U.S. Department
of Justice
United States v. Joseph A. Kostelecky
PENDING CRIMINAL DIVISION CASES
United States v. Joseph A. Kostelecky
Court Docket No.: 1:17-cr-00015 (D. North Dakota)
Court Assigned: This case is assigned to District Judge Daniel M. Traynor, U.S. District Court for the District of North Dakota, William L. Guy Federal Building, U.S. Courthouse, 220 East Rosser Ave., Bismarck, ND 58501.
Latest Update: On April 4, 2022, defendant Kostelecky was sentenced to 36 months of imprisonment, followed by three years of supervised release. In addition, Kostelecky was ordered to pay $406,241,620.04 in restitution.
It is important for you to know that just because the Court ordered the defendant to make restitution in this case, it does not mean that the defendant is financially capable of making restitution at this time. In the event that sufficient restitution payments are received from the defendant, the funds will be distributed by the United States District Court for the District of North Dakota. Please note that the funds may only amount to a portion of your loss, and a portion of the grand total of restitution ordered. You will be notified of any future payments in the event that more sufficient restitution payments are received. To learn more about the restitution amount to which you may be entitled, please contact the Clerk of the United States District Court for the District of North Dakota.
Criminal Charges: On January 6, 2017, Joseph A. Kostelecky, a former vice president of U.S. operations at a now-defunct publicly traded Canadian oil-services company, was indicted for orchestrating a scheme to fraudulently inflate the company’s reported revenue by approximately $100 million.
Kostelecky was charged with five counts of wire fraud and one count of securities fraud for his alleged role in the scheme. The indictment alleges that between November 2011 and December 2012, Kostelecky, the sole executive in Poseidon Concepts Corporation’s U.S. division, engaged in conduct that caused the company to falsely report approximately $100 million in revenue from purported contracts with oil and natural gas companies. Kostelecky’s alleged misconduct included fraudulently directing the company’s accounting staff at the U.S. corporate headquarters in Denver to record revenue from such contracts and then assuring management that the associated revenue was collectable, when he knew that such contracts either did not exist or that the associated revenue was not collectable.
When the inflated revenue came to light at the end of 2012, the company’s stock fell precipitously, with shares losing close to $1 billion in value, and the company was forced into bankruptcy. The indictment alleges that Kostelecky perpetrated the scheme in order to inflate the value of the company’s stock price and to enrich himself through the continued receipt of compensation and appreciation of his own stock and stock options.
Kostelecky made his initial appearance on January 6, 2017, before U.S. Magistrate Judge Charles S. Miller Jr. of the District of North Dakota and was released on a personal recognizance bond.
For more information about the charges, please see below:
Press Release – January 6, 2017
Press Release – October 13, 2021
Plea Agreement
Indictment
Victim Impact Statement: If you would like to submit a Victim Impact Statement, you may do so by mailing the Victim Impact Statement below to: Victim Witness Unit, U.S. Department of Justice, Criminal Division, Fraud Section, 10th & Constitution Avenue, NW, Bond Building, Room 4416, Washington, DC 20530. You also may submit the Victim Impact Statement via email at Victimassistance.fraud@usdoj.gov or by fax at: (202) 514-3708. Please note: As a result of the COVID-19 pandemic response, statements submitted by regular mail and fax may be delayed. For that reason, victims are highly encouraged to submit Victim Impact Statements by e-mail to: Victimassistance.fraud@usdoj.gov..
The information on this website will be updated as new developments arise in the case. If you have any questions, please call the Victim Assistance Line toll-free at (888) 549-3945 or email us at victimassistance.fraud@usdoj.gov.
Presumption of Innocence: It is important to keep in mind that defendants are presumed innocent until proven guilty and that presumption requires both the court and our office to take certain steps to ensure that justice is served.
Crime Victims’ Rights Act and Right to Retain Counsel: The Crime Victims’ Rights Act (18 U.S.C. § 3771) applies only to victims of the counts charged in federal court, and thus individuals may not be able to exercise all of these rights if the crime of which the individual is a victim was not charged. Section 377I(c)(2) of this Act requires that we advise you that you have the right to retain counsel. Although the statute specifically sets forth your right to seek advice of an attorney with regard to your rights under the statute, there is no requirement that you retain counsel. The Government may not recommend any specific counsel, nor can the Government (or the Court) pay for counsel to represent you. Government attorneys represent the United States.
If you elect to obtain counsel to represent your interests, please have your attorney notify this office in writing at: U.S. Department of Justice, Criminal Division, Fraud Section, 10th & Constitution Avenue, NW, Bond Building, 4th Floor, Washington, DC 20530, Attention: Victim Witness Unit; fax: (202) 514-3708; or email: victimassistance.fraud@usdoj.gov. If you elect not to retain counsel to represent your interests, you do not need to do anything.
Plea Agreements: Please be aware that many criminal cases are resolved by plea agreement between the Department of Justice and the defendant. You should also know that it is not unusual for a defendant to seek to negotiate a plea agreement shortly before trial is scheduled to begin. Plea agreements can be made at any time and as late as the morning of trial, leaving little or no opportunity to provide notice to you of the date and time of the plea hearing. If the court schedules a plea hearing in this case, we will use our best efforts to notify you of available information as soon as practicable. If you want to inform the prosecutor of your views regarding potential plea agreements, or any other aspect of the case, please call the Victim Assistance Line toll-free at (888) 549-3945 or email us at victimassistance.fraud@usdoj.gov, and we will put you in touch with the prosecutor.