The Securities and Exchange Commission (SEC) charged the co-founder of a Minnesota-based energy company with manipulating its stock price and concealing his control of the company to attain lucrative financial payouts.
The company’s other co-founder agreed to pay nearly $8 million to settle separate charges against him. Three others also are charged in the case.
The SEC filed a complaint against Ryan Gilbertson, who allegedly hatched and orchestrated the elaborate scheme to secretly siphon millions of dollars from Dakota Plains Holdings, which operates an oil-shipping rail facility in North Dakota. Gilbertson founded the company with Michael Reger.
According to the SEC’s complaint, Gilbertson enlisted friends and associates including Douglas Hoskins and Thomas Howells to choreograph extensive sales and purchases of Dakota Plains stock and cause the price to skyrocket from 30 cents to more than $11 per share during that 20-day period. The inflated stock price obligated Dakota Plains to make bonus payments totaling $32 million to Gilbertson, Reger, and others. After meeting his target to receive the bonus payments, Gilbertson ceased his alleged manipulation efforts. The stock price then steadily declined to pennies per share and was delisted a few months ago.
Hoskins and Howells are charged in the SEC’s complaint along with Gilbertson for allegedly participating in his stock manipulation activities.
As alleged in our complaint, Gilbertson enriched himself by more than $16 million through his secret control of the company while he and his associates defrauded shareholders and manipulated the stock price,” said David Glockner, Director of the SEC’s Chicago Regional Office. “Corporate insiders must fully disclose their stock ownership and trading activities and cannot abuse their power in order to secretly reward themselves.
The SEC’s complaint against Gilbertson, Hoskins, and Howells seeks monetary sanctions and injunctive relief as well as an officer-and-director bar against Gilbertson.
Read the full announcement here.