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CNN Live Today

North Korea Launches Seven Missiles; Enron Founder Dies of Apparent Heart Attack

Aired July 05, 2006 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DARYN KAGAN, CNN ANCHOR: A lot to get to. A busy news day this day after the Fourth of July.
As we begin, President Bush says don't do it. North Korea did it anyway. Looking for diplomatic fireworks today after a flurry of missile tests. Here's what we know about this developing story.

North Korea has launched seven missiles. The tests include at least one long-range missile and six shorter range missiles. U.S. officials say the long-range missile, a potential threat to American soil, failed just a few seconds after it launched. The U.S. condemned the missile test as provocative, but says they're not a threat to American interests.

Japan calls the test "a grave concern." The United Nations Security Council is holding an emergency meeting behind closed doors at this hour.

All right. We're getting breaking news in here at CNN. And this goes to the world of business. We're getting word that Enron founder Ken Lay has died. Getting word from our CNN affiliate KPRC in Houston. Ken Lay, the founder of Enron.

Of course he was convicted back in May of conspiracy and guilty of conspiracy and fraud as well. He was facing sentencing, along with Jeffrey Skilling, on September 11th. Ken Lay could have been facing 20 to 30 years in prison.

Cause of death at this time not known. But CNN has confirmed we have heard from a spokesman for Ken Lay that, in fact, the founder of Enron, Ken Lay, has died. That just a little bit over a month after he was convicted of conspiracy and fraud in a federal trial in Houston. Much more on that just ahead.

And we'll get back to the Ken Lay story in a little bit. First, though, let's get back to the developing story out of North Korea and talk about what's happening at the United Nations. What is the reaction of countries around the world to North Korea's actions over the last day? Let's check in with our CNN correspondent, our senior correspondent, Richard Roth, at the U.N.

Richard.

All right. A little problem with the United Nations. We move on now. Let's go to the White House and Suzanne Malveaux.

Suzanne.

SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Daryn, we just got out of a gaggle with White House Press Secretary Tony Snow giving an update on the situation with North Korea. We are told that President Bush has not reached out to any other world leaders regarding this matter. That is because they feel this does not rise to the presidential level, but rather it's administerial level that they're dealing with this diplomatic dance, if you will.

Secretary of State Condoleezza Rice has been in contact with her counterparts from South Korea, China, Japan and Russia. She is also going to be meeting with the national security advisor of South Korea later this afternoon. Now the envoy from the State Department, Chris Hill, who is going to be involved in negotiations, is going to be traveling to the region. He'll be leaving sometime tomorrow to all of those countries, to meet with his counterparts, to move forward.

And us a know, as you had mentioned before, the U.N. Security Council holding this meet with the permanent five members to discuss what do we do next here? Whether or not North Korea's going to be facing sanctions. Whether or not they can get them back to those six- party talks.

We also understand as well, just a couple of highlights, to button some things up. Tony Snow confirming that that seventh missile that was launched took place at 4:22 a.m. Eastern Time. A nodong (ph), like others, was medium range that splashed into the Japanese Sea. He also took a question here on whether or not it was possible that the U.S. actually shot down that long-range missile. He said that the United States does not have that kind of capability to do such a thing 40 seconds after it launched and then failed, answering that question.

And then finally whether or not we are going to see any other launches from the North Koreans today. Tony Snow saying that there are short and medium-range missiles that could be launched, that are prepared to be launched. So there is a possibility of additional launches perhaps today but they just really don't know what to expect.

But, Daryn, the bottom line here at the White House is they're downplaying these developments saying, look, this is not an immediate threat to the United States. This is not a confrontation between the United States and the North Koreans. And that they are working very, very hard diplomatically with the other members of the six-party talks to pressure North Korea to come back to the negotiating table.

Daryn.

KAGAN: Suzanne Malveaux at the White House. Suzanne, thank you.

We, of course, have a lot more on North Korea and the missile story, but we want to get back to our breaking news out of Houston, Texas. CNN has confirmed through a family spokesman that Ken Lay, the founder of Enron, who once built it into one of the largest companies in the entire world, has died. This is just about five weeks after he was convicted, along with Jeffrey Skilling, on conspiracy and fraud charges in a federal trial that took place in Houston, Texas.

With more on this and on Ken Lay let's go to our Susan Lisovicz at the New York Stock Exchange.

Susan.

SUSAN LISOVICZ, CNN CORRESPONDENT: I think, Daryn, you could make the argument that Ken Lay's life was basically over when the jurors handed him the conviction on all counts of conspiracy, securities fraud, wire fraud. Judge Sim Lake also found Ken Lay guilt in a separate trial that he himself heard on making false statements to financial institutions. He faced the prospect of serving the rest of his life in prison.

In addition to that, prosecutors were looking for Ken Lay, as well as Jeff Skilling, to fork over tens of millions of dollars on what they claim were ill gotten gains. Of course, this all coming from the company that Ken Lay founded in 1985, Enron, which became ultimately known for its aggressive and even dynamic management before it became the largest corporate bankruptcy in U.S. history when it imploded in late 2001.

Ken Lay, prior to that, had been considered sort of a rock star in the corporate world for being such a visionary and taking Enron to these spectacular heights. At one point, Enron had assets of $100 billion. It was the seventh largest company in the U.S. before its spectacular fall. And, ultimately, Ken Lay and Jeff Skilling became synonymous with corporate abuse and accounting fraud.

Ken Lay, on his conviction, actually said that he -- we believe that God is, in fact, in control and, indeed, he does work all things for good for those who love the Lord. But this was a terrible, terrible blow to Ken Lay and to the company that he had started two decades ago. And now his death today coming from Aspen, Colorado.

Back to you, Daryn.

KAGAN: But the cause of death at this point not yet know. The fall that Ken Lay took, almost unprecedented in American business history. Not just of what he built and the collapse and whatnot, what did it cost him personally and the thousands of Enron employees and investors as well. But on a personal note, he was held in such high esteem in Houston where Enron and he and his family supported so many charitable causes.

LISOVICZ: And, Daryn, when you're talking about a person like that who lives for work. Even if he was guilty of all of these abuses, it's like depriving a person of oxygen. He was so synonymous with this company and this company was synonymous with Houston. So it was something that he really couldn't escape. And that kind of blow, ending up with his conviction, had to be something that really took its toll on Ken Lay.

KAGAN: And a personal up front as well during the trial, both Ken Lay and Jeffrey Skilling each took the stand in their own defense. LISOVICZ: And Ken Lay actually had been expected to do better than Jeff Skilling. Jeff Skilling had long been known as sorts of a contentious, abrasive executive. Ken Lay was much more folksy, was considered more of a people person. But, in fact, a lot of legal experts say he actually did not do well on the stand. And one of the reasons why is that his chief counsel had his own health issues and had to recuse himself and he dealt with some other less senior people and apparently did not do as well on the stand and perhaps jurors did not particularly like the character that they saw on the stand.

KAGAN: And in terms of what he faced, he faced and was convicted of all six counts that he was charged with, conspiracy and fraud, 20 to 30 years in prison is what he was facing. Ironically, sentencing date is September 11th for both him and Jeffrey Skilling. That's where it was set.

And I remember the time about five weeks ago when this verdict came out, all the legal experts we talked to said chances of appeal, room for that, there really wasn't a lot.

LISOVICZ: No, Ken Lay's life was over. I think you could make the argument this life was over and he was going to serve out the rest of his life in prison.

KAGAN: OK. And I'm just getting this. Apparently the Lay family has put out a statement. I'm just going to read it to you as I get it. It's very short. It just says "Ken Lay pass away early this morning in Aspen. The Lays have a very large family with whom they need to communicate. And out of respect for the family, we will release no further details at this time."

Short and just to the point there, Susan.

LISOVICZ: Yes, it's been a very tough time, obviously, for the Lay family as well and now Ken Lay the final chapter has been written.

KAGAN: So as we were saying, 20 to 30 years at his age in his mid-60s, he was pretty much looking at spending the rest of his life in jail or prison.

LISOVICZ: Right. And, you know, and because prosecutors were still looking at getting his remaining assets, you know, it was something that his family will still have to deal with theoretically. So for the family, they still have to deal with this cloud. Ken Lay and Enron and, yes, he's 64 years old. So the prospects for him in prison were not good at all.

KAGAN: All right, Susan Lisovicz at the New York Stock Exchange. We'll be back to you for more on this story and other business news as it develops throughout the morning.

But, once again, the founder and former CEO of Enron, Ken Lay, has died. His family releasing a statement saying it happened early this morning in Aspen. No cause of death was given.

Five weeks ago he was convicted of conspiracy and fraud, six counts, faced 20 to 30 years in prison when he was due to be sentence on September 11th. We'll have more on that story as it develops throughout the day and what we learn from the family and other associates as well.

Also we have this over big story working out there on North Korea. What does North Korea hope to gain from these missile tests that it's conducting? We'll look at that. And what's the real message behind the tests. We'll talk with an expert about Kim Jong- il's motive. You're watching CNN, the must trusted in news.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

KAGAN: And we're getting more details now on the death of Enron founder Ken Lay. CNN has confirmed through a family statement that the former Enron chairman has died. It happened in Aspen, Colorado. And our CNN affiliate KPRC on its website is reporting that Ken Lay, at the age of 64, died of a massive coronary. That he was taken to the hospital in Aspen yesterday, or last night, and doctors there say that his heart simply gave out.

It was last month that Ken Lay was convicted on six counts of conspiracy and fraud. He was due to be sentenced on September 11th, expecting to get a prison sentence of about 20 to 30 years. Ken Lay dead at the age of 64.

Back now to the North Korea story and the United Nations Security Council holding an emergency meeting behind closed doors this hour. They are talking about North Korea. Here to peek into that session and explain it to us, our senior U.N. correspondent Richard Roth.

Richard.

RICHARD ROTH, CNN CORRESPONDENT: Yes, Daryn, the Security Council right now is behind closed doors. They were going to be reviewing their program of work for this month, but then they're going to get to North Korea. But already ambassadors are talking to the press. U.S. Ambassador John Bolton a short time ago explained his thoughts following the missile launch and what he wants at the U.N.

(BEGIN VIDEO CLIP)

AMB. JOHN BOLTON, U.S. AMBASSADOR TO U.N.: Good afternoon. This is obviously a very serious matter because of the North Korean provocation. But this is precisely what the Security Council is designed to handle and we hope the council will rise to the occasion. We think we can proceed in a calm and deliberative fashion but we hope we have a strong and unanimous signal from the council that this kind of behavior is unacceptable.

(END VIDEO CLIP)

ROTH: The Chinese ambassador a short time ago talked to members of the press. And he said, well, look, if all members of the council want to do something, we will see. He certainly didn't sound like he was ruling out any action. But we've been told by a U.S. spokesman that there won't be a vote today on a resolution. Prospects for a statement, which 15 countries would have to agree to, that's also unclear at this moment.

Also this morning, North Korea's ambassador to the United Nations, he arrived at his country's offices on New York's east side, not at the U.N. but close by. Let's listen as media members wanted to know what happened.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Can you tell us something, please, sir? (INAUDIBLE).

UNIDENTIFIED MALE: (INAUDIBLE).

(END VIDEO CLIP)

ROTH: All right. That's the North Korean ambassador Pak Ui Chun under siege there, using his umbrella to defend himself against questions, Daryn. So no action this morning at the moment here at the Security Council but talks are underway.

KAGAN: All right, Richard, we'll check back with you at the U.N.

Well, more on these tests. A lot of people were expecting them. But intelligence agencies were caught off-guard by the launch of the shorter range missiles. Is that a reason for concern? Here to explain that, our national security correspondent David Ensor.

David, why do you think the North Koreans went ahead -- or why do intelligence officials believe -- because they already know they work?

DAVID ENSOR, CNN CORRESPONDENT: Well, one theory is that they weren't sure the Taepodong-2 would work and so they -- and they wanted to have a real fireworks display and get everyone's attention. So they put additional launches on the schedule. But no one really knows for sure. North Korea is one of the most difficult places to read from outside on Earth.

The Taepodong-2 was a spectacular failure. It's supposed to have a range that, at least potentially, might take it all the way to U.S. territory. To Alaska, for example. But it landed in the Sea of Japan short of Japan. It barely got off the ground and was -- and fell out of the sky within less than a minute.

So if the North Koreans wanted to display their long-range missile prowess, they failed. But by launching seven missiles, they have gotten the world's attention. They have gotten the attention of their neighbors, certainly Japan and the others. And that seems to be the goal, Daryn.

KAGAN: But they want this kind of attention? They've even ticked off people who were supposed to be their friend.

ENSOR: Well, that's right. But apparently the way the North Koreans calculate it, in the view of U.S. analysts in any case, they think annoying and upsetting people is the way to get concessions out of them. They think that that is more likely to get them what they want and what they believe will eventually be a sort of grand bargaining negotiation in which they are prepared, they say, to give up their nuclear weapons program but only in exchange for major concessions. And they want to sit down one-on-one with the United States which, of course, the Bush administration has consistently refused to do.

KAGAN: Right now that's six-party talks are going on.

ENSOR: That's right, six-party.

KAGAN: Well, kind of going on. Not a lot of talking happening.

ENSOR: That's right. And that's the way the U.S. wants it. Six-party talks. The U.S. believes that pressure from Chine, and to a lesser extent Japan, South Korea and Russia, is what will make the real difference and get North Korea to back down. But they show no signs of doing so at this point.

KAGAN: All right, David, thank you.

Let's check in now at the Pentagon and talk to our Jamie McIntyre and get a sense of what these missiles are and more on the failure, especially of the really large missile.

JAMIE MCINTYRE, CNN CORRESPONDENT: Well, Daryn, the U.S. northern command headquartered at Peterson Air Force Base in Colorado is the one that's been watching the developments in Korea. It appears that six of the seven missiles were short or perhaps median range. A variance of the scud missile. Either the scud missile or the so- called no-dong missile, which is a sort of souped up version of a scud that has clustered some of the motor together and gives it a little more range. Still we're talking about ranges in maybe up to about 600 miles. Nothing that could pose any sort of threat to the United States.

But what they've done is combine some of this no-dong technology in trying to stack one missile on top of another to make this so- called Taepodong missile. By the way, is the U.S. name for it based on the location from which its launched. And as David Ensor said, that was a spectacular failure. If the North Koreans demonstrated anything here, it's that they have quite a bit of trouble launching this kind of sophisticated missile.

But, you know, that's not unexpected. When you look at the U.S. missile defense tests, the technology that the U.S. is developing to essentially knock a warhead out of space, several of those tests have failed because the -- either the target missiles or the interceptor missiles that were launched as part of these tests failed to launch. So the interception in space, which is supposed to be the really difficult part where a warhead, you know, hits a -- a kill vehicle hit as warhead, that didn't even happen because of the basics of trying to launch a booster rocket. So if the United States, which has been launching these boosters for years, can have trouble with some of its own minutemen missiles that it used in these tests, you can imagine what North Korea is facing having barely tested any of these missiles. Only once before tried to launch a Taepodong-2.

So what this tests demonstrates, other than the political theater of North Korea trying to get attention, is that their missile program at this point still remains in its infancy and is facing significant technical problems.

KAGAN: It is difficult technology. Jamie, in the next hour we're going to talk to you about the U.S. capability of defending against technology like this, if, in fact, one day the North Koreans are able to master it. So we'll do that in the next hour.

MCINTYRE: OK.

KAGAN: Right now, though, let's back to our other breaking story, and that is the death of Enron founder Ken Lay. CNN learning this morning at 64 years old Ken Lay has died. According to KPRC, our affiliate in Houston, died of a massive heart attack. That he was in Aspen, Colorado, taken to the hospital last night and doctors there say that his heart simply gave out.

This is in the middle of a summer that he was weeks away from being sentenced, perhaps for as long as 20 to 30 years in prison for the conspiracy and fraud charges that he was found guilty of, along with Jeffrey Skilling, back in May. Our Ed Lavandera is on the phone. Ed covered quite a bit of the trial that took place in May in Houston.

Ed.

ED LAVANDERA, CNN CORRESPONDENT: Hi, Daryn.

Well, we're actually in Colorado. In Colorado Springs, where we were covering the NORAD angle of the North Korea story and just got the news here a short while ago of Ken Lay's death in Aspen. We had known over, you know, the last several years that the Lays did have a vacation home in Colorado. He had spent quite a bit of time there, especially initially after the initial collapse of Enron.

But, you know, I can talk a little bit about just what exactly Ken Lay's life had become in Houston over the last couple of years. You know, here was a man who was sworn by thousands of people in his hometown, in a place that used to be the toast of the town. You know, going to baseball game, sitting next to the president at the baseball games. The Houston Astros. The field there, of course, everyone remembers, used to be named after Enron. So this is a man who was living large, going to charity events. You know, someone who everyone wanted to be very close to and that quickly changed.

Although, however, I had been told in the last year or so that he was making more public appearances, being seen in restaurants and that sort of thing around town and that among people who did support him, that he had found a little bit of support. And, you know, obviously from his family and many who believed he was innocent of what had gone on at Enron. But he'd also found some support within the community and was able to enjoy some moments out and around town in Houston. KAGAN: Ed, let me just jump in here for a second because we need to go make some money. Need to get a commercial break in here. I still, though, want to talk more about Ken Lay, about his life and this shocking news today that at the age of 64 he has died. We will get to that in just a minute. Right now, a quick break. We're back with more on Ken Lay and North Korea after this.

(COMMERCIAL BREAK)

KAGAN: And the markets have been opened just about an hour. Tough, tough day on Wall Street. You can see things starting to slide there. The Dow is down 73 points. The Nasdaq headed south as well. It is down 34 points.

Of course, the big news in the business world is what has happened to Ken Lay, the founder of Enron, we're getting word has died. That he was in Aspen, Colorado. Went to the hospital with a massive coronary. That's according to KPRC, our affiliate in Houston. And apparently doctors say his heart just gave out. Sixty-four years old. He'd been convicted of conspiracy and fraud charges back in May and was facing sentencing on -- coming up on 9/11 for 20 to 30 years in prison.

With more on Ken Lay and what we know of the situation and his life and his times, let's go to Susan Lisovicz at the New York Stock Exchange.

Susan.

OK, we don't have Susan. We'll get more on the Ken Lay story just ahead.

Meanwhile, let's get back to North Korea. And the question, is there a method to the madness. North Korea's missile tests may simply be a colossal way to get attention. Jim Walsh is an international security expert at MIT. He joins us live now to talk about security issues.

Jim, good morning.

JIM WALSH, INTERNATIONAL SECURITY EXPERT: Good morning, Daryn.

KAGAN: What are the North Korean thinking here?

WALSH: Well, I think this is actually consistent with previous North Korean behavior. What they're saying is, look, U.S., you're paying attention to Iran, you're signing a nuclear deal with India, you're focused on Iraq and you've let the North Korean issue drift. And this is a way of putting pressure on all the parties to focus on North Korea. Yes, they'll be mad. Yes, they're upset. But they also get the message that we need to do something about this. We can't continue to ignore it.

So that's what they're hoping. And, again, if you remember, Daryn, just before the war in Iraq three years ago, North Korea did a similar thing. They kicked out the IAEA, the Interatomic Atomic Energy Agency inspectors. They broke the seals. They took a number of different, provocative actions to try to gain leverage and try to focus the attention on the United States.

KAGAN: Well, they got attention here in the U.S., that's for sure. People are waking up today perhaps scared. But the largest missile, it goes up, like 40 seconds later it comes down. Is this a threat to the United States?

WALSH: No, it is not a -- this is a political act, not a military act. Viewers waking up today and turning on CNN and hearing about this for the first time should not be worried. The president is correct in saying, and the military or the Pentagon is correct in saying that this does not pose a direct threat to the United States.

That missile test failed. It's only the second missile test of a long-range missile in eight years. Two tests does not a missile make. So, again, this is about politic, not about security threats.

And the fact that they shot off another, what, six other short- range missiles that have nothing to do with sort of verifying or collecting data, shows that it really is about politics, less about security.

KAGAN: Right. Well, OK, so they haven't mastered this technology clearly. But how does the U.S., how does the west put an end to this practice and development?

WALSH: Well, when I was in North Korea almost a year ago, I had the opportunity to talk to North Korean officials about their missile program. And they told me that they were willing to negotiate that missile program, negotiate it away. They're willing to enter a deal to try to get rid of their nuclear weapons. But they want certain things in return.

I think what the U.S. needs to do now, number one, it needs to stand by its ally, Japan. People are -- if you think people are nervous here, let me tell you, they're nervous in Japan. So the U.S. needs to reassure the Japanese and say, hey, we're going to protect you, you're our friend.

The second thing is U.S. has to look at its own policy. North Korea back six years ago had one, maybe zero, nuclear weapons. But it wasn't building any. For the last six years, it's been building nuclear weapons and now it has started testing long-range missiles. Clearly, we're moving in the wrong direction, and we have to relook at our own policy and see if we shouldn't be doing something differently.

KAGAN: Well, let's talk about some of that different. Because hardliners within the Bush administration say enough with these six- party talks, we need some sanctions. We really need to put the pressure on North Korea.

WALSH: Well, number one, that's what we've been doing for six years, is we've been pressuring them. And all that we have gotten in return for pressuring them is a country that has built more nuclear weapons. We are in a worse position today than we were six years ago. The second thing to keep in mind, Daryn, is -- and I got this loud and clear when I was in Pyongyang -- this is a proud country. This is a country that suffered the occupation of the Japanese during World War II. This is a country that went through a massive famine in the mid-1990s and survived when everyone thought they were going to collapse. If you think that you're going to pressure them into waving the white flag and capitulating with the loss of face, you know, you're wrong and I think the past six years should show that's that's wrong.

KAGAN: All right, Jim Walsh, thank you for your insight on the North Korea story.

WALSH: Thank you, Daryn.

KAGAN: We have two completely different big stories working here this morning.

Besides North Korea, the other story coming out of the world of business. Ken Lay, the founder of Enron, has died at the age of 64. It was just in the May that he was convicted on six counts of conspiracy and fraud. And coming up this fall was facing a massive prison sentence, 20 to 30 years. Probably was guaranteed to spend the rest of his life in prison. That will not happen now. He was in Aspen. And according to Houston affiliate KPRC, he had a massive coronary last night and taken to the hospital. And there, doctors say, his heart simply gave out.

Want to go ahead and welcome in on the phone Kurt Einchenwald with the "New York Times." He's also the author of a book, "Conspiracy of Fools: A True Story," who spent a good chunk of his career looking at Ken Lay and Enron.

Kurt, are you shocked by the news?

KURT EICHENWALD, AUTHOR, "THE CONSPIRACY OF FOOLS": It was surprising. It was not -- it was not something that I had been anticipating.

KAGAN: And clearly, his family hasn't, either. They put out a statement today that this -- a very short, simple statement. Just that they have, indeed, said he has died and trying to get in touch with family members and pull the family together. Let's talk about the man, Ken Lay. On one side, on the rise, a huge American success story.

EICHENWALD: It -- he really was. I mean, he was somebody who was truly a pioneer in the world of gas pipelines. It would sound sort of vague, but it was a business that was struggling in the 1980s, and he really came in and came with some very good ideas. And as a result, he was able to become the chairman of a new company that he founded, with a merger called the Enron Corporation. And from there, things went very, very well for him, for many, many years, and he went from being someone who'd been born to a very poor family to somebody who was cavorting with presidents and prime ministers.

KAGAN: In fact, President Bush called him Kenny Boy. And he had a nickname for him.

EICHENWALD: He did -- he was very close with the Bush family. He actually was closer with the first President Bush than he was with the son, but, you know, he obviously had a very close working relationship and friendship with the current President Bush.

KAGAN: Let's talk a little about his personality and how that played into both into his rise and ultimately his demise. An idea guy, a smart guy. But on the downfall, kind of claimed like he didn't know what was going on?

EICHENWALD: Well, actually, I disagree with that. He was not an idea guy. And he was a very smart pipeline executive, but Enron became something very different in the years after that. It was really -- it was a company that was transformed by the man who would succeed him, Jeffrey Skilling.

KAGAN: Who was convicted the same day.

EICHENWALD: Who was convicted in the same case. And Lay, unfortunately, you know, stood atop a corporation that, you know, he certainly involved himself in certain aspects of it. But there were huge aspects of the corporation he was not involved in.

And what has happened here, what happened in the end, where the jury found him guilty, they had ability to make a determination of him both for direct involvement in activities that led -- that resulted in him lying. And also in -- they could also find him guilty if he was engaged in willful blindness, if he should have known but chose not to. And there was a lot of evidence in the record that suggested that this was a man who did not see, who didn't want to see, things that were unpleasant.

KAGAN: And the jury holding him responsible, saying, well, you should have looked?

EICHENWALD: Well, the jury just said guilty. And we don't know whether or not they found it as a result of him -- of a willful blindness judgment or a direct knowledge judgment. But, you know, at the end of the day, this is a man who got up on the stand, talking about a company that had every reason to collapse because of its terrible financial state, and in a courtroom was still blaming the press and short-sellers, everybody but -- and everything -- but the financials of the Enron Corporation. And so there was a level of willful blindness that went on in the courtroom.

KAGAN: And continues, well - that's how he closes out his life. Kurt Eichenwald, thank you for your insight on the life and the case of Ken Lay. Once again, at the age 64, the Enron founder has died. He was in Aspen. That was just back in May that he was convicted on those conspiracy and fraud charges.

And right after that verdict came down, we watched that here on this program. Ken Lay had this to say just outside of that Houston federal courthouse.

(BEGIN VIDEO CLIP)

KEN LAY, ENRON FOUNDER: Certainly, we're surprised. I think probably more appropriately to say we're shocked. Certainly this was not the outcome we expected. I firmly believe I'm innocent of the charges against me, as I have said from day one. I still firmly believe that as of this day. But despite what happened today, I am still a very blessed man.

(END VIDEO CLIP)

KAGAN: And the shocking news today that Ken Lay has died at the age of 64. More on his life and Enron ahead. You're watching CNN, the most trusted name in news.

(COMMERCIAL BREAK)

KAGAN: And back to our big breaking news story of the day, the day, Ken Lay, the founder of Enron, has died. His family says he was at a home in Colorado, in Aspen and had a massive coronary. That's according to our affiliate KPRC, and doctors at an Aspen hospital say his heart simply gave out. This was just weeks after he was convicted of helping to perpetuate one of the most sprawling business frauds in U.S. history, in the collapse of Enron.

More on Ken Lay now from our affiliate KPRC.

(BEGIN VIDEOTAPE)

UNIDENTIFIED KPRC REPORTER (voice-over): Lay is a former businessman, most notable as the former chairman and CEO of the Enron Corporation. Ken Lay and Enron became synonymous with corporate abuse and accounting fraud, following the collapse of Enron in 2001. Lay was the CEO and chairman of the company from 1986 until his resignation on January 23, 2002. Except for a few months in 2001 when he was chairman, Jeffrey Skilling was CEO.

On July 7th, 2004, he was indicted by a grand jury on 11 counts of securities fraud and related charges. On January 31, 2006, following four-and-a-half years of preparation by government prosecutors, Lay's and Skilling's trial began. Judge Sim Lake dismissed one charge of securities fraud against lay on March 26th, after the government rested its case.

After 56 days of testimony and six days of jury deliberation, Lay was found guilty on May 25, 2006 of all 10 remaining counts against him. The jury convicted Lay of one count of conspiracy, three counts of securities fraud and two counts of wire fraud.

In a separate bench trial, Judge Sim Lake found Ken Lay guilty on three counts of making false statements to banks and one count of bank fraud. Because each count carries a five to 10-year sentence, legal experts say Lay could have faced 20 to 30 years in prison.

(END VIDEOTAPE)

KAGAN: That was from our affiliate KPRC in Houston, which broke the story early this morning that Ken Lay has died.

(BUSINESS HEADLINES)

KAGAN: More on Enron, plus the life of Ken Lay, and the legacy that he leaves behind. That's coming up.

Also undercover in the secret state.

(BEGIN VIDEO CLIP)

FRANK SESNO: This woman is lying the street dead. North Korean refugees say it's a common sight.

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KAGAN: Dissidents risk their lives to take these pictures and then smuggle them out of North Korea. You'll see the story here on CNN, the must trusted name in news.

(COMMERCIAL BREAK)

KAGAN: Enron founder Ken Lay, dead at age of 64, his family releasing a statement earlier this morning, and then our affiliate KPRC in Houston reporting he was in Aspen, Colorado and had a massive coronary. Doctors there saying that his heart simply gave out. This just weeks before Ken Lay was due to be sentenced on federal conspiracy and fraud charges. He could have faced as much as 20 to 30 years in prison. We'll have more on that and the story of Ken Lay Just ahead.

Meanwhile, back to our other lead story. And that, of course, is North Korea defiantly test-firing missiles, and political outrage thundering around the world. Here is what we know at this hour: that North Korea launched seven missiles. The tests include at least one long-range missile and six shorter range. U.S. officials say the long-range missiles failed less than a minute after launch. It has sparked the most concern. Some analysts think it's capable of reaching the U.S. West Coast.

Washington is condemning the missile test as provocative, but says they're not a threat to American interests. Japan calling the test a grave concern. And the United Nations Security Council is holding an emergency meeting behind closed doors at this hour. We do expect comments from those inside when that meeting concludes.

But let's go to California now, to the northern part of Santa Barbara County. That's where Vandenberg Air Force Base is on the front lines of missile defense.

CNN's Kareen Wynter joins me from that base along the California coast. Kareen, so what happens there at Vandenberg when they go on alert in a situation like this?

KAREEN WYNTER, CNN CORRESPONDENT: Well, I can tell you what happened yesterday as a result of these developments here. An official did confirm, Daryn, that two intercepting missiles were activated here, that they were ready to go and that they are remotely operated by Northern Command. And so that sets the stage of what could possibly follow. Again, activated, not launched.

And just to give you an idea, a setup here, as to what would prompt such a launch -- well, the U.S. has satellite systems in place that can track intercontinental missiles. Anything that may be coming in, seen as a potential threat, that can be tracked. Its movements, its location and also even the type of launch can be detected. And from there, a decision would be made as to whether or not to activate those interceptor missiles at this launch site. Or there's another one, as well, in Alaska, at Fort Greely.

So that's where we stand right now. As for the last time this interceptor was tested, we're told, Daryn, back in 2002. But the results, we were told, were somewhat surprising in that it did not reach its intended mock target -- Daryn.

KAGAN: And so we've been looking a lot at what the North -- the North Koreans were able to do with their missile, which was not much. But on this side, in terms of being an interceptor, we have some work to do, as well, here in the U.S.

WYNTER: Absolutely. And we've even heard from one congressional leader in particular talking about the U.S. and the fact that this nation has to build up its missile defense system. That right now, regarding the current system, it's limited in scope, it's limited in nature. That there's still a lot of flaws here, a lot of kinks to be worked out.

And that if something were to happen, if those missiles did, for example, connect with an intended target, that it would be too late for diplomacy at the time. The time to act would be now instead of waiting. And so it's very, very urgent. In his words, Congressman Duncan Hunter saying that more needs to be done on that end -- Daryn.

KAGAN: Kareen Wynter, live from Lamhope (ph) from Northern Santa Barbara County at Vandenberg Air Force Base. Thank you.

Still ahead, we are talking about Enron. The founder, Ken Lay, today, is dead. Sixty-four years old. The affiliate, KPRC in Houston, reporting he died of a massive heart attack. More on his story just ahead.

Also, more on North Korea. An inspection day. A robotic camera checking the shuttle for possible damage after yesterday's launch.

That's all ahead on CNN, the most trusted name in news.

(COMMERCIAL BREAK)

KAGAN: As we move ahead into the next hour, we'll be checking our two stop stories. One top story, that Enron founder Ken Lay has died, apparently of a massive heart attack, at the age of 64. This just weeks before he was due to be sentenced to 20 to 30 years in prison on conspiracy and fraud charges. Also ahead, more on North Korea; that has fired seven test missiles over the last 24 hours and what that means in the international community.

And then news about another launching yesterday. This one, the space shuttle. And checking for damage, that is the agenda today for the seven astronauts aboard the Space Shuttle Discovery. NASA animation showing how the crew is going to check. A camera attached to a robot arm will be the astronauts' eyes. It will probe the shuttle's wing and other parts for possible damage. At least five pieces of foam broke away from Discovery as it soared into space yesterday, but NASA says the foam came off of the danger period, and that it has passed.

(BEGIN AUDIO CLIP)

(MUSIC)

UNIDENTIFIED FEMALE: Good morning, Houston. And thank you for playing that...

(END AUDIO CLIP)

KAGAN: So the crew awoke today to a recording of "Lift Every Voice and Sing," sometimes referred to as the black national anthem. It was selected by mission specialist Stephanie Wilson, the nation's second African-American woman in space. Discovery is set to dock with the International Space Station tomorrow.

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