SANCTIONS FOR FALSE STATEMENTS BY RUDOLPH, DEITZ, AND CIRI SHAREHOLDERS FOR CIRI SHAREHOLDERS UPHELD
The Alaska Superior Court has affirmed an administrative decision finding that CIRI shareholders Harold Rudolph, Allen Deitz, and the group CIRI Shareholders for CIRI Shareholders made false and misleading statements, in violation of Alaska law and regulations, in their 1998 annual meeting proxy solicitations.

The case was the result of an administrative appeal filed by Rudolph, Deitz, and CIRI Shareholders for CIRI Shareholders from a 1999 decision by a hearing officer for the Alaska Department of Community and Economic Development's Division of Banking, Securities and Corporations. The hearing officer's decision (which was adopted by the Administrator of Securities for the Department) upheld a Division order issued in June of Œ98 fining Rudolph, Deitz, and CIRI Shareholders for CIRI Shareholders and directing CIRI to recalculate the results of the 1998 board election to exclude proxies solicited based upon the false and misleading statements.

On appeal, the Alaska Superior Court upheld the hearing officer's ruling that Rudolph, Deitz, and CIRI Shareholders for CIRI Shareholders made false and misleading statements in their 1998 proxy solicitation materials, and failed to adequately correct such statements in later submissions. The court found that the Division's decision to fine Rudolph, Deitz, and CIRI Shareholders for CIRI Shareholders, and to order that the proxies solicited based upon the false and misleading statements be voided, was supported by the evidence, including evidence that Rudolph, Deitz, and CIRI Shareholders for CIRI Shareholders "knowingly violated the securities laws because (they) included a statement in the 1998 proxy solicitation that (they) had previously been told was false and misleading in the 1997 proxy solicitation." The court rejected arguments by Rudolph, Deitz, and CIRI Shareholders for CIRI Shareholders that the Division was without authority to impose penalties, that an Alaska Native corporation's proxy statements should be treated as political speech not commercial speech, and that their due process rights were violated during the administrative hearing.

"We are pleased with the Superior Court's decision, and we hope it will send a message that neither CIRI nor the state of Alaska will tolerate these sorts of false and misleading statements in future proxy campaigns," said Dr. Terry Simpson, chairman of the CIRI board.

Appellants have 30 days to appeal the ruling.

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