Dec 16 (Reuters) - Daniel Ruettiger, the legendary
Notre Dame football underdog who inspired the 1993 movie
"Rudy," couldn't do an end run around the Securities and Exchange Commission.
The SEC on Friday charged Ruettiger and 12 others with
running a stock scam associated with Rudy Nutrition - a company
Ruettiger founded to try to compete against Gatorade in the
sports drink market.
The company sold modest amounts of the sports drink "Rudy"
with the tagline "Dream Big! Never Quit!", but the company was
primarily a pump-and-dump stock scheme that created more than
$11 million in illicit profits, the SEC said.
The SEC said Rudy Nutrition, which is no longer in business,
provided false and misleading statements to investors.
For example, the company said that "Rudy outsold Gatorade 2
to 1!" in a major U.S. Southwest test, and boasted that the
drink outperformed Gatorade and Powerade by 2 to 1 in a blind
taste test, the SEC said. Both claims were false, it said.
Ruettiger agreed to pay $382,866 to settle the case, without
admitting or denying the charges.
"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," SEC enforcement lawyer Scott
Friestad said in a statement.
Ruettiger was an undersized walk-on football player for
Notre Dame who in 1975 was called off the bench during his last
chance to play for Notre Dame at home. In a dramatic turn for
the underdog, he recorded a sack, and was carried off the field
by his teammates.
An attorney for Ruettiger could not immediately be reached
The SEC said Ruettiger ran the company with a college friend
out of South Bend, Indiana, until October 2007 when Rocky
Brandonisio became the company's president and moved the
company's operations to Las Vegas.
As the company struggled financially, Ruettiger and
Brandonisio recruited Ruettiger's neighbor in Las Vegas, an
experienced penny stock promoter, to orchestrate a public
distribution of the company stock in late 2007, the SEC said.
The promoter, Stephen DeCesare, identified a shell
corporation quoted on the Pink Sheets that Rudy could merge with
in order to become a public firm.
The company hired a business consultant who was a disbarred
California lawyer, Kevin Quinn, to execute the deal.
It began trading in February 2008 under the ticker symbol
Through false or misleading statements about the company,
the team pumped up its stock price from 25 cents to $1.05 per
share, the SEC said.
The agency said the scheme ended when the SEC issued a
trading suspension against Rudy Nutrition on Sept. 12, 2008, for
delinquent regulatory filings.
Lawyers for Brandonisio and DeCesare did not immediately
respond to a request for comment. A lawyer for Quinn had no
(Reporting By Aruna Viswanatha)
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