The Securities and Exchange Commission (SEC) alleges Willie Gault fraud. Gault was a great athlete, winning a Super Bowl with the 1985 Chicago Bears and running on the US Olympic track team. But Gault was apparently not a very good businessman, as the SEC charged Gault and five other men at Heart Tronics for taking part in a scam to artificially prop up the stock price of their medical device company.
For his defense, Gault may plead ignorance, reports the Chicago Sun-Times. Too bad being ignorant may not be a defense.
Gault was hired as a figurehead and co-CEO of Heart Tronics, reports the Sun-Times. Gault's celebrity status gave credence to the company and helped generate publicity and boost investor confidence, claims the SEC.
With Gault as figurehead, the brains behind the company (or scam), Mitchell Stein, allegedly gave false sales information inflating the profitability of the company so that he could sell company stock at higher prices. Stein allegedly pocketed nearly $8 million through his fraud, says the SEC.
So is Willie Gault a victim or a perpetrator of fraud?
To prove fraud, a plaintiff must generally show he lost money because the plaintiff relied on factual information provided by a representative at the company when the representative knew, or should have known, that the information was not true.
Stein reportedly took advantage of Willie Gault and tricked investors into giving him money. However, Gault may not be without culpability. Regardless of whether he was hired to be a figurehead or not, Gault was the co-CEO of the company. As Chief Executive Officer, it is reasonable to expect Gault to know how profitable the company was and to stand behind the product he was peddling.
Gault was no actor hired to sell a product. Instead, he was an officer of a company and he used his celebrity status to help sell the product.
So was there Willie Gault fraud? While the former Bears wide receiver may not have purposefully defrauded investors, his failure to perform due diligence as an officer at the company may still expose him to civil penalties.
- Find a Chicago Personal Injury Attorney (FindLaw)
- Ex-NFL Star Willie Gault Sued by SEC in Stock-Pumping Fraud (Businessweek)
- Fraud (FindLaw)
- Illinois AG Madigan Sues Heart Check America for Fraud (FindLaw's Chicago Personal Injury Law Blog)