SEC accuses Willie Gault of fraud in Heart Tronics case
Former professional football player Willie Gault spent his NFL career evading opponents’ defenses. Now he’s facing the Securities and Exchange Commission.
Gault and five other men, including Rowland Perkins, a co-founder of Creative Artists Agency, were accused by the SEC of fraudulently inflating the stock of a Studio City medical products company.
The company, Heart Tronics, claimed to have received millions of dollars in orders for its Fidelity 100 heart-monitoring device but had no actual customers, according to the SEC.
In its complaint filed Tuesday, the agency said Heart Tronics was secretly controlled by Mitchell J. Stein, an attorney from Hidden Hills who went to great lengths to tout the stock.
Among tactics to deceive company auditors, the SEC said, Stein had another defendant fly to Japan for a day to mail a letter from a fictitious customer. Stein reaped nearly $8 million through secret sales of Heart Tronics shares, the agency said.
Jared Scharf, an attorney for Gault, Perkins and Heart Tronics, said the company and the two men would fight the SEC allegations. Heart Tronics has a “breakthrough medical device” that Gault and Perkins believe “will save tens of thousands of lives and tens of millions of dollars in medical expenses,” Scharf said.
Stein could not be reached for comment. He pleaded not guilty after being arrested in a parallel criminal investigation, the SEC said.
In its complaint, the agency said Stein installed Gault, a onetime Olympian and Super Bowl-winning wide receiver for the 1985 Chicago Bears, as a “figurehead” chief executive to draw on his celebrity.
“Stein took advantage of Gault’s celebrity to further prop up the image of Heart Tronics as a successful enterprise,” Stephen L. Cohen, the SEC’s associate enforcement director, 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,” Cohen said.
Despite being co-CEOs, Gault and Perkins “rarely questioned” the specifics of Heart Tronics’ operations, according to the SEC complaint. Gault also defrauded an investor by diverting $150,000 intended to finance the company’s operations to his personal brokerage account to trade Heart Tronics stock, the SEC alleged.
