Willie Gault, 5 others named in SEC lawsuit
LOS ANGELES – Federal regulators on Tuesday 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 filed in Los Angeles against Gault, talent agent J. Rowland Perkins and attorney Mitchell Stein alleges that they defrauded investors by giving the impression that 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, 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.
"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."
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.
"He's not really surprised by this but he's disappointed," Scharf said of Gault. "He did not profit from this."
The complaint, which seeks the return of any ill-gotten gains, describes the three other defendants as a stock promoter, a stockbroker and a handyman.