A former walk-on for the University of Notre Dame football team whose story of determination inspired millions settled charges filed against him by the Securities and Exchange Commission for nearly $400,000 on Dec. 16. Federal investigators had accused Daniel “Rudy” Ruettiger of fraud by running a “classic pump and dump scheme” involving his one-time Las Vegas-based sports nutrition company.

Ruettiger was the founder of Rudy Nutrition, which sold a sports drink similar to Gatorade. According to investigators with the SEC, Ruettiger convinced investors to purchase penny stocks in the company by artificially inflating its financial prospects in statements, SEC filings and promotional documents. When the stock’s value subsequently rose, he then sold his own shares in Rudy Nutrition, sending the value crashing and the investors’ stocks worthless, the SEC said.

An attorney with the SEC called the scheme “a classic pump and dump.” Ruettiger and a number of his partners reportedly made more than $11 million in the plot in 2008, with Ruettiger personally taking in $185,750 in stock sales. Charges against him and several other defendants followed.

As part of the settlement, Ruettiger will not admit or deny the allegations against him, but will pay the agency $382,866. Slightly less than half that amount will go to paying back his profits, with an equal amount serving as a fine and the rest making up interest. However, his legal problems may not be over, as the IRS is reportedly investigating him.

Ruettiger is best known for walking onto Notre Dame in the 1970s. Despite being just 5 foot, 6 inches and 165 pounds, his determination and hard work in practice impressed his teammates. He finally got into a game in 1975 and sacked the quarterback as his the Notre Dame sideline cheered. The story was later adapted into a 1993 film. The SEC lawyer said that part of the scheme involved using his fame to gain investors’ trust.

Source: VEGAS INC, “Former Notre Dame walk-on ‘Rudy’ settles lawsuit with SEC,” Steve Green, Dec. 16, 2011