Dickinson man settles fraud case by Jessica Holdman, February 10, 2015, Bismark Tribune
The U.S. Securities and Exchange Commission Friday charged Joe Kostelecky for his role in financial fraud committed by Alberta-based Poseidon Concepts Corp., a fracking water storage tank manufacturer. … Kostelecky was Poseidon Concepts Corp.’s only senior executive in the U.S. in 2012 and found himself a multimillionaire. He decided to use his new found wealth to support his alma mater, donating $30,000 to refurbish the weight room at the high school.
Also in 2012, Poseidon fradulently reported about $100 million in revenues for non-existent or uncollectable contracts, according to the SEC. The overstatement accounted for 64 to 72 percent of total revenues reported over the first three fiscal quarters of 2012.
“Kostelecky’s company sought to capitalize on the U.S. shale oil and gas boom in the Bakken formation and elsewhere by inflating revenues based on purported multimillion dollar agreements that never materialized,” said SEC Denver office director Julie Lutz. The SEC alleged that Kostelecky was among those responsible.
According to a complaint filed in federal court in North Dakota, Kostelecky told accounting staff to record revenues for contracts without supporting documentation. He was then alleged to have made false assurances to members of Poseidon’s management in Canada that the U.S. contracts were valid.
Kostelecky could not be reached for comment.
As a result of the false information, Poseidon issued three quarterly financial statements with inflated revenues. When the company later announced it would need to restate its financials, its stock price collapsed and the company filed for bankruptcy
As part of the $75,000 settlement, Kostelecky is barred from serving as an officer or director of a U.S. publicly traded company. Without admitting or denying the SEC’s allegations, he consented to a final judgment. A similar proceeding was filed by the Alberta Securities Commission against Poseidon’s senior management, including Kostelecky. [Emphasis added]