Jury clears ex-NFL player Gault of purposely defrauding investors
18/03/2015 20:28
By Sarah N. Lynch
WASHINGTON, March 18 (Reuters) - A California jury on
Wednesday cleared former Chicago Bears wide receiver Willie
Gault of intentionally defrauding investors in a scheme to
inflate the price of stock in the heart-monitoring device
company Heart Tronics HRTT.PK .
The jury's verdict found Gault, 54, not liable on four
serious civil fraud charges, including intent to defraud and
aiding and abetting fraud.
The jury did find he was liable for three other less serious
charges, including charges that he violated provisions in the
2002 Sarbanes-Oxley law by filing false certifications in
connection with the company's financial statements.
"Mr. Gault entered the courtroom today with the shroud of
serious securities fraud violations hanging over his head, and
he exited the courtroom cleared of any serious misconduct and
with the equivalent of a securities parking ticket," said his
attorney George B. Newhouse, Jr., a partner at Dentons.
The verdict comes more than three years after the U.S.
Securities and Exchange Commission first filed its case against
Gault, who previously served as Heart Tronics' co-CEO, and
several other former company executives.
The SEC's case centered primarily on the actions of Mitchell
Stein, the company's outside counsel, whom the SEC alleged was
orchestrating fictitious sales orders for the company's products
to pump up the stock price, selling the shares without
disclosing it, and using the proceeds to fund a lavish
lifestyle.
Stein was convicted of securities fraud in 2013 in a
parallel criminal case, and was later sentenced to 17 years in
prison.
The SEC had claimed that Stein brought in Gault as a
figurehead of the company to take advantage of his celebrity
status and make Heart Tronics seem successful.
Gault played 11 season in the National Football League,
winning the Super Bowl with the Chicago Bears in 1985. He was
also a member of the U.S. Olympic team that boycotted the 1980
Moscow Games.
The SEC said that Gault, as well as the company's former
chief executive J. Rowland Perkins II, failed to question
Stein's conduct and did not meet their fiduciary duties to
shareholders.
Last fall, Perkins settled charges that he had signed and
certified three quarterly reports with materially false
statements about the company's sale orders, and agreed to pay a
$42,500 penalty. He did not admit nor deny the allegations.
Andrew Ceresney, the head of the SEC's enforcement division,
said Wednesday that the agency is "pleased" with the verdict in
Gault's case.
"As proved at trial, as CEO of a public company, Willie
Gault filed false certifications with the SEC and knowingly
circumvented the company's internal controls," he said in a
statement.
(Reporting by Sarah N. Lynch)
((sarah.n.lynch@thomsonreuters.com; 202-354-5831;))
Keywords: SEC GAULT/VERDICT