Chad Peter Smanjak has been sentenced to a year and a day in prison. Smanjak admitted to operating a pump-and-dump scam linked to a company founded by Daniel Ruettiger, also known as Rudy. Ruettiger’s time playing football at Notre Dame was retold in the movie “Rudy.”
Smanjak is accused of targeting over 250 investors in his penny stock scam, which made at least $5M in profits. Although he had co-conspirators, Smanjak was the only person indicted in this securities case.
The penny stock in the scam was issued by Rudy Nutrition, which Ruettiger founded. The sports drink company claimed it was selling health conscious drinks.
According to prosecutors, Smanjak and other individuals were able to get millions of Rudy Nutrition stock shares. They pumped these shares by trading the stock with each other and issuing press releases that were misleading. Prospective investors thought the greater trading volume was real and that there was an increased market demand. Smanjak and others dumped about 600 million shares that they had inflated into the market, which is when they made their profit.
Eight years ago, the SEC stopped trading in the Rudy Nutrition stock shares. According to prosecutors, this is when Smanjak told others to move the funds, which were now in the accounts of Panamanian companies under his control, to accounts in the US. that he and other individuals controlled. Prosecutors say this was money laundering.
Although Ruettiger was not criminal charged, he settled the SEC’s probe for over $382K. He is now barred from working at any publicly traded company as a director or officer. The Commission claimed that his company was mostly a pump and dump scam vehicle that in total made over $11M in illicit profits.
Investors were allegedly given false and misleading statements about the sports drink company in promotional materials, SEC filings, and press releases. The SEC said that Ruettiger’s “feel good story” is what attracted investors.
Unfortunately, investors have been known to place their trust in celebrity names and brands and ended up becoming the victim of fraud. Our job at Shepherd Smith Edwards and Kantas, LTD LLP is to help investors recoup their securities fraud losses.
Man gets year in prison for stock scheme tied to company founded by Rudy of Notre Dame, film fame, OC Register, September 13, 2016