Zeeb (who sent this in) had this to say:

"I was in town about 2 weeks ago and heard the guards kill someone, I ran to where the guards were and saw a corpse of GM Loki. He was grey for some odd reason, and the guards had killed him; so it was only proper that I begin to loot him. I, as well as 3 other people rummaged through the corpse, I unfortunetly didn't get his robe! I did however get some of his plate armor, a rune, and his left arm and leg (which have now decayed)."

Apparently, guards are complete hardasses. Poor Loki.