The U.S. Securities and Exchange Commission (SEC) has proposed a settlement in Illinois federal court with two men who were allegedly part of an insider-trading ring related to Life Time Fitness Inc.’s 2015 private equity buyout.
Peter A. Kourtis and Alexander T. Carlucci were two of six accused conspirators who allegedly worked through Bret Beshey, a friend of Shane Fleming, Life Time's former vice president of corporate sales, to secure and share illegal trading profits after Fleming learned the fitness company had been purchased and would be taken private in 2015.
Between Feb. 25, 2015 and March 3, 2015, the defendants allegedly purchased and sold approximately 2,000 "highly speculative" call options for Life Time shares, amounting to $866,209. Life Time stopped trading on the New York Stock Exchange in June 2015. Fleming was fired by Life Time in 2016.
Orders filed on May 22 in Illinois Northern District Court stipulate that Carlucci will pay disgorgement of $15,798.85 in four separate payments to the SEC, while Kourtis will pay an amount that has yet to be determined by the SEC.
Of Kourtis' disgorgement, the order states: "[Kourtis] shall pay disgorgement of ill-gotten gains and prejudgment interest thereon; that the amounts of the disgorgement and civil penalty shall be determined by the Court upon motion of the Commission; and that prejudgment interest shall be calculated from March 6, 2015, based on the rate of interest used by the Internal Revenue Service for the underpayment of federal income tax as set forth in 26 U.S.C. § 6621(a)(2)."
The case, first filed on Sept. 29, 2017, is still open, and a May 18 filing by the SEC addresses the commission's intention behind settling with two of the eight defendants.
"The SEC seeks a temporary lift of the Court’s stay for the sole and limited purpose of approving these settlements and entering [Carlucci and Kourtis'] judgments," the filing states. "The lifting of the stay for this limited purpose will not prejudice any party. Moreover, approval of the settlements and entry of the proposed judgments will narrow the issues before court. The judgments, if entered, will finally resolve or provide a mechanism for resolving the Commission’s claims for relief against two of the eight defendants in this case."
Kourtis' attorney, Sergio E. Acosta, told Club Industry on June 21 the SEC case has been stayed pending a criminal case set for trial in 2019.
The attorney for the SEC did not immediately respond to a request for comment.
"Mr. Fleming’s employment was terminated as a result and he has not been employed by Life Time for nearly a year," Public Relations Manager Amy Williams told Club Industry in October 2017. "Additionally, the other individuals mentioned were not current or former employees of Life Time. Finally, Life Time cooperated fully with government law enforcers in this matter.
Life Time ranked No. 2 on Club Industry’s Top 100 Health Clubs if 2017 with estimated 2016 revenue of $1.475 billion.