Former Monster Exec Gets Two Years In Stock Fraud Case

Monster Exec IndictedFormer Monster president and COO James Treacy was sentenced Wednesday to two years in federal prison on his conviction in May of stock options fraud.

In addition, Treacy was ordered to pay $6.3 million in fines and another $6.3 million in restitution.

Treacy is the only former Monster executive to receive prison time in connection with a stock options backdating scheme that netted the recipients – including Treacy – millions. Andrew McKelvey, who founded TMP Worldwide, which owned Monster, and was the company’s CEO and chairman, was accused of stock fraud, but because of his terminal pancreatic cancer, was allowed to defer his prosecution after he admitted his guilt in court. McKelvey died in November 2008.

The backdating plan worked by granting employees options at the lowest price during a particular period, guaranteeing that they would be “in the money.”

Prosecutors claimed during Treacy’s federal trial that he made as much as $24 million from the 450,000 backdated options they said he was given. They asked for a 12 1/2 year sentence.

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Treacy’s attorneys, presenting some 200 letters from friends and colleagues, asked for leniency, saying no executive in any other backdating case in the U.S. has been sentenced to more than 21 months.

The backdating scandal forced Monster in 2006 to restate its earnings for prior years by $271.9 million. That changed the company’s financial picture for several years, most significantly for 2001 when the initial $69 million profit was restated to be $3.4 million.

Treacy was given until Oct. 20th to report to prison.

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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