Former King Owner Faces Fraud Charges

A federal grand jury on Wednesday indicted Jeffrey P. Sudikoff, a former owner of the Los Angeles Kings hockey team, on charges of securities fraud and insider trading in connection with the once high-flying Culver City telecommunications firm he founded, prosecutors said.

The 19-count indictment against Sudikoff, 41, and Edward Cheramy, 53, is the result of a lengthy investigation into IDB Communications Group, once one of the fastest growing companies in Los Angeles. The indictment comes on the heels of civil charges filed by the Securities and Exchange Commission two months ago.

Sudikoff and Cheramy, a former president of IDB Communications, are accused of inflating IDB’s first-quarter 1994 numbers to meet company analysts’ projections, according to the indictment released by the U.S. attorney’s office. The pair then concealed the fraud in press releases and official filings, the indictment says.

In addition, the indictment states that Sudikoff and his parents, while possessing inside information, sold large blocks of IDB stock before it dropped in value. Sudikoff sold $1.6 million of IDB stock through an account in a friend’s name and transferred money to an offshore account without making the necessary official filings, the indictment states.

”. . . We are confounded by the decision to charge Jeffrey with insider trading when no stock was sold from his account and he received no financial benefit,” Sudikoff’s lawyer, Brad D. Brian, said Wednesday. “And with crimes based on accounting actions that he was not involved in, we believe no charges should have been brought.”

An attorney for Cheramy, who now lives in Jackson Hole, Wyo., said he would vigorously defend his client against all charges. “We will prevail,” said Gordon Greenberg, a Los Angeles lawyer.

The two men are to be arraigned Jan. 12.

“Officials of public companies who misrepresent or conceal the accuracy of company earnings undermine the integrity and trust of the American public in our business institutions,” said Timothy P. McNally, assistant director in charge of the FBI, which conducted the investigation.

Sudikoff started IDB Communications in 1984 with a $15,000 loan, and eventually created a powerful global satellite network that once had more than $300 million in yearly revenues and 800 employees.

In May 1994, accounting firm Deloitte & Touche abruptly resigned from IDB, which caused the stock to plummet and helped touch off federal probes. In August of that year, IDB was sold to a rival long-distance communications firm in a $700-million stock swap and is now part of WorldCom Inc.

Also in 1994, Sudikoff and telecommunications executive Joseph Cohen bought 72% of the Los Angeles Kings. Although Sudikoff was hired to clean up the franchise, his reign was plagued with financial troubles. In 1995, the team was sold to billionaire Philip F. Anschutz and developer Edward P. Roski.

Sudikoff could not be reached for comment Wednesday, but in early 1994 he spoke with The Times and discussed his business philosophy.

“I don’t really worry about things in advance--it’s not my personality,” Sudikoff said. “I have this unlimited, and some say naive, self-confidence that I can make it all come out all right. That if I walk across the freeway reading People magazine at 4:30 in the afternoon, something will happen to the cars.”