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Ex-Bear Willie Gault denies SEC claims he participated in stock inflation scam

Willie Gault Tim Dwight

Willie Gault, Tim Dwight

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Updated: January 22, 2012 8:18AM

Former Chicago Bears receiver Willie Gault Tuesday denied charges by federal regulators that he took part in a scam to artificially pump up the stock price of a medical device company he helped to manage.

Gault, an Olympic sprinter who played on the 1985 Super Bowl Bears team, was among six people charged Tuesday in a civil suit filed by the Securities and Exchange Commission.

The suit alleged that Gault was hired as a figurehead co-CEO of Heart Tronics to generate publicity and boost investor confidence. Meanwhile, the complaint alleges that California attorney Mitchell Stein, who controlled Heart Tronics, pocketed nearly $8 million from selling shares in the company at inflated prices.

“Stein took advantage of Gault’s celebrity to further prop up the image of Heart Tronics as a successful enterprise,” said Stephen L. Cohen, Associate Director in the SEC’s Division of Enforcement. “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.”

While some of this was going on, the SEC alleged that Gault and his co-ceo “rarely questioned Stein’s fraudulent agenda and abdicated their fiduciary responsibilities.”

Stein has also been charged in a criminal case stemming from a parallel investigation by the Justice Department.

The SEC suit also claimed that Gault recruited an investor who put $150,000 into the company, but that the money was instead diverted to Gault’s personal brokerage account and used to trade Heart Tronics stock.

Gault, speaking with his attorney on the phone line, told the Sun-Times he did just what the investor told him to do with the money.

“He wanted his money to go to pay the workers which I did, pay the back taxes which I did and some small amount went to buy stock to fight the shorts,” Gault said, referring to short sellers who were trying to push the price of the stock down.

“It’s documented, the SEC has this information,” Gault said. “The investor suggested we do it because his goal was to help build the stock and fight the shorts.”

Gault said he initially got involved with the company in 2005 as a spokesman because he believed in its product, an electrocardiogram device that Gault said is much better at detecting early stage heart disease than other such devices.

“I got paid just to go to different events and to wear the device and show it,” Gault said. “That that was it.”

Gault took the post of co-CEO in late 2008. “As an officer I didn’t receive one penny from the company. In fact my contract stated I would work for free until I could turn the company around,” Gault said.

“I received zero dollars, no stock. I have no stock, I’ve sold no stock,” Gault said.

The SEC complaint seeks the return of any ill-gotten gains.

Does Gault regret his involvement with the company?

“In any situation like this you start out with good intentions and I still have those great intentions. I still feel I’ve done the right thing, I still feel I’ve helped save lives. I’ve worked with the device, I’ve worked with doctors with it and they swear by it.”

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