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James J. Treacy may have helped you find a job, but years after he left Monster.com , he was sent to prison over paperwork there. Treacy, the former chief operating officer of Monster Worldwide, served the longest prison sentence in the backdated-options frenzy : two years.
Now he’s out—though he’s still banned from running public corporations—and last week, he shared some of his experience with Fox Business .
When initially contacted about backdating, Treacy says, he “didn’t even bother to call a lawyer.” He’s learned from that mistake. Now, he says executives should start getting to know lawyers even before they’re charged with anything—even before they have any specific concerns:
When you hit a certain level in the white-collar world, you should be out cultivating a relationship with a white-collar defense lawyer that you’re comfortable with, and you go to … him or her once or twice a year, just like you go to the dentist or the doctor, your tax accountant [or] your financial advisor: What’s going on in the world? What are the issues I have to watch for? How is this game really played? Hopefully it never happens to you, but it’s worth spending the money, and then if an issue ever comes up, you’ve got somebody you trust, somebody who knows you, somebody who’s advised you, and you go right to it.
This ought to sound absurd: Why should executives go around preparing themselves to be prosecuted? But, sadly, it is sensible. As the backdated-options frenzy shows, the fact that you have never heard of a regulation does not mean that you will not find yourself facing prison for violating it. And there’s so much criminal law in the business world now, and so much regulation that might one day be treated as criminal law, that executives need to be prepared to deal with it. They need lawyers they can trust—lawyers whose loyalty is to them, not to their corporations.
But as troubling as it is that knowing a criminal lawyer should be a good idea, there’s something scarier: There is so much criminal law out there that even lawyers can’t keep track.
For more on the backdated-options frenzy, read Roger Donway's book Rich-Hunt: The Backdated-Options Frenzy and the Ordeal of Greg Reyes , and his continuing series of articles .