Former olympian, NFL star Willie Gault has been accused by the SEC of taking part in a scheme to artificially inflate the stock of a medical-device company that he managed.
Willie Gault, the former professional football player and Olympic sprinter, was accused by U.S. regulators of taking part in a scheme to artificially inflate the stock of a medical-device company that he managed.
J. Rowland Perkins, who was co-chief executive officer along with Gault, and California-based attorney Mitchell Stein were also accused of defrauding investors, the Securities and Exchange Commission said in a complaint filed today at U.S. District Court in California.
Gault was installed as a figurehead co-CEO to generate publicity for the company and foster investor confidence, the SEC said. Stein controlled most of the company's business activities, hiring promoters to tout Heart Tronics stock on the Internet and reaping nearly $8 million from trades he orchestrated without telling investors, according to the complaint.
Heart Tronics repeatedly announced millions of dollars in sales orders for its heart-monitoring devices between 2006 and 2008 even though the company never had viable sales orders from actual customers, the SEC said. The SEC sued a total of six individuals, and Stein was named by the Justice Department in a parallel criminal case, the SEC said.
“Stein took advantage of Gault's celebrity to further prop up the image of Heart Tronics as a successful enterprise,” Stephen L. Cohen, an associate director in the SEC's enforcement division, said in a statement. “Stein secretly sold millions of dollars in stock while peddling false claims of Heart Tronics' lucrative sales orders, and has been living the high life off his illicit proceeds with multiple homes, exotic cars, and private jets.”
Jared Scharf, an attorney who represents Gault, Perkins and Heart Tronics, said his clients denied accounts of falsified sales. "The company intends to defend the lawsuit vigorously," Scharf said.
--Bloomberg News--
