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Man pleads guilty in stock scam linked to Notre Dame hero 'Rudy'

Rudy Ruettiger

A Long Beach man faces up to five years in federal prison after admitting his role Tuesday in orchestrating a "pump-and-dump stock scheme" around a sports drink company built around the name of Notre Dame football legend Daniel E. “Rudy” Ruettiger.

Chad Peter Smanjak, 38, appeared at the U.S. District Court in Santa Ana and pleaded guilty to one count of conspiring to commit securities fraud. The plea deal requires Smanjak to pay full restitution to the more than 250 victims of the scheme, which prosecutors alleged generated a profit of more than $5 million. Money-laundering transactions also netted more than $1 million.

"The Rudy drink line featured flavors with names like ‘Blue Fuel,’ but what fueled the company’s public offerings was fraud," U.S. Atty. André Birotte Jr. said in a statement.

No total for restitution has been set by the court. Smanjak is scheduled to be sentenced Dec. 12.

Known as Rudy, Ruettiger was the pint-size player who won the hearts of Fighting Irish fans in the 1970s by walking on to the then-dominant football team. His story inspired the 1993 film “Rudy.”

Ruettiger served as the CEO of Rudy Nutrition, which prosecutors said "purported to sell health-conscious beverages as an alternative to high-sugar soda and sports drinks."

But the venture attracted the attention of the Securities and Exchange Commission, and in 2008, the agency revoked the registration of each class of registered securities of Rudy Nutrition for failure to make required periodic filings with the commission.

In December 2011, the agency filed a complaint against Ruettiger and 12 others based upon the Rudy Nutrition scheme.

That same month, Ruettiger agreed to pay federal regulators $382,866 to settle claims that he and 12 others crafted the stock scheme related to the now-defunct sports drink company. He did not admit or deny the allegations.  

Ruettiger also was barred from serving as an officer or director of a publicly traded company.

The drink was marketed under the motto “Dream Big! Never Quit!,” according to the Securities and Exchange Commission. The agency contends that Ruettiger and others grossed more than $11 million off the alleged scheme in 2008.

Federal prosecutors allege Smanjak and others traded on the name of Ruettiger, the sports drink's namesake, to pump up the value of the drink company before dumping approximately 600 million shares of RUNU stock on the market.

Smanjak fled the country during the investigation into the company but was arrested in January in Johannesburg, South Africa, by special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and South Africa’s Police Services.

Smanjak waived extradition and voluntarily returned to the United States last week to face the charges.

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-- Andrew Blankstein

Follow Andrew Blankstein on Twitter and Google+.

Photo: Daniel "Rudy" Ruettiger photographed at a Notre Dame pep rally in October 2005 in South Bend, Ind. Credit: Kohl Threlkeld / South Bend Tribune / Associated Press

 
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