Digital Gas, Inc.(fka DIGGQ)

[scion]

A New Jersey judge has ordered a broker to pay $5,193,280 in penalties and restitution for violating the New Jersey Uniform Securities Law by fraudulently operating a publicly-traded penny stock shell company, Digital Gas Inc., fraudulently issuing stock and issuing false press releases to boost the value of that stock.


Avoid Brokers Pushing 'Fishy' Stocks
Investors getting $4 million restitution in NJ Case

September 30, 2009
http://www.consumeraffairs.com/news04/2009/09/nj_penny_scam.html

More Scam Alerts ...

The stock market has been in a sustained rally since March, tempting more and more investors -- burned by Wall Street's free-fall that began one year ago, to take another look at stocks.

For those putting a toe back in the water, the best advice is to proceed cautiously and beware of anyone pushing a "sure thing."

A New Jersey judge has ordered a broker to pay $5,193,280 in penalties and restitution for violating the New Jersey Uniform Securities Law by fraudulently operating a publicly-traded penny stock shell company, Digital Gas Inc., fraudulently issuing stock and issuing false press releases to boost the value of that stock.

Superior Court Judge Thomas W. Cavanagh, entering a final decision in a suit brought by New Jersey Attorney General Anne Milgram and the New Jersey Bureau of Securities, permanently barred broker Brian Smith of Spring Lake from the securities industry, and ordered him to pay $4,693,280 in restitution.

The judge also ordered Smith and Digital Gas to each pay $500,000 in civil penalties, and ordered Lynn Smith, Smith's wife and co-defendant, to disgorge $809,237 in funds she received from her husband's scheme.

Judge Cavanagh filed his decision following a 10-day civil trial which concluded in June in his Monmouth County courtroom. He found that for seven years, from 1999 to 2007, Smith sold unregistered Digital Gas securities to at least 200 investors but was not a registered agent.

The judge also found that Smith issued press releases that manipulated the price and demand for Digital Gas and concluded that Brian and Lynn Smith used investor funds for their personal benefit, including home improvement and mortgage expenses related to their Spring Lake home.

The Bureau of Securities had obtained a temporary order in October 2006 freezing the assets of Digital Gas and the Smiths. While Digital Gas is currently in a Chapter 7 Bankruptcy in Michigan, the Smiths' assets, including their home in Spring Lake, are subject to collection efforts by the Bureau of Securities.

"This case is another example of why investors need to carefully research company backgrounds before investing their hard earned money," Milgram said. "It is also why we urge consumers to check with our Bureau of Securities to determine whether securities are properly registered."

Digital Gas was a Michigan-based corporation that publicly traded on the Over-The-Counter market as DIGG.PK. The Bureau of Securities charged that Digital Gas was a shell corporation with no known business operations, although its Website claimed it was a business incubator for new technologies in the energy and natural resource fields.

The judge found it had no bank accounts in its name, and that Smith used fraudulent corporate resolutions to cause a transfer agent to issue shares of the stock.

http://www.consumeraffairs.com/news04/2009/09/nj_penny_scam.html