A former North Dakota energy executive is charged in federal court of falsely inflating company revenues by millions of dollars.
Dickinson resident, Joseph Kostelecky, is charged in the U.S. District of North Dakota with five counts of wire fraud and one count of securities fraud. He faces a maximum penalty of 20 years in prison on each count and maximum total fines of $6.25 million. He has pleaded not guilty.
Kostelecky served in the U.S. as an executive for Poseidon Concepts Corp., a fluid storage tank supplier based in Calgary, Alberta, Canada. Kostelecky was promoted to executive vice president in May 2012, a position he held until resigning in January 2013.
The indictment alleges that Kostelecky made false and misleading claims about finances in order to inflate the value of the company and stock price.
“As part of and in furtherance of the scheme, Kostelecky repeatedly undertook efforts to conceal the fact that millions of dollars of purported contract revenue did not exist or was not collectible,” the indictment says.
When investors learned that as much as $106 million of the company’s reported $148 million in revenue should not have been recorded, the company’s common stock collapsed from more than $13 per share to a paltry 18 cents per share.
Kostelecky’s trial will begin on March 7.
