The co-founder of a Bakken Shale midstream operator has been charged with allegedly operating a stock scheme that allowed him to collect millions in bonus payments.

Ryan Gilbertson, who co-founded Dakota Plains Holdings in 2008 with Michael Reger, is facing 13 wire fraud charges.

Gilbertson, as president, and Reger, as CEO, co-founded Northern Oil and Gas Inc. and they later created affiliate Dakota Plains, both based in Wayzata, MN. Dakota Plains was publicly launched in 2012. Northern operates oil and gas leases in the Bakken. Dakota Plains, which owns a facility in North Dakota that loads crude into rail cars, filed for Chapter 11 last December.

The U.S. Securities and Exchange Commission (SEC) in 2015 said it was investigating the initial public offering (IPO) concerning $9 million in loans made to the company by the partners. The promissory notes included an escalator clause that paid noteholders a bonus based on its stock price during its first 20 days of trading.

When it launched, Dakota Plains shares initially rose to $12 and remained near that price for 20 days before declining, never reaching that level again.

Last summer the alleged stock manipulation scheme was mentioned in a Wells notice issued by SEC against Reger, who was the second-largest participant in the loan package. He, in turn, was fired last August by Northern. SEC last fall ordered him to repay $6.5 million plus a $750,000 fine and $669,365 in accrued interest.

According to the indictment against Gilbertson issued earlier this month, he instructed an additional payment provision be included in the Dakota Plains IPO that stated bonus payments would be paid to noteholders if the average stock price exceeded $2.50/share in the first 20 days of trading. If the average share price rose above $2.50, the bonus payments were increased in tandem.

Dakota Plains launched under a reverse merger agreement with MCT Holding Corp., which owned a tanning salon in Salt Lake City, court documents said. According to court filings, Gilbertson, who owned about 40% of Dakota Plains notes, sent Wayzata resident Douglas Hoskins $30,000 to purchase 50,000 shares of MCT. On the day it debuted, Hoskins, who managed Gilbertson’s polo team, was directed to sell MCT shares at an inflated price of $12/share.

Minnetonka, MN-based stockbroker Nicholas Shermeta also was involved in the scheme, according to the indictment. Shermeta allegedly purchased MCT shares on the debut trading day at the inflated $12 price under his name and his clients’ names without their knowledge. The activities by Hoskins and Shermeta helped raise MCT’s average trading price to $11.30/share, resulting in the payout of $32.9 million in bonuses to noteholders, SEC said. Gilbertson’s 40% share translated to about $12 million in bonus payments.

In addition to the charges against Gilbertson, Hoskins faces seven counts of wire fraud and Shermeta was charged with five counts of wire fraud.

Gilbertson’s attorney said his client would contest the charges.

“One day before the five-year statute of limitations would bar any charges against Ryan Gilbertson, the U.S. attorney has brought these unsupportable charges,” said attorney William Mauzy. “The stale and meritless SEC alleged regulatory violations have been simply repackaged as a criminal case.”