SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16663 / August 28, 2000
Accounting Auditing Enforcement Rel. No. 1296 / August 28, 2000
SECURITIES AND EXCHANGE COMMISSION v. JEFFREY P. SUDIKOFF, EDWARD
CHERAMY AND RUDY WANN, Civil Action No. 97-7207 DDP (RCx) (C.D. Cal.)
The Securities and Exchange Commission ("Commission") announced that
on August 21, 2000, United States District Judge Dean D. Pregerson of
the Central District of California entered final judgments of
permanent injunction and other relief against all three defendants in
this case, Jeffrey P. Sudikoff ("Sudikoff"), Edward Cheramy
("Cheramy") and Rudy Wann ("Wann"). The judgments were entered
pursuant to the consents of the defendants, who neither admit nor deny
the allegations of the Commission's Complaint.
The defendants are former officers of IDB Communications Group, Inc.
("IDB"), a telecommunications company formerly headquartered in Los
Angeles, California. Sudikoff was IDB's former Chairman and Chief
Executive Officer; Cheramy was IDB's former President; and Wann was
IDB's former Chief Financial Officer. Sudikoff and Wann reside in Los
Angeles, and Cheramy now resides in Wyoming.
The Commission's Complaint alleged that Sudikoff, Cheramy and Wann
fraudulently inflated IDB's 1994 first quarter earnings from $9
million to $15 million in order to meet analysts' projections.
Sudikoff, Cheramy and Wann then publicly disseminated these overstated
earnings in a press release and a Form 10-Q quarterly report filed
with the Commission. The Complaint further alleged that Sudikoff,
Cheramy and Wann concealed the fraud by fabricating documents,
knowingly making false adjusting entries on IDB's books and records in
circumvention of IDB's internal controls and lying to IDB's
independent auditors. The Complaint also alleged that Sudikoff engaged
in insider trading in IDB stock, and tipped his parents, who also
traded IDB stock.
In addition to enjoining the defendants from future violations of
various antifraud and other provisions of the federal securities laws,
as set forth below, Sudikoff was ordered to disgorge $522,505.50,
representing his alleged losses avoided on certain insider trades in
IDB stock, plus prejudgment interest of $130,060.86, and an Insider
Trading and Securities Fraud Enforcement Act penalty of $100,000.
Additionally, based upon their alleged financial fraud, all three
defendants were ordered to pay civil penalties pursuant to the
Securities Enforcement Remedies and Penny Stock Reform Act of 1990.
Sudikoff and Cheramy were each ordered to pay the maximum penalty of
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
Accounting Auditing Enforcement Rel.
SECURITIES AND EXCHANGE COMMISSION v. JEFFREY P. SUDIKOFF, EDWARD CHERAMY AND RUDY WANN,
The judgments were entered pursuant to the consents of the defendants, who neither admit nor
The defendants are former officers of IDB Communications Group, Inc., a telecommunications
The Commission's Complaint alleged that Sudikoff, Cheramy and Wann fraudulently inflated
The Complaint further alleged that Sudikoff, Cheramy and Wann concealed the fraud by
The Complaint also alleged that Sudikoff engaged in insider trading in IDB stock, and tipped
In addition to enjoining the defendants from future violations of various antifraud and other
Additionally, based upon their alleged financial fraud, all three defendants were ordered to
Sudikoff and Cheramy were each ordered to pay the maximum penalty of $100,000, and Wann was
Finally, Cheramy and Wann, both formerly licensed as certified public accountants, have
Each of the defendants consented to entry of a judgment permanently enjoining him from
Sudikoff was permanently enjoined from violating the antifraud provisions of Section 17of the
In the related criminal action brought against them by the United States Attorney's Office
Sudikoff pled guilty to two counts of securities fraud for insider trading and one count of
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