(HENDERSON, Nev.) — Daniel “Rudy” Ruettiger, the subject of an inspirational movie of an undersized football player who finally makes the Notre Dame team through sheer determination, was charged Friday with being part of a ”classic pump-and-dump scheme” to deceive investors into buying stock in Ruettiger’s sports drink company.
Ruettiger, 63, and a dozen others are named in the complaint filed Friday by the Securities and Exchange Commission.
Ruettiger, identified in the SEC suit as “the walk-on football player at Notre Dame who was the subject of the 1993 movie Rudy,” was the CEO of the Rudy Nutrition, or RUNU.
The company allegedly produced and sold “modest amounts” of a sports drink called Rudy, which was supposed to compete with Gatorade. The drink’s tagline was “Dream Big! Never Quit!”
The SEC alleged that Rudy Nutrition provided investors with false and misleading information about the company, such as a promotional email bragging that in “a major southwest test, Rudy outsold Gatorade 2 to 1,” according to the SEC complaint. The company would then allegedly manipulate trading by artificially inflating the price of the stock while selling unregistered shares to investors.
The scheme allegedly occurred between February and September 2008, grossing over $11 million for the participants. The SEC alleges that the group “sold almost one billion shares to unsuspecting investors in the public market during the scheme.”
“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 Division of Enforcement, 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.”
As a kid, Ruettiger had dreamed of playing football for Notre Dame, but lacked the grades, size and speed to get into the school or make the team. He worked his way up from a nearby junior college, got a job on campus and was eventually allowed to practice with the team. Rudy was allowed to suit for the final home game of his senior year when other starting players appealed to their coach to let Rudy play.
Ruettiger and 10 of the scam’s other participants have agreed to settle the SEC’s charges without admitting or denying the allegations. Ruettiger has agreed to pay $382,866 to settle the charges.
Rudy Nutrition is no longer in business.
Ruettiger’s attorney Michael Eldredge could not be reached for comment.
Copyright 2011 ABC News Radio
Steve Almasy and Chris Boyette, CNN
Michael Pearson, CNN
Angela Dewan, CNN
Madison Park, CNN