CEO Convicted of Fraud on Retrial

LOS ANGELES (CN) – A federal jury convicted the former CEO of a nutritional supplement distributor of a $1 million securities fraud.     Richard A. Bailey, 57, of Las Vegas, CEO of publicly traded Gateway Distributors, “paid over $1 million worth of the corporation’s stock to Stephen Owens during a two-month period in 2004 as purported consulting fees for services provided by Owens,” the U.S. Attorney’s Office said in a statement announcing the verdict.     The shares were unregistered.     “Shortly thereafter, Owens liquidated the shares and wired hundreds of thousands of dollars to escrow accounts where Gateway was purchasing a resort in Utah and an office building in Las Vegas,” the U.S. Attorney’s Office said. “Prosecutors charged that the stock payments to Owens were a sham and violated the securities laws because they were not paid to Owens for bona fide services he actually performed and were paid instead with the illegal intention of raising capital for the corporation.”     Bailey was retried after the 9th Circuit vacated and remanded his previous conviction.     “A jury convicted Richard A. Bailey of two counts of securities fraud. Bailey appeals his conviction arguing that he was prejudiced by the trial court’s improper admission of a prior civil complaint filed by the SEC against Bailey. We agree and vacate Bailey’s conviction and remand for a new trial,” the 9th Circuit wrote in its Aug. 27, 2012 ruling.