Digital Gas, Inc.(fka DIGGQ)

[Buckey]

9/30/09 Star-Ledger Article

http://www.nj.com/news/index.ssf/2009/09/spring_lake_man_ordered_to_pay.html

Spring Lake man ordered to pay $5.1M for bilking more than 200 investors through shell company

By MaryAnn Spoto/The Star-Ledger
September 30, 2009, 8:49PM

MONMOUTH COUNTY -- A Superior Court judge in Monmouth County has ordered a Spring Lake man to pay more than $5.1 million in penalties and restitution for pushing worthless stocks from a fake company, authorities said today.

The judgment, reached Monday after a 10-day trial this summer, directs Brian Smith and his shell company Digital Gas to each pay $500,000 in civil penalties and $4.69 million in restitution related to a seven-year fraud, said Attorney General Anne Milgram.

Sitting in Freehold, Superior Court Judge Thomas Cavanagh found Smith operated a shell company and used the money from more than 200 investors to finance his personal lifestyle, including making home improvements and paying his mortgage, Milgram said.

Cavanagh also directed Smith’s wife, Lynn Smith, to turn over more than $809,000 she received form him.

Milgram said Cavanagh found Smith was an unregistered agent who sold unregistered Digital Gas securities from 1999 and 2007 and issued phony press releases on the internet to manipulate their price and demand to boost their value.

In October 2006, the state Bureau of Securities obtained a temporary order freezing the assets of Digital Gas and the Smiths. Digital Gas was a Michigan corporation that claimed to acquire propriety products in the fields of energy and waste management. But Cavanagh found the company to be a shell corporation with no known business operation and no known bank accounts or revenue.