Remember 'Rudy,' the Notre Dame football walk-on who worked hard to overcome his physical limitations and join the Fighting Irish football team? The man who had his uplifting story turned into a memorable sports movie? Turns out the real life Rudy, Daniel Ruettiger, got himself into some pretty serious trouble with the government.
On December 16th, Ruettiger and some of his associates were formally charged by the United States Securities and Exchange Commission in stock fraud scheme to deceive investors into buying stock in his sports drink company, Rudy Nutrition.
Ruettiger founded Rudy Nutrition to compete in the sports drink market with industry giants like Gatorade, and even sought to capitalize on his ethos by tagging Rudy drinks with the line "Dream Big! Never Quit!" Turns out Ruttiger and associates were really trying to get investors to "dream big" by allegedly telling them lies, as they used the company as a vehicle for a stock trading scheme that generated more than $11 million in illicit profits in 2008.
Among the allegations in the SEC complaint was the claim that the company provided false and misleading statements in press releases, SEC filings, and promotional materials. Rudy Nutrition falsely claimed the drink brand outsold Gatorade by a two-to-one ratio in "a major southwest test," and that the Rudy drink beat out Gatorade in blind taste tests. While distributing these false claims to investors, Ruettiger and his associates manipulated stock trades to artificially inflate the price of Rudy Nutrition stock in 2008, while they sold unregistered shares to unsuspecting investors. The SEC stepped in to revoke registration of the stock in late 2008, and Rudy Nutrition has since ceased operations.
"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," said Scott W. Friestad, Associate Director of the SEC's Division of Enforcement. "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."
Ruettiger and the other participants in the scheme all agreed to settle the SEC's charges without admitting or denying the allegations. Ruettiger has agreed to pay $382,866 to settle the charges. I guess the sequel to Rudy wouldn't be nearly as inspirational or uplifting, would it?