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August 29, 2014

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Ex-CEO of Nevada company convicted of securities fraud

LOS ANGELES — The former head of a Nevada company that sold nutritional supplements has been convicted of securities fraud.

The U.S. Attorney's Office in Los Angeles said Monday a jury returned the verdict last week after a three-day trial.

Prosecutors said 57-year-old Richard A. Bailey violated securities law in 2004. Bailey was the chief executive of Gateway Distributors Ltd.

Bailey was accused of paying over $1 million worth of company stock to a businessman for consulting work that was never performed. The businessman later liquidated the shares and wired a substantial sum to escrow accounts owned by Gateway, which was looking to buy a Utah resort and a Las Vegas office building.

Prosecutors say the stock payments were a sham and were intended to raise capital for the company.

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