The Securities and Exchange Commission on Friday charged a Dickinson man with enabling financial fraud.
Joseph A. Kostelecky was Poseidon Concepts Corp.’s only senior executive in the United States at the time of allegedly fraudulent reporting of about $100 million in revenues for non-existence or uncollectable contracts, the SEC said in a news release.
The U.S. arm of the Calgary, Alberta-based business focused on renting above-ground fluid storage tanks for fracking operations.
Kostelecky is charged with directing Poseidon’s accountants to record revenues for “inadequately documented transactions” and with making false assurances to the company’s management in Canada. The company therefore issued three quarterly financial statements in 2012 that boasted “materially inflated revenues” while the stock was trading in the U.S. and Canada.
Without admitting to or denying the charges, Kostelecky settled with the SEC, agreeing to pay $75,000 and to not be an officer or director of any U.S. publicly traded company.
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“The magnitude of the overstatements was substantial, comprising approximately 64 to 72 percent of total revenues reported over the first three fiscal quarters of 2012,” according to the SEC.
“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 multi-million dollar agreements that never materialized,” SEC Denver office director Julie Lutz said in a statement.
The company eventually filed for bankruptcy. At the time, Poseidon was based in Calgary with subsidiary offices in Denver and Dickinson.
