SEC CHARGES 13 INDIVIDUALS IN ALLEGED PUMP AND DUMP SCAM

The following excerpt is from the SEC website:

“The Securities and Exchange Commission announced charges today against Daniel “Rudy” Ruettiger and twelve other individuals who participated in a pump-and-dump scheme involving the stock of Rudy Nutrition, a now defunct Nevada corporation. The SEC's complaint, filed in the United States District Court for the District of Nevada, alleges that Rudy Ruettiger, who is known for having inspired the motion picture “Rudy,” founded Rudy Nutrition to compete with Gatorade in the sports drink market. The SEC alleges that while Rudy Nutrition produced and sold modest amounts of a sports drink called “Rudy,” with the tagline “Dream Big! Never Quit!,” the company primarily served as a vehicle for a pump-and-dump scheme in 2008. As alleged in the complaint, participants in this scheme made false and misleading statements in company press releases, SEC filings, and promotional materials, and engaged in manipulative trading to artificially inflate the price of Rudy Nutrition stock, while selling unregistered shares to investors. The complaint alleges that the scheme generated more than $11 million in illicit profits.
The SEC’s complaint names thirteen defendants and includes the following allegations:
Daniel “Rudy” Ruettiger, a resident of Las Vegas, Nevada, was the CEO of Rudy Nutrition. Ruettiger made false statements in SEC filings and authorized the issuance of company shares to nominee accounts used by other defendants to sell unregistered stock in the scheme.
Rocco “Rocky” Brandonisio, a resident of Las Vegas, Nevada, was the President of Rudy Nutrition. Brandonisio made false statements in an SEC filing and authorized the issuance of company shares to nominee accounts used by other defendants to sell unregistered stock in the scheme.
Stephen DeCesare, a resident of Las Vegas, Nevada, is a stock promoter. DeCesare was the primary organizer of the scheme. He recruited other defendants to manipulate the price of Rudy Nutrition stock, and directed the issuance of false company press releases.
Pawel P. Dynkowski, a citizen of Poland, is a stock promoter. Dynkowski manipulated the price of Rudy Nutrition stock using wash sales, matched orders, and other trading coordinated with the issuance of false company press releases.
Kevin S. Kaplan, a resident of Las Vegas, Nevada, was the Chief Financial Officer of Rudy Nutrition. Kaplan authorized the issuance of company shares to nominee accounts used by other defendants to sell unregistered stock in the scheme.
Gregg R. Mulholland, a resident of Huntington Beach, California, is a stock promoter. As part of the scheme, Mulholland made false statements about the company in mailers sent to two million domestic households, and controlled nominee accounts that sold shares in the scheme.
Mehmet Mustafoglu, a resident of Beverly Hills, California, was a consultant to Rudy Nutrition. Mustafoglu sold unregistered shares of Rudy Nutrition during the scheme.
Joseph A. Padilla, a resident of San Marcos, California, is a stock promoter and a former registered representative at the broker-dealer Scottsdale Capital Advisors LLC. Padilla sold unregistered shares of Rudy Nutrition during the scheme.
Angelo R. Panetta, a resident of Montebello, California, is a stock promoter. Panetta made false statements about Rudy Nutrition on an Internet radio show and in an Internet chat room, and sold unregistered shares of the company during the scheme.
Kevin J. Quinn, a resident of Santa Monica, California, is a business consultant and a disbarred attorney. Quinn arranged for the company to issue unregistered shares to nominee accounts used to sell shares during the scheme.
Andrea M. Ritchie, a resident of San Marcos, California, is a former registered representative at the broker-dealer Scottsdale Capital Advisors LLC. Ritchie sold shares of Rudy Nutrition for other defendants without conducting a reasonable inquiry as to the registration status of the shares.
Chad P. Smanjak, a citizen of the Republic of South Africa, is a stock promoter. Smanjak directed Dynkowski’s manipulative trading, and controlled a series of Panamanian companies that sold shares during the scheme.
Gary J. Yocom, a resident of Altamonte Springs, Florida, is a former registered representative at Thomas Anthony & Associates, Inc., a now defunct broker-dealer. Yocom sold shares of Rudy Nutrition for other defendants without conducting a reasonable inquiry as to the registration status of the shares.
As a result of the conduct described in the complaint, the Commission alleges that Ruettiger, Brandonisio, DeCesare, Dynkowski, Kaplan, Panetta, Quinn, and Smanjak violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (“Securities Act”), Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), and Rule 10b-5; that Mulholland violated Sections 5(a), 5(c), 17(a), and 17(b) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5; and that Padilla, Ritchie, Mustafoglu and Yocom violated Sections 5(a) and 5(c) of the Securities Act. The Commission’s complaint seeks against each defendant permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties, and, as to certain defendants, orders barring them from participating in penny stock offerings and/or serving as officers and directors of public companies.
Without admitting or denying the allegations in the complaint, nine of the defendants – Ruettiger, Brandonisio, DeCesare, Kaplan, Mustafoglu, Padilla, Panetta, Quinn, and Yocom – have agreed to final judgments, which are subject to Court approval:
Ruettiger has consented to a final judgment that orders disgorgement of $185,750, prejudgment interest of $11,366, and a civil penalty of $185,750, bars him from participating in the future offering of any penny stock, bars him from acting as an officer or director of a public company, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5;

Brandonisio has consented to a final judgment that orders a civil penalty of $50,000, bars him from participating in the future offering of any penny stock, bars him from acting as an officer or director of a public company, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5.

DeCesare has consented to a final judgment that orders disgorgement of $1,341,366 and prejudgment interest of $108,744, bars him participating in the future offering of any penny stock, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5.

Kaplan has consented to a final judgment that orders a civil penalty of $25,000, bars him from participating in the future offering of any penny stock, bars him from acting as an officer or director of a public company for a period of five years, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5.

Mustafoglu has consented to a final judgment that orders disgorgement of $363,603, prejudgment interest of $31,765, and a civil penalty of $40,000, bars him from participating in the future offering of any penny stock, and permanently enjoins him from violating Sections 5(a) and 5(c) of the Securities Act.

Padilla has consented to a final judgment that orders disgorgement of $197,427, prejudgment interest of $18,128, and a civil penalty of $100,000, bars him from participating in the offering of any penny stock for a period of three years, and permanently enjoins him from violating Sections 5(a) and 5(c) of the Securities Act. Additionally, in related administrative proceedings, Padilla has consented to a Commission Order barring him from association with any broker or dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization for a period of three years.

Panetta has consented to a final judgment that orders disgorgement of $175,000 and prejudgment interest of $21,692, bars him participating in the future offering of any penny stock, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5.

Quinn has consented to a final judgment that orders disgorgement of $197,286 and prejudgment interest of $17,755, and permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5.

Yocom has consented to a final judgment that orders disgorgement of $166,250 and prejudgment interest of $20,608, bars him from participating in the offering of any penny stock for a period of three years, and permanently enjoins him from violating Sections 5(a) and 5(c) of the Securities Act. Additionally, in related administrative proceedings, Yocom has consented to a Commission Order barring him from association with any broker or dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization for a period of three years.
In addition, two defendants – Mulholland and Ritchie – have agreed to bifurcated judgments which are subject to Court approval:
Mulholland has consented to a judgment that bars him from participating in the future offering of any penny stock, permanently enjoins him from violating Sections 5(a), 5(c), 17(a), and 17(b) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5, and provides that upon subsequent motion the Court will determine issues relating to monetary relief.

Ritchie has consented to a judgment that bars her from participating in the offering of any penny stock for a period of three years, permanently enjoins her from violating Sections 5(a) and 5(c) of the Securities Act, and provides that upon subsequent motion the Court will determine issues relating to monetary relief. In related administrative proceedings, Ritchie has also consented to a Commission Order barring her from association with any broker or dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization for a period of three years.
The SEC thanks the following agencies for their cooperation and assistance in connection with this matter: the U.S. Attorney’s Office for the Central District of California; the U.S. Attorney’s Office for the District of Delaware; United States Immigration and Customs Enforcement, Department of Homeland Security, Homeland Security Investigations; and the Department of the Treasury, Internal Revenue Service, Criminal Investigation.”