A former oil company executive has been charged in federal court for allegedly scheming to inflate his company’s reported revenue by $100 million, according to the Department of Justice.
Joseph Kostelecky, of Poseidon Concepts Corporation, is facing five counts of wire fraud and one count of securities fraud for his role in a scheme that caused the company to falsely report in 2012 that it has more than $100 million in contracts with various oil and gas entities when in fact it did not.
As a result of his misrepresentation, Poseidon Concepts collapsed and thousands of investors lost money. Poseidon filed for bankruptcy protection in 2013 and sold its operations in the U.S. within a few months.
In 2015, Kostelecky entered into a settlement with the SEC regarding his role in artificially inflating the value of Poseidon Concepts, agreeing to pay a $75,000 fine and agreeing to a ban from serving as an officer or director of any U.S. publicly-traded company.
Kostelecky’s admission caused the value of the stock to tumble and shares lost nearly $1 billion in value. According to allegations from the SEC, his actions caused between a 64 to 72 percent disparity between the actual company income and its reported value.
The scheme unraveled when an operations controller for the company directly contacted the companies that Poseidon Concepts was supposed to be dealing with. Upon discovering the truth, the employee notified the company’s board of directors.
After Poseidon Concepts disclosed the fraud, the stock lost almost 99 percent of its value in only three months.
Call a Los Angeles Securities Fraud Lawyer Today
If you invested with Joseph Kostelecky or Poseidon Concepts Corporation, or suffered a loss and suspect your broker of securities fraud, you may have certain legal rights that require your immediate attention.
Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.