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After Fraudster Gilbertson Dakota Plains on Scienter Reger Found Liable 57% Co Reckless

By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - ESPN

SDNY COURTHOUSE, June 14 –  Bankrupt oil company Dakota Plains Holdings is seeking to decertify a class of investors suing for fraud after Dakota's Ryan Gilbertson was convicted of stock manipulation. 

  On December 21, 2020 in the U.S. District Court for the Southern District of New York there was a proceeding. Inner City Press covered it, and live tweeted some of it, below.

On June 14, the jury reached its verdicts: Reger liable, 57% (but not liable on insider trading); the company, reckless. Full verdict form on Patreon here.

From December 21, 2020: First up is Michael Rowe, saying there were other reasons for Dakota Plains' collapse, including a train crash near Montreal. 

Now argument turns to "Daubert" - that is, experts. Oral argument bingo: scienter. 

Now Mr. [Karl Jon] Breyer: Both Reger and Gilbertson both denied they owned more than 5% of the companies stock...

 The officers and director did the best as they could, they found nothing they had to disclose to the public, they don't have to disclose suspicions 

Plaintiffs' counsel: Our exhibit 119 is what the officers and directors privately disclosed to the SEC about what they said was securities fraud by Gilbertson... That should be sufficient to defeat this motion.  

On August 4, Judge Jed S. Rakoff held a proceeding, after reading a jury his legal instructions in US v. Sidney Scales. For this case, a trial date had to be selected.

One of the lawyers said two weeks in December were not possible. Judge Rakoff asked, Why not? The lawyer said, a vacation in Hawaii.

 Judge Rakoff joked, then the trial would have to be moved to Hawaii in December.
  On January 14, 2022 Judge Rakoff held a conference with the parties to discuss the upcoming trial. Counsel for the Officer and Director Defendants posed a lot of questions about how COVID could impact the trial, and asked if additional jurors will be sat.

And on June 6, it began. As he usually does, Judge Rakoff very quickly selected the jury. Then there was testimony about how promising Dakota Plains' business seemed, moving oil from the Dakotas by train to Philadelphia and elsewhere, how Jena Smith talked it up.

Meanwhile, Inner City Press obtained documents labeled confidential from a previous case, on Patreon here.

On June 7, Mike Reger was on the stand, being grilled on cross examination about articles and his emails about press releases, before the market opened. His own counsel barely objected and the word "potted plant" was heard.

Plaintiff attorney Steven Molo questioning
                        defendant Michael Reger
Plaintiff attorney Steven Molo questioning defendant Michael Reger, courtesy of Elizabeth Williams

On June 8, the CEO of Dakota Plains who said he was displaced when Reger brought forward Craig McKenzie as the new CEO testified, how shareholder complaints were a distraction to the expansion in North Dakota he was then working on.

Here are more documents on Patreon, this time the Nevada deposition of McKinzie, here.

On June 9, a stock analyst was on the stand testifying that Reger's stock sales drove Dakota Plains' valuation down. (The witness rather clumsily kept turning to the jurors and slowing down his speech).

Meanwhile, here is McKenzei's memo doling out $100,000 and more by unanimous written consent, referring to Dakota Plains' negotiations with Suntrust (now Truist), on Patreon here.

We'll have more on this.

The case is Jon D. Gruber v. Ryan R. Gilbertson, et al., 16-cv-9727 (Rakoff)


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