U.S. exec sentenced in Calgary firm’s accounting fraud

The U.S. perpetrator of an accounting fraud at a Canadian oil services firm, Poseidon Concepts Corp., has been sentenced to jail time and ordered to pay over US$400 million in restitution.

Last October, the former executive vice-president of U.S. operations at Calgary-based Poseidon Concepts, Joseph Kostelecky, 61, pled guilty to securities fraud and wire fraud for causing the company to overstate revenues by approximately US$100 million in 2011 and 2012.

The U.S. Department of Justice (DoJ) said that Kostelecky admitted “that he perpetrated the scheme to inflate the value of the company’s stock price in order to enrich himself through the continued receipt of compensation and appreciation of his own stock and stock options.”

When the accounting fraud was uncovered, the company’s stock price plunged. Ultimately, the scheme led to the company’s collapse, with shareholders losing more than US$886 million as a result.

Now, Kostelecky has been sentenced to three years in prison. He was also ordered to pay approximately US$406.2 million in restitution.

Previously, he was sanctioned by the Alberta Securities Commission and the U.S. Securities and Exchange Commission.

Additionally, in 2018, shareholders settled a class action against the company, its directors, auditor and underwriters for $36.6 million.

Staff

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