Jury clears ex-NFL player Gault of purposely defrauding investors

Wed Mar 18, 2015 4:38pm EDT
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By Sarah N. Lynch

WASHINGTON (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.   Continued...