A former Long Beach resident who fled to South Africa as a fugitive pleaded guilty to orchestrating a scam involving a sports drink named after Notre Dame's most famous football benchwarmer.
Peter Smanjak, 38, copped in U.S. District
Court to one count of conspiring to commit securities fraud and, as part of a plea deal, he will pay full restitution to be determined to more than 250 marks. He is also likely to draw five years in prison.
Smanjak and others obtained millions of shares of penny stock in the Rudy Nutrition sports drink company and then pumped up the
trading volume by trading it among themselves and issuing misleading
press releases. They then dumped the stock on the market until federal regulators halted trading in 2008. The feds call these “pump and dump” scams, and Smanjak enjoyed a $5.2 million profit.
The SEC on Nov. 14, 2008, revoked the registration of each class of registered
securities of Rudy Nutrition for failure to make required periodic
filings with the commission. David “Rudy” Ruettiger, whose story of
becoming a member of the Notre Dame Fighting Irish football team is
depicted in the 1993 film Rudy, was the CEO of Rudy Nutrition, which was marketed as a health-conscious alternative to high-sugar soda and
sports drinks. Ruettiger was not charged with a crime in the wire fraud case, but he did have to agree to pay $382,866 to settle Securities and Exchange Commission (SEC) charges. The SEC also barred him from
serving as an officer or director of a publicly traded company.
Smanjak fled to his native South Africa in 2010 after
authorities executed a search warrant. He was arrested
in January in Johannesburg by special agents with U.S.
Immigration and Customs Enforcement's (ICE) Homeland Security
Investigations (HSI) Attaché office in Pretoria and members of South
Africa's Police Services. Smanjak waived extradition and voluntarily
returned to the U.S. to face charges.
By then more than 630 million shares of Rudy Nutrition shares had been issued to several
Smanjak-controlled Panamanian companies, which sold them and kept the
proceeds in Panamanian banks, which then wired the funds back to U.S.
accounts held by Smanjak and his
co-conspirators. Smanjak paid his trader with a $400,000
Lamborghini Murcielago, which ICE later seized.
V. Selna in Santa Ana will unveil the restitution order on Dec. 12, when Smanjak is formally sentenced.
"It's a long-awaited
and welcome day for the hundreds of unwitting stockholders who were
duped,” commented Claude Arnold, special agent
in charge for HSI Los Angeles. "Schemes like this not only exact a heavy toll on individual
investors, they also undermine public confidence in our nation's
financial system, which is why HSI will continue to vigorously pursue
and seek justice for those involved.”
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