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Monster Exec Pleads Guilty in Backdating Scandal

February 15, 2007
Related Topics: Corporate Culture, Ethics, Latest News

The former general counsel of Monster Worldwide pleaded guilty Thursday, February 15, to charges of securities fraud and conspiracy in connection with the backdating of employee stock options at the online recruitment company.

Myron Olesnyckyj, who also held the titles of senior vice president and secretary at Monster, faces up to 25 years in prison when he is sentenced. He also faces fines of more than $5.2 million and has agreed to forfeit $381,000, which he said was the amount of money he gained from the scheme, according to the Associated Press.

Monster fired Olesnyckyj in November. Longtime CEO Andrew McKelvey also resigned his post in the fall and later withdrew from his chairman’s seat on Monster’s board of directors.

According to the U.S. Attorney’s Office, Olesnyckyj conspired with other former senior executives at Monster to “systematically backdate stock option grants to Monster employees in an effort to fraudulently suppress Monster’s compensation expenses.” As a result, the company’s public filings with the Securities and Exchange Commission between 1997 and 2005 inflated its earning by more than $300 million. In December, the company restated its past earnings, reducing them by $339.6 million.

Also on Thursday, the SEC filed civil charges against Olesnyckyj in connection with the same backdating activities.

“Olesnyckyj knew that backdating was wrong but nonetheless went along with the scheme,” Mark Schonfeld, director of the commission’s Northeast regional office, said in a release that accompanied the SEC’s complaint. “Any lawyer who works at a public company should do everything possible to thwart fraud—not participate in it.”

From 1997 to 2002, Olesnyckyj and co-conspirators backdated all broad-based annual options grants to Monster employees, according the U.S. Attorney’s Office and the SEC complaint. During the same period, new hires at Monster were promised that they would be granted options at the lowest price within the 30 days following their start date.

To keep this fact from the company’s outside auditors, Olesnyckyj instructed Monster’s HR department in an e-mail: “No written document should ever state lowest price over the next 30 days! The auditor(s) will view that as backdating options and we’ll have charge to earning[s].”


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