id your broker recommend investing in Dakota Plains Holdings, Inc and you suffered financial losses? Were you a client of NICHOLAS HARRIS SHERMETA (CRD#: 2414010), formerly with NORTHLAND SECURITIES, INC. in Minneapolis, Minnesota, who was barred by the SEC from acting as a broker or investment adviser or otherwise associating with firms that sell securities or provide investment advice to the public and was charged with 5 counts of wirefraud?
There was a 13 count indictment issued in March of 2017 by the US Attorney, charging RYAN RANDALL GILBERTSON, 41, founder of Dakota Plains, Inc., DOUGLAS VAUGHN HOSKINS, 48, and NICHOLAS HARRIS SHERMETA, 49, with wire fraud stemming from a complex stock manipulation scheme resulting in the company owing more than $30 million in fraudulent bonus payments.
Dakota Plains Holdings, Inc. is an integrated midstream energy company operating the Pioneer Terminal with services that include outbound crude oil storage, logistics, and rail transportation and inbound frac sand logistics. According to the indictment, in December 2008, GILBERTSON and his business partner founded Dakota Plains, Inc., a privately held Minnesota corporation that owned and operated a transloading facility in New Town, North Dakota, for loading crude oil onto trains for transport to oil refineries.
In 2012, GILBERTSON arranged for Dakota Plains to become a publicly traded company by entering into a “reverse merger” agreement with MCT Holding Corporation, an alleged public shell company that owned a single defunct tanning salon in Salt Lake City. Allegedly, at GILBERTSON’s direction, HOSKINS, who was a polo player and manager for GILBERTSON ‘s polo team, purchased 50,000 freely trading shares of MCT stock and opened a trading account with a broker in Salt Lake City, which would allow him to sell the MCT stock. HOSKINS, who had no prior investing experience or assets and a significant amount of debt, received $30,000 from GILBERTSON to purchase the stock. On March 23, 2012, following the merger of Dakota Plains with MCT, Dakota Plains Holdings became a publicly traded company. According to the indictment, on the first day of public trading, HOSKINS offered to sell his newly acquired shares for an inflated price of approximately $12 per share at GILBERTSON’S direction, and continued throughout the first 20 days of trading. During this same time, SHERMETA, who allegedly had a series of bogus consulting agreements with GILBERTSON, began purchasing shares of Dakota Plains stock on behalf of both himself and his clients at inflated prices without their knowledge.
Throughout the 20-day period following the reverse merger, GILBERTSON, along with the help of SHERMETA and HOSKINS, manipulated the price of Dakota Plains stock to increase the average trading price to $11.30 per share which triggered a bonus payment of approximately $32 million to GILBERTSON and the other noteholders. GILBERTSON, who controlled 40 percent of the Notes, was entitled to more than $12 million in bonus payments.
The company’s stock went from a low of 30 cents to $12 a share in the first few weeks of trading. After receiving bonus payments, the manipulation allegedly ended and the stock tumbled, falling to pennies and eventually was delisted.
NICHOLAS HARRIS SHERMETA, according to FINRA’s BrokerCheck, had been in the securities industry for 22 years and was listed with 7 firms, the last two listed below:
11/25/2011 – 11/09/2016 NORTHLAND SECURITIES, INC. – MINNEAPOLIS, MN
06/06/2002 – 11/28/2011 FELTL & COMPANY – MINNEAPOLIS, MN
If you were a victim of this alleged fraud and unknowingly purchased inflated shares of Dakota Plains Holdings, Inc. from NICHOLAS HARRIS SHERMETA or another broker and suffered investment losses, call Soreide Law Group for a no-cost consultation regarding the possible recovery of your financial losses at: 888-760-6552.
Soreide Law Group operates on a contingency fee basis and we represent our clients nationwide before FINRA.