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Tuesday, July 23, 2024 | Back issues
Courthouse News Service Courthouse News Service

$2.5M Coughed Up in Rudy Sports Scandal

LAS VEGAS (CN) - A federal judge ordered a member of the Rudy sports drink pump-and-dump stock scheme to pay $2,465,250 in disgorgement and interest for his role in the fraud - but spared him a fine.

U.S. District Judge Jennifer Dorsey ordered Chad P. Smanjak to pay $2,010,286 in disgorgement and $454,963 in prejudgment interest, which he satisfied in a March 2013 consent to forfeiture, according to Dorsey's Nov. 23 order. Smanjak was one of 13 defendants in the SEC case.

Dorsey did not fine Smanjak because he cooperated with SEC investigators, but she permanently barred him from dealing in penny stocks. If information reveals that Smanjak lied to investigators, Dorsey said, she will fine him.

Dorsey in November 2014 ordered former Notre Dame football player Daniel "Rudy" Ruettiger to pay $383,866 and stock promoter Pawel Dynkowski $4.4 million in the pump-and-dump scheme that bilked investors of $11 million .

The SEC claimed Ruettiger, Smanjak and others lied in their promotional materials, news releases and in SEC filings to promote Rudy sports drink, claiming, among other things, that consumers preferred it to Gatorade. They sold shares in Rudy Nutrition on a penny stock exchange under the RUDN symbol.

Their misrepresentations boosted Rudy Nutrition's stock price from 25 cents to $1.05 in about a month, then they dumped their shares.

Ruettiger's days at Notre Dame in the mid 1970s inspired the 1993 film "Rudy," which ESPN in 2005 ranked 24th among the all-time best sports movies. Rudy was portrayed as an undersized overachiever.

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