Related Federal Cases
- Joseph A. Kostelecky, Securities Fraud, North Dakota 2022 · New Mexico
- Christopher Agbaje, Law Firm Fraud, North Dakota 2023 · North Dakota
- Kenneth Ward, Wire Fraud, MT 2021 · California
- Daniel Colorado-Garcia, Wire Fraud, Nevada 2001 · North Dakota
- James Kenneth Ward, Wire Fraud, Montana 2024 · South Dakota
North Dakota Man Sentenced to 3 Years in Prison for Securities Fraud Scheme
A North Dakota man, formerly the executive vice president of U.S. operations at a publicly traded Canadian oil-services company, was sentenced yesterday to three years in prison for perpetrating a scheme to fraudulently inflate the company’s reported revenue that resulted in shareholder losses in excess of $886 million.
Joseph A. Kostelecky, 61, of Dickinson, engaged in a scheme to defraud while serving as the highest-ranking U.S. executive of Poseidon Concepts Corporation (Poseidon) from approximately November 2011 to December 2012.
Kostelecky previously pleaded guilty on October 13, 2021, admitting that, in his role, he caused Poseidon to falsely report approximately $100 million in revenue from purported long-term contracts with oil and natural gas companies that were Poseidon’s customers.
Kostelecky’s misconduct included fraudulently directing Poseidon’s accounting staff at the U.S. corporate headquarters in Denver, Colorado, as well as its field office in Dickinson, to record revenue from such contracts and then assuring management that the associated revenue was collectable, when he knew that the contracts either did not exist or that the associated revenue was not collectable.
After Poseidon reported a partial write-down of uncollectable accounts in its financial statements, resulting in a drop in the company’s stock price, Kostelecky fraudulently caused the issuance of a public filing falsely reporting that he had purchased a substantial number of shares of the company when, in fact, he had made no such purchase.
Kostelecky admitted that when the inflated revenue came to light at the end of 2012, Poseidon’s stock price plunged and the company was forced into bankruptcy, causing over $886 million in shareholder losses. Kostelecky further 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.
In addition to the prison sentence, Kostelecky was ordered to pay approximately $406.2 million in restitution.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division and Inspector in Charge Eric Shen of the U.S. Postal Inspection Service’s Criminal Investigations Group made the announcement.
The U.S. Postal Inspection Service Criminal Investigation Group’s DOJ Mail Fraud Team investigated the case.
Assistant Deputy Chief Anna G. Kaminska and Trial Attorney Jason M. Covert of the Criminal Division’s Fraud Section prosecuted the case. The Securities and Exchange Commission and the U.S. Attorney’s Office for the District of North Dakota provided valuable assistance.
Kostelecky is a resident of Dickinson, North Dakota, and was employed as the executive vice president of U.S. operations at Poseidon Concepts Corporation.
The exact charges brought against Kostelecky were not specified in the press release, but he was found guilty of perpetrating a scheme to defraud investors in a publicly traded company.
The scheme resulted in shareholder losses in excess of $886 million and Kostelecky was ordered to pay restitution in the amount of $406.2 million.
The sentencing occurred on an unspecified date, but Kostelecky previously pleaded guilty on October 13, 2021.
Kostelecky is currently serving a three-year prison sentence, which is the exact sentence he received.
Key Facts
- State: North Dakota
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
ðŸâ€Â’ Get the grimiest stories delivered weekly. Subscribe free →
