SEC Opens Investigation Into Company Whose Founder Spent Heavily on the Clintons
11.22.07 -- 12:26 PM
The Securities and Exchange Commission has opened an investigation into spending by database marketer in Omaha which already faces a lawsuit alleging the company misspent millions -- some of it on Bill and Hillary Clinton.
The shareholder lawsuit questions why InfoUSA Inc. founder Vin Gupta used private corporate jets to fly the Clintons on business, personal and campaign trips, why Gupta gave Bill Clinton a $3.3 million consulting contract and why the company paid for extravagant luxuries Gupta enjoyed.
The company said in a filing Tuesday that it would cooperate with the SEC's request for documents related to expense reimbursement, transactions with related parties, some corporate expenditures and certain trades of company stock.
The company did not specify what the SEC is looking for, but the lawsuit filed by two investment managers in a Delaware court may offer some clues.
Investment manager Cardinal Value Equity Partners and hedge fund Dolphin Limited Partnership filed the lawsuit earlier this year alleging Gupta misspent millions of dollars in corporate funds.
According to the lawsuit, InfoUSA has spent nearly $900,000 since 2001 flying the Clintons to domestic and international locations and political events.
Gupta has been a major donor to Democrats and gave at least $1 million to Bill Clinton's presidential library in Arkansas. Gupta also took part in a June fundraiser for Hillary Clinton in Manhattan.
A spokesman for Hillary Clinton said in May that all the flights connected to InfoUSA were reimbursed and disclosed in accordance with Federal Election Commission and Senate ethics rules.
The investment managers also say InfoUSA paid for use of a jet plane, the 80-foot yacht American Princess, condos in Hawaii and California and a University of Nebraska-Lincoln stadium box.
Some of the $28 million in "related-party transactions" the investment managers have questioned included payments to Annapurna Corp. which Gupta owned.
InfoUSA did not immediately respond to a message seeking comment Wednesday.
In the past, Gupta and InfoUSA have said the jet, condos, stadium box and American Princess are for entertaining clients.
The company has also come under scrutiny for its policies concerning the sale of personal information.
The New York Times reported in May that InfoUSA, which compiles consumer information and sells it to direct marketing companies and others, sold the names of senior citizens, including millions with Alzheimer's disease and others whom it identified as gamblers, with labels that said things such as, "These people are gullible."
The company has denied those allegations and said it does everything it can to ensure it does not do business with scam artists.
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