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Ex-Blues owner Shanahan gets three years probation in federal case

ST. LOUIS - Former St. Louis Blues owner Michael Shanahan Sr. was ordered on Friday to pay nearly US$8 million in restitution and serve three years of probation for his role in backdating stock options.

The 68-year-old former chief executive officer of Engineered Support Systems pleaded guilty in July to one felony count of falsifying records of a publicly traded company.

Federal prosecutors say he and other ESS officials backdated stock options from 1996 to 2002 to enrich executives and board members of the company, which provided military equipment and support services.

"If I could do a stock transaction today and have it dated a month ago, I would start by selling my 401(k)," Assistant U.S. Attorney Jeff Jensen said. "Regular investors don't get the benefit of time travel."

Shanahan led a group of St. Louis businessmen who bought the Blues in 1986 and sold the NHL team in 1999.

About 200 people wrote letters on Shanahan's behalf highlighting his philanthropic and charitable contributions, said his lawyer Barry Short.

Shanahan did not admit to orchestrating the scheme, but in his plea agreement said he knowingly signed stock option award letters with a false date. He agreed to pay back $7.8 million.

In exchange for Shanahan's guilty plea and his agreement to co-operate in a case against another company official who later pleaded guilty, the government dropped other charges against him.

The government also agreed to drop charges against his son, Michael Shanahan Jr., 41, who agreed to report to a probation officer for a year.

The company's former chief financial officer, Gary Gerhardt of St. Charles, previously pleaded guilty to falsifying records of a publicly traded company. He is scheduled for sentencing Oct. 17. He agreed to make restitution of $1.8 million.

Engineered Support System's former controller, Steven Landmann, is scheduled for sentencing in November, after admitting he received about $500,000 of the backdating-related proceeds.

DRS Technologies Inc. acquired Engineered Support Systems in 2006.



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