SEC charges former NFL star Willie Gault, others in fraud

— -- The Securities and Exchange Commission on Tuesday accused former NFL superstar Willie Gault and several others of orchestrating an alleged multimillion dollar fraud.

Gault, a former player in the National Football League, including with the Chicago Bears team that won Super Bowl XX, and former member of the U.S. Olympics team, is accused of generating publicity for shares of a company called Heart Tronics. The alleged scheme defrauded investors of more than $8 million, the SEC says.

The SEC's move comes days after it charged another sports hero, Daniel "Rudy" Ruettiger, a former Notre Dame football player, with an alleged pump-and-dump scheme with a company that purported to sell a sports drink to compete with Gatorade.

Such cases underscore the danger of assuming famous people or athletes are always backing legitimate businesses or investments. "It's important people understand the company they are investing in and not make an investment based on who is selling it to them," says the SEC's Stephen Cohen.

Gault is accused of scheming along with former Hollywood executive J. Rowland Perkins and California attorney Mitchell Stein. Stein and Gault took investors' money for personal use, the SEC alleges. Some money, too, was diverted to one of Gault's brokerage accounts, which was used to bid for the stock and give the false impression there was demand for the shares, the SEC says.

Meanwhile, Stein allegedly sold millions of dollars of company stock and used the profit on homes, private jets and exotic cars, the SEC says. Stein was arrested by the Department of Justice, the SEC says.

Jared Scharf, the attorney representing Gault and Perkins, disputes the charges. "We believe the allegations are incorrect and look forward to proving that in court," he says. Stein could not be reached.

Separately, Ruettiger, former football player for the University of Notre Dame and inspiration for the 1993 movie Rudy, was charged last week with allegedly tricking investors into buying stock in his sports drink company, Rudy Nutrition. Ruettiger could not be reached.

The actions warn investors to not allow their appreciation of a sport or celebrity to blur judgment, says Gregory Lawrence at Conti Fenn & Lawrence. "You need to evaluate them and their investments independent of celebrity," he says.