A Bloomberg news report said the verdict—guilty on charges of securities fraud and conspiracy—came after a four-week trial and four hours of jury deliberations. The report said Treacy faces a jail term of as much as 25 years.
Prosecutors said Treacy backdated option grants by “papering” them as if they’d occurred on dates in the past when Monster’s stock price was at or near a periodic low point. None of those grants were accounted for as a compensation expense, as the law requires, prosecutors alleged.
According to the Bloomberg story, Treacy received more than 450,000 options on six dates from 1997 to 2001 and earned more than $24 million.
The news account said Treacy’s lawyers argued during the trial that Treacy’s options decisions were based on decisions by other Monster executives. The other Monster executives decided when to make the options awards and Monster finance officials figured out how to account for them, Treacy’s lawyers contended.
“This verdict brings us closer to the end of an unfortunate chapter in the company’s history and putting the issue firmly behind us,” Steve Sylven, a Monster spokesman, said in a statement, according to Bloomberg.
Bloomberg said Monster reported in 2001 that its net income was $69 million when it was really $3.4 million after options expenses were recorded, prosecutors said (see “SEC Slaps Former Monster Execs with Options Backdating Charge’). The company said in December 2006 that it had overstated earnings by $271.9 million in the previous nine years because of improperly recorded option grants. Prosecutors said the company understated compensation by $339 million
At least 225 companies have disclosed internal or federal probes involving options irregularities, and more than 140 have said they would restate financial results, according to the report.