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Justice News

Department of Justice
U.S. Attorney’s Office
District of Minnesota

FOR IMMEDIATE RELEASE
Friday, December 21, 2018

Wayzata Man Sentenced For Role In Stock Manipulation Scheme

Hoskins is the last defendant sentenced in fraud scheme

United States Attorney Erica H. MacDonald today announced the sentencing of DOUGLAS VAUGHN HOSKINS, 50, to 24 months of federal prison. HOSKINS was sentenced earlier today by Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minnesota. A federal jury convicted HOSKINS and RYAN RANDALL GILBERTSON, 42, of multiple counts of wire fraud, securities fraud, and conspiracy to commit securities fraud, on June 26, 2018, following an 11-day jury trial before Judge Schiltz.

GILBERTSON who was the founder of Dakota Plains Holdings, Inc., (“Dakota Plains”) was sentenced on December 11, 2018, to 144 months of federal prison.

Dakota Plains was a privately held company based in Wayzata, Minnesota that owned and operated a transloading facility in New Town, North Dakota. As proven in court, as part of the fraud scheme, GILBERTSON caused Dakota Plains to go public via a reverse merger with a company called Malibu Club Tan, which was a publicly traded shell company. GILBERTSON made it a secret condition of the reverse merger that HOSKINS, his friend and polo coach, be able to purchase the majority of the “float” of freely trading shares, which were the only shares that could trade publicly following the reverse merger. GILBERTSON then gave $30,000 to HOSKINS, who was deeply in debt and owed money to the IRS and other creditors, in order to purchase 50,000 shares of Dakota Plains stock at a price of $0.50 per share on March 23, 2012, the morning of the reverse merger.

On the first day of public trading, HOSKINS began selling his newly acquired shares for an inflated price of $12 per share at GILBERTSON’S direction, and continued to do so throughout the first 20 days of public trading following the reverse merger. Throughout that 20-day period, GILBERTSON, with the help of HOSKINS and others, manipulated the price of Dakota Plains stock to increase the average trading price to $11.30 per share. This inflated share price triggered a $32.8 million bonus payment to GILBERTSON and the other noteholders.

In the wake of the fraud scheme, HOSKINS was interviewed by the Securities and Exchange Commission (SEC) about his involvement in these stock sales. HOSKINS repeatedly lied under oath during the deposition, covering up both his and GILBERTSON’S involvement in the stock manipulation scheme. Among other things, HOSKINS claimed that he did not discuss the stock trades with any other individuals.

Ultimately, GILBERTSON made millions as a result of his stock manipulation scheme. HOSKINS made less money, but still pocketed more than $125,000 from his stock sales, much of which he used to purchase an Argentine polo pony.

“The expertise of our partners – the FBI, the U.S. Postal Inspection Service, and the Securities and Exchange Commission - brought to light a complex and detailed stock manipulation scheme, resulting in the convictions of Gilbertson and Hoskins,” said United States Attorney Erica H. MacDonald. “It is thanks to their tireless digging and collaboration that this case had a just outcome.”

This case is the result of an investigation conducted by the FBI and the United States Postal Inspection Service. United States Attorney MacDonald would also like to thank the Securities and Exchange Commission for their assistance on this matter.

This case was prosecuted by Assistant United States Attorneys Joseph H. Thompson, Kimberly A. Svendsen, and Melinda A. Williams.

The Criminal Docket Number for this case is: 17-cr-00066

Defendant Information:                 

DOUGLAS VAUGHN HOSKINS, 50
Wayzata, Minn.
 
Convicted:

  • Wire fraud, 2 counts
  • Conspiracy to commit securities fraud, 1 count
  • Securities fraud, 3 counts

Sentenced:

  • 24 months imprisonment
  • 1 year supervised release
  • $15,135,360 in restitution (owed jointly with defendant Gilbertson)

 

RYAN RANDALL GILBERTSON, 42

Delano, Minn.

Convicted:

  • Wire fraud, 14 counts
  • Conspiracy to commit securities fraud, 1 count
  • Securities fraud, 6 counts

Sentenced:

  • 144 months imprisonment
  • 2 years supervised release
  • $2 million fine
  • $15,135,360 in restitution (owed jointly with defendant Hoskins)

 

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United States Attorney’s Office, District of Minnesota: (612) 664-5600

Topic(s): 
Securities, Commodities, & Investment Fraud
Component(s): 
Updated December 21, 2018