Rudy Settles With SEC

LA Times:

Daniel "Rudy" Ruettiger, the 5-foot-6 walk-on Notre Dame football player whose underdog story became the 1993 movie "Rudy," has seen his sports drink venture turn out less happily — with allegations of securities fraud.

In a lawsuit Friday, the Securities and Exchange Commission accused Ruettiger, 63, and 12 others of swindling investors in Rudy Nutrition, a Gatorade challenger he started with a college friend in South Bend, Ind.

Ruettiger got in trouble when he moved the company to Las Vegas in 2007 and joined a fast crowd that pumped out promotions to penny-stock investors. The SEC said the participants dumped $11 million worth of stock in a company that had few customers and no profits.

The drink, called Rudy, carried the slogan "Dream Big! Never Quit!" A promotional mailing claimed that in "a major Southwest test, Rudy outsold Gatorade 2 to 1!" An email boasted that in "several blind taste tests, Rudy outperformed Gatorade and Powerade by 2:1," the SEC suit states.

Both statements were false, according to the lawsuit, filed in federal court in Las Vegas. The promoters are accused of manipulating trading to artificially inflate the price of Rudy Nutrition stock while selling unregistered shares to investors.

Only $800,000 of the more than $11 million raised went back into Rudy Nutrition, said Scott W. Friestad, associate director of the SEC's enforcement division.

Rudy outperformed Gatorade and Powerade by 2:1?  In "a major Southwest test?" Who would have ever guessed that was a false statement.  Ah, penny stocks.  Nobody ever gets ripped off in penny stocks.