Ex-Monster executive charged over options scheme

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NEW YORK (Reuters) - A former chief operating officer at job recruitment Web site Monster Worldwide Inc <MNST.O> was charged on Wednesday with securities fraud and conspiracy in connection with an alleged scheme to backdate millions of dollars' worth of employee stock option grants.

By Martha Graybow

NEW YORK (Reuters) - A former chief operating officer at job recruitment Web site Monster Worldwide Inc <MNST.O> was charged on Wednesday with securities fraud and conspiracy in connection with an alleged scheme to backdate millions of dollars' worth of employee stock option grants.

James Treacy is accused of conspiring with other former top executives at Monster to systematically backdate option grants to company employees between 1997 and 2003, falsely inflating the company's earnings, according to an indictment filed in U.S. District Court in Manhattan.

He and another former Monster executive, ex-controller Anthony Bonica, also face civil charges filed by the U.S. Securities and Exchange Commission. Bonica was not named as a defendant in the criminal case.

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The charges are the latest to emerge from an investigation into the global employment listings service for options backdating, a practice in which option grant dates are changed retroactively to allow recipients to reap greater profit. The practice in itself is not illegal as long as it is properly disclosed and accounted for in financial statements.

"Mr. Treacy is completely innocent of these charges and looks forward to being vindicated at trial," said his lawyer, Evan Barr, a partner at Steptoe & Johnson LLP.

A lawyer for Bonica was not immediately available for comment.

Monster's former general counsel, Myron Olesnyckyj, pleaded guilty in March 2007 to criminal backdating-related charges. Former Chief Executive Andrew McKelvey was also charged with backdating violations, but the government agreed to defer prosecuting him because of his poor health and said it would drop the charges if he abides by the terms of the agreement.

Prosecutors say the backdating scheme led to the fraudulent understatement of the company's compensation expenses by more than $300 million.

Treacy, 50, was expected to be arraigned later on Wednesday, according to the U.S. Attorney's Office in Manhattan, which investigated the case along with the New York division of the U.S. Postal Inspection Service.

If convicted in the criminal case, Treacy faces a maximum prison sentence of 20 years on the securities fraud count and five years on the conspiracy charge, according to prosecutors.

(Additional reporting by Paritosh Bansal)

(Reporting by Martha Graybow, editing by Tim Dobbyn and Dave Zimmerman)