Football underdog "Rudy" sacked for stock fraud

Fri Dec 16, 2011 8:25pm EST

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(Reuters) - Daniel Ruettiger, the legendary Notre Dame football underdog who inspired the 1993 movie "Rudy," couldn't do an end run around the U.S. 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 for comment.

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

RUNU.

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 September 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 immediate comment.

(Reporting By Aruna Viswanatha; Editing by Karey Wutkowski, Gerald E. McCormick and Richard Chang)

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Comments (5)
inverse137 wrote:
There is some interview out there somewhere where Joe Montanna is talking about “Rudy.” I think they were at Notre Dame at the same time. I think there was some hazing of Rudy in Montana’s story.

I mean, it is an f’ing awsome movie and I give the guy credit…I never had the balls to walk-on to a college football team. But let’s not forget there was some artistic freedom taken in the telling of the story.

Dec 16, 2011 9:55pm EST  --  Report as abuse
WeWereWallSt wrote:
Rudy Rudy Rudy. Moving to Vegas and doing business with that crowd? No wonder things went wrong.

You should have moved to Wall Street. Pump and dump? Our specialty. www.WeWereWallStreet.com/About-Us.html

We’re working on dotcom III right now. Give us a call. A guy like you could do a lot of smiling and dialing for us.

Dec 17, 2011 7:36am EST  --  Report as abuse
johnb9990 wrote:
Pump and Dump scams are illegal? And the investors are called “victims”?

They why aren’t bankers in jail for “Pumping and dumping” real estate on the American people?

Why is our government and the media blaming the 20 million people underwater on bad investments?

Why is a “pump and dump” on the middle class not being called criminal???????????????????????

Dec 18, 2011 1:14pm EST  --  Report as abuse
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