(CBS) — The SEC has accused former Chicago Bears wide receiver Willie Gault and five other people of artificially inflating the stock price of a company that makes a heart monitoring device.
In a lawsuit filed Tuesday, the Securities and Exchange Commission claimed that Heart Tronics repeatedly announced millions of dollars of sales that never existed. At the same time, California attorney Mitchell J. Stein was controlling the company’s business and reaped $8 million from trades that he kept secret from investors.
The lawsuit claims Heart Tronics hired Gault to work as a figurehead CEO, along with Hollywood talent agent J. Rowland Perkins to generate publicity for the company.
Stein and Gault also are accused of defrauding an investor by convincing him to invest in Heart Tronics, claiming the money would fund the company’s operations. Instead, the SEC claims Stein and Gault used the money for their own personal benefit, including the purchase of Heart Tronics stock to create the false appearance of volume and spur investor demand for the stock.
“Stein took advantage of Gault’s celebrity to further prop up the image of Heart Tronics as a successful enterprise,” the SEC said in a news release. “Stein secretly sold millions of dollars in stock while peddling false claims of Heart Tronics’s lucrative sales orders, and has been living the high life off his illicit proceeds with multiple homes, exotic cars, and private jets.”
In addition to the lawsuit, federal authorities have arrested Stein under a parallel criminal investigation.
Heart Tronics has since been sold to a European firm.