Feel-Bad Ending for Hero of 'Rudy' Movie
LAS VEGAS (CN) - Former Notre Dame football player Daniel "Rudy" Ruettiger - the subject of the 1993 underdog movie "Rudy" - created a sports drink company as a shell for a "classic pump-and-dump scheme" that bilked investors for more than $11 million, the SEC says.
Ruettiger, 63, and 10 other defendants have settled the SEC charges without admitting or denying them.
The SEC says Ruettiger, who based his business, Rudy Nutrition, in Las Vegas, agreed to pay $382,866 as part of the settlement. He also agreed to no longer serve as an officer or director of a publicly traded company, and to refrain from promoting penny.
"Investors were lured into the scheme by Mr. Ruettiger's well-known, feel-good story but found themselves in a situation that did not have a happy ending," Scott W. Friestad, associate director of the SEC's enforcement division, said in a statement.
"The tall tales in this elaborate scheme included phony taste tests and other false information that was used to convince investors they were investing in something special."
Ruettiger and 12 others were accused of conning investors in Rudy Nutrition (RUNU), maker of the sports drink "Rudy," which they claimed would compete with Gatorade. The SEC claims the defendants "inflate[d] the price and volume of the stock artificially through fraudulent touting and manipulative trading."
Defendants "made and distributed a series of false or misleading statements about RUNU to the public," through millions of mailers sent to investors, messages on Internet chat rooms, videos, news releases and official documents filed with the SEC.
Penny stock promoter Stephen DeCesare and "disbarred California lawyer ... Kevin Quinn arranged for 3 billion RUNU shares to be issued to nominee entities, which sold almost one billion shares to unsuspecting investors in the public market during the scheme," the SEC says in its federal complaint.
The scheme was conducted from February to August 2008, and ended when the SEC suspended trading in September for delinquent periodic filings. The SEC revoked the registration of Rudy Nutrition's securities the next month.
Named as defendants along with Ruettiger, Quinn and DeCesare were president Rocky Brandonisio; CFO Kevin Kaplan; stock promoters Pawel Dynkowki, Gregg Mulholland, Chad Smanjak, Joseph Padilla and Angelo Panetta; broker-dealers Andrea Ritchie and Gary Yocom; and consultant Mehmet Mustafoglu.
Charges against Dynkowski were Smanjak are not settled, and litigation against them continues, the SEC said in a statement.