For perpetrating a scheme to fraudulently inflate the company's reported revenue, a former executive of Poseidon Concepts' U.S. operations was sentenced to three years in prison and ordered to pay approximately $406.2 million in restitution on Monday.
According to the Department of Justice, Joseph Kostelecky's misconduct cost shareholders more than $886 million. Kostelecky admitted causing the company to falsely report approximately $100 million in revenue from ostensibly long-term contracts with customers, including oil and natural gas companies.
According to court documents, the misconduct occurred between November 2011 and December 2012. In October, Kostelecky pleaded guilty to the charges.
As part of his scheme, Kostelecky directed accounting staff at Poseidon's corporate headquarters in the United States and a field office in North Dakota to record contract revenue incorrectly. The Justice Department noted that he assured management that the associated revenue was collectible when it was not, and that he caused the issuance of a public filing falsely reporting his purchase of a substantial number of shares in the company.
According to the Justice Department, Poseidon's stock price plummeted after the inflated revenue was revealed in 2012, and the company went bankrupt.
By fLEXI tEAM