WASHINGTON (AP) — The founder and former CEO of database provider InfoGroup Inc. agreed Monday to pay more than $7.3 million to settle federal regulators' charges he siphoned off nearly $9.5 million from the company to finance a lifestyle that included jet travel to Africa and Europe, homes around the U.S. and 20 automobiles.
Vinod Gupta also was accused by the Securities and Exchange Commission of putting Omaha, Neb.-based InfoGroup Inc. into $9.3 million of undisclosed transactions with other companies in which he held a personal stake. He agreed to the settlement announced by the SEC without admitting or denying the agency's allegations but did agree to refrain from future violations of securities laws.
Gupta was the chief executive and chairman of the company, known as Info, from 1992 through August 2008, when he stepped down as part of a proposed settlement of a shareholder lawsuit. The lawsuit alleged that Info misspent millions of dollars, some of it on domestic and international air travel for former President Bill Clinton and his wife, then-Sen. Hillary Rodham Clinton.
Gupta has been a major donor to Democrats and gave at least $1 million to Bill Clinton's presidential library in Arkansas. He also took part in a fundraiser for Hillary Clinton in New York in June 2007. A spokesman for Hillary Clinton said that year that all flights she took at Info's expense were reimbursed and disclosed in accordance with Federal Election Commission and Senate ethics rules.
Bill Clinton had a six-year, $3.3 million consulting contract with the company, which sells business and consumer databases used for sales leads, mailing lists and direct marketing.
The SEC also said it reached a settlement with the former chairman of InfoGroup's audit committee, Vasant Raval, who is paying a $50,000 civil fine. Raval, without admitting or denying the allegations, also agreed to a five-year bar from serving as an officer or director of any public company.
Two former chief financial officers, Rajnish Das and Stormy Dean, are still facing charges. The SEC says the two rubber-stamped hundreds of Gupta's requests to have his expenses reimbursed by the company.
An attorney for Dean, David Zisser, disputed the SEC's charges and said his client would contest them at trial. "We think that the SEC is wrong on the facts and the law, and that's the position we're going to be pursuing in court," Zisser said by telephone from Denver.
A lawyer representing Das didn't immediately return a telephone call seeking comment.
"Gupta stole millions of dollars from Info shareholders by treating the company like it was his personal ATM," SEC Enforcement Director Robert Khuzami said in a statement. "Other corporate officers also abused their positions of trust by looking the other way instead of standing up for investors and bringing the scheme to a halt."
The SEC's civil lawsuit against Gupta, filed in federal court in Omaha, alleged that from 2003 to 2007, he improperly tapped company funds to pay for more than $3 million of personal jet travel for himself, family and friends to destinations such as South Africa, Italy and Mexico's resort city of Cancun. Gupta, 63, is a resident of Las Vegas.
He also, according to the SEC, used investor funds to pay: $2.8 million in expenses related to his 80-foot yacht; $1.3 million in credit card bills and other expenses stemming from 28 country club memberships; and the costs of 20 automobiles, homes in Omaha; Aspen, Colo.; Washington, D.C.; Miami, California and Hawaii; and three personal life insurance policies.
In the August 2007 words of the Delaware judge who presided over the shareholder suit, Gupta's collection of luxury cars "would leave James Bond green with envy."
Gupta failed to inform the other members of InfoGroup's board that for his own financial benefit he had bought shares of a company that was an acquisition target of Info, the SEC said.
He has agreed to pay $4.04 million in restitution plus about $1.1 million in interest and a $2.2 million civil fine. Gupta also consented to an order barring him from serving as an officer or director of any public company and putting restrictions on the voting of his Info stock.
As for Info, it paid Gupta about $9.5 million in perks that weren't disclosed to shareholders and enabled his personal use of the corporate jet and other accoutrements of a luxury lifestyle, the SEC alleged. The company agreed in a settlement to refrain from future violations of the securities laws. It neither admitted nor denied the allegations.
Attorneys for Gupta, Raval and the company didn't immediately return telephone calls seeking comment.
