Lay had argued that the discovery of a certain employee lower down Enron had led to a 'classic run on the bank', and that he would be exonerated. The collapse, he believed, was a tragedy, not a fraud.

When the verdict was finally read out, Lay reacted to the jury's decision "like someone hit him on the head with a two-by-four," according to Pat Lopez, a courtroom sketch artist who was standing behind Lay at the time. "He died right then. I didn't expect him to survive to go to prison." Lay had a wife, Linda, two children, three step-children, and 12 grandchildren.

The couple were in Colorado on a week's break. The holiday home was the only place to which Lay was allowed to travel outside of Houston, where he was due to be sentenced on 23 October alongside Jeffrey Skilling, his long-time deputy at Enron, who was convicted on 19 fraud, conspiracy and insider dealing charges.

Prosecutors were closing in on the couple's assets, having demanded last Friday that they be allowed to seize a $6.3m investment fund and Lay's $5m Houston condominium.

Lay had said during his 14-week trial that a fortune that once totalled $400m had become the debts of $250,000. Where once he had been living the American dream, he said, "you could say I have been living the American nightmare".

The son of a Baptist minister, Lay always said he had dreamed of clawing his way out of poverty. In its pomp, Enron was the seventh largest company in the US, worth more than $70bn. What Lay created from the merger of two small gas pipeline companies in 1985 had grown into a corporate colossus.