In Fraud Case, ND Oilfield Exec Ordered To Pay Back $400 Million
Also, he's going to federal prison for three years.
I know big whoop!
I can hear him now...
"I'm good for the $400 million, it's just my checkbook's in my other pants"
The "him" is 61-year-old Joseph Kostelecky from Dickinson, North Dakota, and in October of 2021 according to US News, Kostelecky entered a plea agreement
Joseph Kostelecky, of Dickinson, pleaded guilty to one count each of wire fraud and securities fraud. He faces up to 40 years in prison when he's sentenced Jan. 10. Prosecutors dropped four counts of wire fraud as part of the plea deal.
It appears sentencing didn't happen until April 2022 and it also appears shareholders would like their money back. So the court is asking Mr. Kostelecky to please pay back $406 million and also go to federal prison for three years. How's a guy supposed to come up with $400 million sitting in prison?
Kostelecky, what went wrong?
Well AP News breaks it down like this...
A former North Dakota oilfield executive whose false claims about his company’s value resulted in more than $886 million in shareholder losses has been sentenced to three years in federal prison and ordered to pay back $406 million.
The thing is the government had asked for a 20-year sentence. So only three years is a big win for Joe.
Seems Joe was a top-ranking oilfield executive for Poseidon Concepts Corp. and he pled guilty to having misrepresented the company's financial standings. Again from the AP...
Specifically, Kostelecky was accused of reporting about $100 million in revenue from long-term contracts that either didn’t exist or that Poseidon Concepts couldn’t have collected on. The company’s stock plunged after the fraud was uncovered and it was forced into bankruptcy in 2013
Yipes. Reminiscent of the Enron scandal of 2001 at a much smaller scale. Nobody is saying that Mr. Kostelecky's creative math directly netted him the money lost by investors, but the legal system does think he should at least pony up $400 million in reparations.
All buried in coffee cans hidden along a stone fence outside of Dickinson.
I was going Shawshank Redemption there. The restitution list of 6,648 potential payees varies from about $123 million at the top to $4.90 at the bottom. If I was Joe I'd start writing checks five bucks at a time.
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