Wednesday, December 21, 2011
Football Great Willie Gault, Five Others Named in SEC Stock Fraud Lawsuit
From Staff and Wire Service Reports
Federal regulators yesterday sued former NFL wide receiver Willie Gault and five other people, accusing them of taking part in a scam to artificially inflate the stock of a heart monitoring device company.
The complaint was filed in Los Angeles against Gault, talent agent J. Rowland Perkins and attorney Mitchell J. Stein, whom the complaint says “masterminded the scheme.” It further alleges that they defrauded investors by giving the impression that the firm of Heart Tronics Inc. had millions of dollars in sales orders between 2006 and 2008 when in fact it did not.
Stein reaped nearly $8 million using Gault’s and Perkins’ celebrity status to foster investor confidence in Heart Tronics, authorities said. Gault, who played 11 seasons with the Chicago Bears and the Los Angeles Raiders and has had various television roles since then, also is accused of using investors’ money for his own personal use, including the purchase of company stock to give the appearance there was strong demand for Heart Tronics shares. Perkins on-line bio describes him as a television producer and former executive of the William Morris Agency.
Thompson Reuter’s latest share price listing for the Heart Logic stock was five cents a share as of Dec. 9, off from a 52 week high of $1.55. It is traded over the counter.
“Stein took advantage of Gault’s celebrity to further prop up the image of Heart Tronics as a successful enterprise,” said Stephen Cohen, an SEC associate director. Stein “has been living the high life off his illicit proceeds with multiple homes, exotic cars and private jets.” The basic premise of the complaint was that Stein pretended the firm was filling numerous orders for the devices it made, but the orders in fact were generally faked.
Gault was in the news recently due to a reported November burglary of his West Valley home. Gault told police that some $100,000 worth of his wife’s jewelry was taken, along with Gault’s Superbowl XX diamond ring. The ring, along with some of the other stolen jewelry, was reportedly recovered late last week by the Los Angeles Police.
Stein was arrested in a parallel criminal investigation, authorities said, but details weren’t immediately available and it was unknown if he is represented by an attorney.
Jared Scharf, who represents Heart Tronics, Gault and Perkins, denied the allegations.
Copyright 2011, Metropolitan News Company