Daniel ‘Rudy’ Ruettiger accused of fraud by SEC in sports drink case
By Stefano Esposito Staff Reporter email@example.com December 16, 2011 4:22PM
Daniel "Rudy" Ruettiger, on whose life the movie "Rudy" was based, works with students at a Notre Dame pep rally in 2005. (AP Photo/South Bend Tribune, Kohl Threlkeld)
Updated: January 18, 2012 8:08AM
Joliet native Daniel Ruettiger gained fame as the underdog — the undersized kid who made it onto the University of Notre Dame football team and inspired the 1993 movie, “Rudy.”
And more recently, when Ruettiger’s “Rudy” soft drink failed to compete with the big boys in the sports drink industry, Ruettiger also didn’t give up, the U.S. Securities and Exchange Commission said.
He and 12 others illegally schemed to pump up the value of the company that made the sports drink, the SEC charged in a complaint filed Friday in U.S. District Court in Las Vegas.
Among others things, the SEC complaint alleges Ruettiger participated in a “pump-and-dump” scheme involving the stock of Rudy Nutrition, Ruettiger’s company. The complaint alleges the scheme generated more than $11 million in “illicit profits,” the SEC said.
“Participants in this scheme made false and misleading statements in company press releases, SEC filings, and promotional materials, and engaged in manipulative trading to artificially inflate the price of Rudy Nutrition stock, while selling unregistered shares to investors,” the SEC said in a written statement announcing the charges.
Ruettiger, reached through his brother Mick Ruettiger, declined to talk to a reporter, but asked his brother to say he has “settled with the SEC.”
“He learned a valuable lesson, as far as not letting his name be used by someone he doesn’t know,” Mick Ruettiger said.
Lawyers for the SEC did not return calls seeking comment Friday.
The SEC’s statement said nine of the defendants have agreed to settle the case without admitting guilt, pending the court’s approval. Ruettiger has tentatively agreed to pay $382,000, according to the release.
Ruettiger, who is also a motivational speaker, started Rudy Beverage in South Bend, Ind., and ran it there with a friend from Notre Dame, until October 2007, when the company was moved to Las Vegas, according to the federal complaint. The Rudy drink was marketed under the tagline: “Dream Big! Never Quit!”
“During this time, [Rudy] Beverage struggled financially, with few customers, few assets and no profits,” the complaint states.
The pump-and-dump scheme allegedly began in early 2008.
Among other things, the scheme allegedly involved sending out e-mails to potential investors that claimed the Rudy sports drink outperformed Gatorade and Powerade 2-1 in “several blind taste tests.”
“These statements were materially false or misleading,” according to the SEC complaint.
The marketing attempts were apparently a great success. In less than a month, the company went from trading 720 shares on Feb. 27, to more than 3 million shares a month later, according to the SEC. And while the stock price soared for a while, they eventually dropped to a value of less than $0.002 a share, according to the federal complaint.