4 Min Read
* SEC alleges ex-CEO used company as personal ATM
* Company funded jet travel, yacht and car costs, SEC says
* Three defendants settle, two cases continue (Adds company sale, other details)
By Jonathan Stempel
NEW YORK, March 15 (Reuters) - A former chief executive of infoGroup Inc IUSA.O will pay roughly $7.43 million to settle U.S. Securities and Exchange Commission charges he illegally extracted millions of dollars from the business-to-business marketing company to fund a lavish lifestyle.
In a lawsuit filed in Omaha, Nebraska federal court, the SEC alleged that Vinod Gupta, who was also infoGroup's chairman, fraudulently used $9.47 million of corporate funds.
It said this included $3.1 million for jet travel to such places as Cancun, Italy and South Africa; $2.85 million of expenses for his yacht; $1.31 million for credit card bills; 28 club memberships and expenses associated with several homes, three life insurance policies and more than 20 automobiles, including a Hummer, a Jaguar and two Mercedes.
The SEC also said Gupta caused the Omaha-based company once known as infoUSA to enter $9.3 million of undisclosed transactions with other companies in which he had personal stakes.
Also charged by the SEC were Vasant Raval, who once chaired the company's audit committee, and former chief financial officers Rajnish Das and Stormy Dean for enabling Gupta to carry out his scheme.
The SEC said Gupta's perks totaled $10.4 million from 2003 through 2007, but InfoGroup disclosed just $950,000.
"Gupta stole millions of dollars from Info shareholders by treating the company like it was his personal ATM," said Robert Khuzami, director of the SEC's enforcement division, in a statement. "Other corporate officers also abused their positions of trust by looking the other way."
InfoGroup and Raval also settled with the SEC. The company was not fined, while Raval accepted a $50,000 fine. Gupta and Raval also accepted bans from serving as directors or officers with public companies. InfoGroup, Gupta and Raval did not admit wrongdoing. The case against Das and Dean is ongoing.
Last week, infoGroup agreed to be acquired by private equity firm CCMP Capital Advisors LLC for about $463 million.
InfoGroup Chief Executive Bill Fairfield said in a statement the company was pleased to settle.
David Zisser, a lawyer at Davis, Graham & Stubbs LLP who represents Dean, said: "The SEC is wrong on its facts, it is wrong on the law, and we will see them in court."
Lawyers for Gupta, Raval and Das did not immediately return calls or e-mails seeking comment.
The 63-year-old Gupta ran infoGroup from the time it went public in 1992 through August 2008, and still controls 36 percent of the company's shares, the SEC said.
Gupta and his immediate family have at least nine U.S. homes, including in Las Vegas; Aspen, Colorado; Miami; and both Maui and Kauai in Hawaii, the SEC said.
His settlement calls for him to pay a $2.24 million fine, give up $4.05 million of improper gains and pay $1.15 million of interest, the SEC said.
The Gupta case is SEC v. Gupta, U.S. District Court, District of Nebraska, No. 10-00100. The InfoGroup case is In re: infoUSA Inc, SEC Administrative Proceeding No. 3-13815. (Reporting by Jonathan Stempel; editing by Andre Grenon, Bernard Orr)