As part of an unusual deal with the government that will spare him being convicted of a crime or sent to prison, the multimillionaire founder of Monster.com, Andrew McKelvey, reported to be terminally ill with cancer, admitted he back-dated stock options for company employees and signed and certified falsified public filings with the SEC.
As part of the agreement, the U.S. Attorney's Office will defer prosecution of McKelvey, meaning the charges will be dismissed after 12 months, pending his good behavior and compliance with the agreement. In addition, McKelvey has agreed to pay Monster.com $8 million plus convert his 4.7 million shares from super voting rights to common rights. A super voting right counts 10 times more than a common one.
Sources told ABC News McKelvey's terminal illness played a part in determining the agreement.
In addition to Monster.com, a hugely popular job search site, at least 200 companies have come under investigation for the practice in which the issue date of stock options is manipulated to maximize profits for executives.
A former chief executive of Brocade Communications Systems, Gregory L. Reyes Jr., was sentenced to 21 months in prison Thursday and fined $15 million. He reportedly cried in court in San Francisco as federal Judge Charles Breyer told him, "This offense is about honesty."
In the case of McKelvey at Monster.com, federal officials say he boasted at company meetings that manipulating stock options was "akin to printing money on a printing press in the basement."
McKelvey's former general counsel at Monster.com, Myron Olesnyckyj, pleaded guilty last year and began to cooperate with U.S. postal inspectors in making the case against his former boss.
Olesnyckyj told authorities he repeatedly objected to the back-dating but that McKelvey responded, "Who will ever know?"
Officials said McKelvey "systematically" used the back-dated options to recruit and keep top executives by offering them, collectively, millions of dollars in compensation that "did not result in a reduction in the company's earnings."
The former general counsel told authorities that pressure to meet certain financial targets at the company "worked against his efforts" to end the back-dating practice.