Ex-NFL star Gault is fined in SEC fraud case, will appeal (updated)
15/04/2016 18:28
(Adds planned appeal, comments from SEC enforcement chief and
lawyer for Gault)
By Jonathan Stempel
April 15 (Reuters) - Willie Gault, the former National
Football League wide receiver and Olympic sprinter, was ordered
to pay $206,571 to settle a U.S. Securities and Exchange
Commission lawsuit over his role in a scheme to inflate the
stock price of a heart-monitoring device maker.
U.S. District Judge James Selna of the Santa Ana, California
federal court ordered Gault, who was co-chief executive officer
of Heart Tronics Inc HRTT.PK , to pay a $78,000 civil fine and
give up $101,000 in ill-gotten gains plus $27,571 in interest.
The judge also banned Gault from serving as an officer or
director of public companies, in a final judgment issued on
Thursday.
Gault had argued that no sanctions, or at most a minimal
fine, were warranted.
A federal jury in March 2015 cleared Gault of fraud, but
found him liable for filing false certifications with the SEC
and circumventing Heart Tronics' internal controls. urn:newsml:reuters.com:*:nL2N0WK2J6
George Newhouse, a partner at the Dentons law firm
representing Gault, said his client will appeal.
The SEC had sued Gault and others affiliated with Heart
Tronics in December 2011.
Among the defendants was Mitchell Stein, a lawyer who the
SEC said controlled much of Heart Tronics' business, hired
promoters to tout its stock online, and installed Gault as
co-CEO to drum up publicity.
Stein was convicted in 2013 of fraud in a related criminal
case, and is serving a 17-year prison term.
"We think the judge imposed remedies far exceeding what is
provided under the law," Newhouse said in a phone interview,
referring to the final judgment against Gault.
"Since the jury clearly, and unequivocally, rejected any
fraud by our client, it is wholly inappropriate to require
disgorgement," he added. "No proceeds from any fraud went into
Mr. Gault's pocket, and he was a victim of fraud by Mr. Stein."
Andrew Ceresney, head of the SEC enforcement division, in a
statement said Selna's order reflects the seriousness of Gault's
actions, and "reinforces the importance of CEOs understanding
their obligations under the federal securities laws."
Gault played 11 seasons in the NFL with the Chicago Bears
and Los Angeles Raiders, winning Super Bowl XX with the Bears in
1986. He was also on the U.S. Olympic team that boycotted the
1980 Summer Games in Moscow.
The case is SEC v Gault, U.S. District Court, Central
District of California, No. 11-01962.
(Reporting by Jonathan Stempel in New York; Editing by Jeffrey
Benkoe and Grant McCool)
((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))
Keywords: PEOPLE GAULT/SEC