Progressive Rail Execs Sued for Fraud
Progressive Rail Execs Sued for Fraud
Progressive Rail, a Minnesota firm, has been recommended by the Santa Cruz County Regional Transportation Commission staff to become the rail operator for the Santa Cruz Branch Line.
Three members of Progressive Rail’s management team served together as officers and/or board members of Dakota Plains Holdings, a now bankrupt oil services company in the Midwest.
Craig McKenzie — CEO and Chairman of the Board at Dakota Plains Holdings. CEO and Chairman at Progressive Rail.
Dave Fellon — Director and Board Member at Dakota Plains Holdings. Owner and President at Progressive Rail.
Jim Thornton — Interim CFO and principal financial officer; and Executive VP for Strategy, General Counsel and Secretary at Dakota Plains Holdings. Managing Director - Legal at Progressive Rail.
In October, 2016 Co-Founders of Dakota Plains Holdings and associates of the Progressive Rail management team were charged with securities fraud by the U.S. Attorney, Minnesota District[1], and the U.S. Securities and Exchange Commission[2].
Although not directly named in the U.S. government’s lawsuits, all three Progressive Rail executives are named individually in another class action lawsuit[3] filed on July 10, 2017 regarding the same matter as detailed below.
To quote from the complaint filed:
“This securities fraud class action concerns a scheme hatched and orchestrated by defendants Gilbertson and Reger to enrich themselves and their accomplices by hiding their involvement in, and control of, Dakota Plains, since its inception, and then secretly and nefariously siphoning off millions of dollars from the public shareholders of the Company in various ways, including an elaborate price manipulation scheme involving its stock. This scheme was unknown to the investing public, but was known to or recklessly disregarded by each of the individually named defendants [including Dave Fellon, Craig McKenzie and Jim Thornton] who signed the Company’s Class Period SEC filings, all of which omitted to disclose this fraud until it was too late for any public shareholder to recoup any value from their investment in the Company.”
Dakota Plains Holdings declared bankruptcy in December 2016, three months after Craig McKenzie resigned as CEO in September 2016.
References
[1] UNITED STATES OF AMERICA, Plaintiff, v. RYAN RANDALL GILBERTSON,DOUGLAS VAUGHN HOSKINS, and NICHOLAS HARRIS SHERMETA, Defendants., U.S. Attorney, Minnesota District
[2] UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. RYAN GILBERTSON, THOMAS HOWELLS, and DOUGLAS HOSKINS, Defendants., U.S. Securities and Exchange Commission
[3] JON D. GRUBER, Individually And On Behalf Of All Others Similarly Situated, Plaintiff, v. RYAN R. GILBERTSON, MICHAEL L. REGER, GABRIEL G. CLAYPOOL, CRAIG M. MCKENZIE, TIMOTHY R. BRADY, TERRY H. RUST, PAUL M. COWNIE, DAVID J. FELLON, GARY L. ALVORD, and JAMES L. THORNTON, Defendants., SECOND AMENDED CLASS ACTION COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS