Dakota Plains President Indicted For Wire Fraud
A federal grand jury in Minneapolis indicted the former president of Dakota Plains Holdings, which operated the crude oil rail loading terminal at New Town, ND, and two other men not connected with the company on charges of wire fraud.
Federal authorities said Ryan R. Gilbertson, 41, of Delano, MN, a co-founder of Dakota Plains, was charged with 13 counts of wire fraud. Also indicted on seven counts of wire fraud was Douglas Hoskins, 48, of Wayzata, MN. Five counts of wire fraud were charged against Nicholas Shermeta, 49, of Minnetonka, MN.
The criminal action follows a settlement reached with Michael Reger, the ousted CEO of Northern Oil and Gas, who paid a $7.9 million to the Securities and Exchange Commission for failing to disclose investments in Dakota Plains.
According to the SEC, Reger, 40, and Gilbertson, reaped $32 million from the initial public offering of Dakota Plains stock even though their financial involvement with the company remained undisclosed.
Gilbertson, Shermeta, and Hoskins operated a stock scheme to defraud investors,” said Shjea Jones, special agent in charge of the Internal Revenue Service’s field office in St. Paul. “Those individuals who engage in this type of stock manipulation fraud should know they will not go undetected and will be held accountable,” Jones said.
According to the indictment, Gilbertson in early 2012 arranged for Dakota Plains to become a publicly traded company by entering into a reverse merger agreement with MCT Holding Corp.
Gilbertson directed Hoskins, who was a player and manager for Gilbertson’s polo team, to buy 50,000 freely trading shares of MCT stock and then open an account with a broker in Salt Lake City.
Hoskins got $30,000 from Gilbertson to buy the stock, and on March 23, 2012, Dakota Plains become a publicly traded company,
According to the indictment, Gilbertson manipulated the price of Dakota Plains stock in the first 20 days of trading, running it up to $11.30 a share. As a result of the secret investment, Reger, Gilbertson and the other note holders received $32.8 million and Gilbertson got $12 million of that as his share.
According to the indictment, all three received bonuses when the stock price exceeded $2.50 a share, and the bonuses increased as the stock price went up.