Willie Gault of the NFL charged with fraud

Written on . Posted in Fraud Schemes

NFL Legend Willie Gault Charged With FraudWillie Gault, former NFL player, has been charged by the Securities and Exchange Commission (SEC) with fraud.  He has been charged, along with five others, for allegedly representing himself as a “celebrity figurehead” of a medical device company involved in a stock scam.

The former wide receiver was known as the Co-CEO for Operations at Heart Tronics, a company that commonly filed false and misleading reports to increase its share price, according to the SEC.

Gault also misused investor money for his personal use.

The SEC also listed Heart Tronics Chief Executive J. Rowland Perkins as a defendant in the case.

According to Jared J. Scharf, a lawyer of the defendents, nobody was misled and the defendents did not benefit from the fraud.

Gault was recently in the news when his Super Bowl ring, won in 1985 with the Chicago Bears, was recovered after the burglary of his Los Angelos home.

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SEC doubles down on its efforts to find hedge fund fraud

Written on . Posted in Fraud Schemes, Hedge funds

Hedge Fund FraudThe Securities and Exchange Commission (SEC), according to The Wall Street Journal, has their eye out for hedge fund fraud.  The organization is starting this process by looking at firms doing better than expected.

The SEC has created a method of analyzing data that picks out hedge funds with higher than normal numbers, despite the suffering market.  The WSJ also pointed out that the SEC is trying to catch the “next Bernie Madoff” before his or her investors are defrauded out of billions of dollars, as Madoffs investors were in his Ponzi scheme.  The SEC has already begun four civil-fraud lawsuits based on the results of their data collection.

Some suspect the reason behind the SEC crack down are the critiques that the agency has not done more to identify and prosecute financial malpractice at the height of the financial crisis.

The Huffington Post points out a high-profile example of this in the fraud investigator who spent nearly ten years building a case against Madoff’s wealth management firm.  Harry Markopolos told the House Financial Services Committee that the SEC was “financially illiterate” and “captive to the industry it regulates” In 2009.  Another example the SEC is under fire for is its failure to place a check on Lehman Brothers’ heavy over-leveraging and for waiting to investigate Alan Stanford until 8 years after they suspected wrongdoing.

In late 2001, the SEC has had a proactive period.  They have redoubled efforts to stamp out insider trading and sued six former executives of Fannie Mae and Freddie Mac for securities fraud.

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Former Bixby Leader Indicted on Fraud Charges

Written on . Posted in Fraud Schemes, Misrepresentation

Bixby Leader IndictedBob Walker, the former leader of Bixby Energy Systems was arrested and indicted on securities fraud charges after his company admitted to defrauding their investors.  Walker was charged with one count of conspirasy to commit securities fraud.  He faces up to five years in prison.

Walter is also known as the founder of Select Comfort and is the inventor of Sleep Number beds.  He was the president, chairman, and CEO of Bixby from 2001 to 2011.  While filling these positions, Walker raised over $43 million from investors by selling company securities based on false and misleading information, according to the indictment.

Walker allegedly falsely told investors that the offers and directors of Bixby would not receive compenstation from sales of securities when, in reality, over $3 million were sent to a company officer.  Approximately $600,000 of this ended up in Walker’s pockets.  According to the indictment, Walker was also concealing that the money from investors was being used to pay the companies existing investors and to pay for his lavish lifestyle.

According to the indictment, the investors and the company’s board of directors was unaware of the fraud.

The indictment alleges that Walker repeatedly misspoke regarding the capability of Bixby’s coal gasification and liquefaction technology and machine.  Walker described the technologies as “proven” and “ready for market” despite the fact that the technology had never worked and the machine was defective.

The Securities and Exchange Commission (SEC) filed a civil suit against Walker, claiming that he and his former Bixby fundraiser, Dennis Desender, were selling unregistered securities.

Desender pleaded guilty to one count of securities fraud and now now awaiting sentencing.  He faces up to 20 years in prison.

After admitting to defrauding investors and agreeing to cooperate with a government investigation into Bixby’s former officers and employees, Walker’s one count of securities fraud will not be prosecuted.

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Feds filed charges in Massachusetts in penny stock probe

Written on . Posted in Fraud Schemes, Penny Stocks

Penny StocksSeven firms who allegedly defrauded investors had their trading suspended by Federal authorities.  The firms were involved in penny stocks, which use fraud to encourage investments in small businesses. These charges are the latest action in the yearlong investigation by the U.S. Attorney’s Office in Boston in an effort to prevent stock market fraud for small publicly traded companies.  One unique aspect of penny stocks is that they are traded over the counter instead of on a major exchange. According to the criminal case filed in the U.S. District Court, 13 defendants from 10 states have been accused of paying off an undercover FBI agent whom they believed was a representative of an investment fund.  In exchange for the pay offs, his supposed firm bought stock in certain companies.  Most of the defendants were charged with wire fraud, mail fraud, and conspiracy to commit securities fraud. The Securities and Exchange Commission (SEC) also suspended seven firms associated with the kickback scheme. The maximum penalty for a conviction of mail fraud or wire fraud is 20 years in prison and a $250,000 fine.  The maximum punishment for conspiracy to commit securities fraud is five years and a $250,000 fine.
Full article: http://www.businessweek.com/ap/financialnews/D9RC0V7O0.htm