Internet job site exec’s cooperation in probing options backdating earns him no time in jail

Internet job site exec’s cooperation earns no jail

NEW YORK — A former top executive of the company that runs the Monster job search Web site was rewarded for cooperating in a backdated stock option probe with a sentence of no jail time Tuesday by a judge who said he was troubled that so many companies cheated.

U.S. District Judge Jed S. Rakoff said Myron Olesnyckyj, a former Monster Worldwide Inc. vice president, can serve a year of probation rather than prison time because he helped investigators learn the extent of the fraud. He also ordered him to forfeit $381,000, representing the amount he illegally gained, and pay a $6,000 fine.

The judge said he found it “troubling that backdating stock options and the accounting fraud that it generated were seemingly so widespread in corporate America.”

He said the worst fears of people “that greed and manipulation will triumph” in corporate America over playing it straight were realized in the backdating scandal.

“Stripped to its essence, it was high-level executives seeking to line their pockets by telling lies and covering up those lies with accounting fraud,” Rakoff said.

Olesnyckyj, 48, of New Providence, N.J., had pleaded guilty to securities fraud and conspiracy to commit securities fraud, admitting that he illegally backdated millions of dollars in employee stock option grants. The charges carried potential penalties of up to 25 years in prison.

The scheme lasted from 1996 to 2006; he was accused of participating from 1996 to 2003. Monster went public in 1996. Olesnyckyj said during his plea that he and others agreed to backdate annual companywide stock option grants, choosing the dates of the grants after looking at the historical records of the company’s stock price movements.

Olesnyckyj, who also was the company’s general counsel and secretary, choked back tears as he apologized for his crimes.

“I cannot explain my actions nor do I excuse them,” he said.

Assistant U.S. Attorney Deirdre McEvoy said his cooperation was “truly extraordinary,” even before charges were brought in the case. She said he also cooperated with the Securities and Exchange Commission, setting the stage for other prosecutions.

Monster, whose job site competes with newspaper classifieds, is among scores of companies whose stock options backdating practices have been investigated by federal authorities.

Monster overstated the value of its earnings by more than $250 million between 1997 and 2005. Backdating involves issuing stock options retroactively to coincide with low points in the share price, thus boosting payouts. It can be illegal if it is not properly accounted for and disclosed to investors.

At least 135 U.S. companies have disclosed internal inquiries or government investigations, and at least 39 executives and board directors at 19 companies have been fired or have resigned.

The fraud at Monster was revealed after the company announced in July 2006 it might need to restate its finances to record additional charges for stock options expenses.