The Brief Writer

Former chief operating officer of Monster Works, James Treacy, has been indicted for securities fraud in connection with the backdating of stock options.  The United States Attorneys' Office for the Southern District of New York issued a press release stating:

TREACY conspired with other former senior executives at Monster to systematically backdate stock option grants to Monster employees between 1997 and 2003, in an effort to provide profitable options to employees without recording the required compensation expenses, thereby falsely inflating Monster's earnings. As a result, Monster’s public filings with the United States Securities and Exchange Commission ("SEC") between 1997 and 2005 fraudulently understated the company’s compensation expenses by a total of more than $300 million.

Federal judge Colleen McMahon handed down a severe sentence to Samuel Israel III, co-founder of the hedge fund, the Bayou Group, for his role in a scheme to cheat investors.  The judge sentenced Israel to 20 years in prison for a fraudulent scheme involving more than $400 million.  The sentence was among the longest handed down in a white-collar case though Israel had pleaded guilty.

In sentencing Israel to 20 years, Judge McMahon noted that the Federal Sentencing Guidelines advised a sentence of more than 30 years in prison.  The judge cited Israel's cooperation with prosecutors as one of the factors mitigating his sentence.

Daniel Marquez, the other co-founder, was found to be less culpable and was sentence to just four years and three months.