Wayzata man sentenced for role in stock manipulation scheme

Wayzata man sentenced for role in stock manipulation scheme Photo: U.S. Attorney's Office

December 21, 2018 03:02 PM

A Wayzata man was sentenced to 24 months in federal prison for his involvement in a stock manipulation scheme. 

According to the United States Attorney's Office, Douglas Vaughn Hoskins, 50, was convicted by a federal jury of multiple counts of wire fraud, securities fraud and conspiracy to commit securities fraud on June 26, following an 11-day jury trial before Judge Schiltz. 

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The founder of oil company Dakota Holdings, Inc., Ryan Randall Gilbertson, 42, was sentenced for the same crimes on Dec. 11 to 144 months in federal prison. 

RELATED: Former oil company president sentenced in connection to stock manipulation scheme

Authorities alleged that Gilbertson and his business partner founded Dakota Plains, Inc. in 2008. The privately-held company based in Wayzata owned and operated a transloading facility in New Town, North Dakota. 

The release alleges that Gilbertson and his partner concealed their involvement in the company by installing their fathers as the company's executives and two-person board of directors. And that he caused the company to issue $9 million in promissory notes to himself and other "corporate insiders."


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The notes reportedly paid 12 percent annual interest and included a provision that paid Gilbertson and the other noteholders a bonus based on the average trading price of the company's stock during the first 20 days of public training. Authorities allege Gilbertson then caused the company to go public via a reverse merger with a publicly traded shell company that operated a single defunct tanning salon in suburban Salt Lake City.

A secret condition of the reverse merger was alleged to be that Hoskins would be able to purchase the majority of the "float" of freely trading shares. Gilbertson then allegedly gave $30,000 to Hoskins, who was reported to be deeply in debt, to purchase 50,000 shares of Dakota Plains stock at a price of 50 cents per share on March 23, 2012 - the morning of the reverse merger.

That same day, Hoskins reportedly began selling his shares at a fraudulently inflated price of $12 per share.

Throughout a 20-day period following the reverse merger, authorities allege Gilbertson, Hoskins and others manipulated the price of Dakota Plains stock to increase the average trading price to $11.30 per share, triggering a $32.8 million bonus payment to Gilbertson and the other noteholders.

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Tommy Wiita

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