A former executive of U.S. operations at Canadian oil services company Poseidon Concepts was sentenced Monday to three years in prison and ordered to pay approximately $406.2 million in restitution for perpetrating a scheme to fraudulently inflate the company’s reported revenue.
Joseph Kostelecky’s misconduct resulted in shareholder losses of more than $886 million, according to the Department of Justice. Kostelecky admitted he caused the company to falsely report approximately $100 million in revenue from purported long-term contracts with oil and natural gas companies that were customers.
The misconduct occurred from approximately November 2011 to December 2012, according to court documents. Kostelecky previously pleaded guilty in October.
As part of his scheme, Kostelecky directed accounting staff at Poseidon’s U.S. corporate headquarters and a North Dakota field office to improperly record revenue from contracts. He assured management the associated revenue was collectable when it was not and caused the issuance of a public filing falsely reporting he purchased a substantial number of shares in the company, the Justice Department noted.
When the inflated revenue came to light in 2012, Poseidon’s stock price plunged, and the company went bankrupt, according to the Justice Department.
No comments yet