Former CEO of IDB Charged With Fraud, Insider Trading

The Securities and Exchange Commission on Tuesday charged Jeffrey P. Sudikoff, a former owner of the Los Angeles Kings hockey team, with securities fraud and insider trading in connection with the once highflying Culver City telecommunications company he founded.

The civil charges cap a nearly three-year SEC investigation into IDB Communications Group, a former Wall Street darling and once one of the fastest-growing companies in Los Angeles. The complaint, filed in federal court in Los Angeles, also names four other former IDB executives.

Sudikoff is not the first former Kings owner to run into trouble. Bruce McNall, who sold a portion of the Kings to Sudikoff, went to prison in March to serve a five-year sentence for an unrelated case of bank fraud.

The SEC complaint filed Tuesday alleges that Sudikoff, IDB’s former chief executive, along with former IDB President Edward Cheramy and former Chief Financial Officer Rudy Wann, inflated IDB’s first-quarter 1994 numbers 66%, to $15 million, to meet analysts’ expectations.

“In simple terms, they cooked the books and used that information to avoid losses,” said Sandra Harris, associate regional director for the SEC’s office in Los Angeles. “They all participated in a scheme to inflate the earnings by more than 60%.”

The SEC alleges they then concealed the fraud in press releases and official filings for the company, which once had more than $300 million in yearly revenues and 900 employees. The company was sold in 1994.

In addition, Sudikoff, 41, and Cheramy, 53, allegedly engaged in insider trading by selling large blocks of stock while the inflated figures were known only to them, the SEC said. Sudikoff allegedly made $649,000 in profit; he also tipped his parents, who avoided losses totaling $21,383, the complaint states. Cheramy avoided losses of $2.2 million, the SEC alleges.

Sudikoff’s attorney vowed that he would be cleared in court.

“Jeffrey Sudikoff built a first-class company at IDB and engaged in no wrongdoing whatsoever and looks forward to being vindicated in court,” said Mike Shepard of San Francisco.

Wann, 40, of Los Angeles denies the allegations, attorney Brian Sun said. An attorney for Cheramy, who lives in Jackson Hole, Wyo., said he would vigorously defend his client against all charges.

The SEC also filed cease-and-desist orders against Mary Brennan, a former controller at IDB, and Philip McInnes, a former vice president of international sales.

Founded in 1983, the company created a powerful global satellite communications network that served such clients as major league baseball and the White House. It specialized in providing satellite links from remote locations and was aggressively moving into the global long-distance phone market.

Sudikoff’s fortunes rose along with his company’s. In March 1994, Fortune magazine listed him among an elite group of “America’s smart young entrepreneurs.”

Then in May 1994, accounting firm Deloitte & Touche abruptly resigned from IDB, which caused the stock to plummet and helped touch off the SEC probe and one by the U.S. attorney’s office in Los Angeles. A spokesman for the U.S. attorney’s office on Tuesday said he could not comment on any investigation.

In August 1994, IDB was sold to rival long-distance telecommunications company LDDS Communications in a $700-million stock swap.

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

Sudikoff, who still lives on the Westside, has invested in several other Los Angeles companies.

According to filings with the state Department of Corporations, Sudikoff is president of IPG Investments Inc. in Santa Monica. Messages left on an answering machine at the company were not returned. Sudikoff is also president of Santa Monica-based Goldenline Network Services, according to state filings made this year.