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by Mike Caswell

Joseph Kostelecky, the former Poseidon Concepts Corp. senior vice-president awaiting trial for an accounting fraud that led to the downfall of the company, has agreed to plead guilty to criminal fraud charges. Prosecutors in North Dakota claimed that Mr. Kostelecky caused Poseidon to book tens of millions of dollars in non-existent revenue. The company, which had traded as high as $16.90 on the Toronto Stock Exchange, had to restate its financial results and went out of business.

The case had been scheduled for trial by jury in February, 2021, but that trial looks to have been averted, with prosecutors filing a plea agreement in federal court on Friday, Oct. 1. In the agreement, Mr. Kostelecky has agreed to plead guilty to charges of wire fraud and securities fraud. Prosecutors will dismiss four other counts against him. The charges carry a maximum sentence of 20 years, although Mr. Kostelecky will likely receive a much shorter jail term.

The plea agreement comes about eight years after the demise of Poseidon, a Calgary company that rented out tanks for storing the fluids used in hydraulic fracturing. The first sign of trouble for investors came in 2013, when the company reported that it would have to restate its revenue for the first nine months of 2012. The resulting restatement wiped out $95-million of the company's $148-million in revenue for the period. The stock, which had traded as high as $16.90 in 2012, hit 27 cents after the news. Two months later, the company delisted from the TSX, and it is now defunct.

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