UPDATE 4-Ex-Monster executive charged over options scheme

(Adds Treacy pleading not guilty in paragraph 5, Bonica attorney comment in paragraph 7)

By Martha Graybow

NEW YORK, April 30 (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, brought by the U.S. Attorney's Office.

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.

Treacy, 50, pleaded not guilty at his arraignment, where he was released on a $2 million bond. If convicted in the criminal case, he faces as much as 25 years in prison and $250,000 in fines.

"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, Paul Shechtman, said that he was "disappointed that the SEC, unlike the United States Attorney's Office, determined that Tony Bonica had a role in this backdating scheme. The facts are to the contrary."

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.

Federal prosecutors, who investigated the case along with the New York division of the U.S. Postal Inspection Service, say the backdating scheme led to the fraudulent understatement of the company's compensation expenses by more than $300 million. (Additional reporting by Paritosh Bansal and Leslie Gevirtz) (Reporting by Martha Graybow, editing by Tim Dobbyn and Dave Zimmerman)