and more Spring Lake man named in fraud charges Posted by the Asbury Park Press on 10/14/06
STAFF REPORT
NEWARK — A Spring Lake man accused of using a shell company to rip off investors and manipulate the company's stock price to benefit himself was among two people charged with securities fraud in court papers filed Wednesday by the New Jersey Bureau of Securities.
Brian Smith of Spring Lake and William Brown of Bowmanville, Ontario, Canada, issued unregistered Digital Gas stock to themselves and their associates by creating fraudulent corporate documents, the bureau alleges, according to a press release from Stephen B. Nolan, acting director of the state Division of Consumer Affairs in the Attorney General's Office.
Smith generated false press releases on the Internet to manipulate price and demand for the stock to benefit himself and his associates, the bureau alleges. He used some of his profits to pay for renovations to his home, the bureau charges.
"Smith and Brown went to great lengths to rip off honest investors for their own personal benefit," Attorney General Stuart Rabner said. "It is critical that we put an immediate halt to these activities and secure restitution for those whose money was stolen. That is exactly what we are doing now."
Digital Gas is a Michigan corporation that publicly trades on the over-the-counter market. The bureau alleges it is a shell corporation with no known business operations, bank accounts or revenue.
Superior Court Judge Alexander D. Lehrer, in an order signed Oct. 10, temporarily banned Digital Gas, Smith and Brown from:
Any conduct in violation of the New Jersey Uniform Securities Law.
Selling unregistered securities.
Acting as unregistered broker-dealers and agents.
Employing unregistered agents.
Destroying or concealing documents.
Selling or promoting the sale of securities or issuing any press releases in violation of the securities law.
The order also froze the assets of Digital Gas, Smith and his wife, Lynn Smith, also of Spring Lake, including real property, checking and savings accounts, brokerage and trading accounts, Digital Gas stock certificates and all other assets.
A follow-up hearing is scheduled for Nov. 3.
The bureau also alleges Brian Smith and Brown used fraudulent corporate resolutions to cause the transfer agent to issue shares of Digital Gas publicly traded stock. As of May 23, transfer records showed more than 24 million Digital Gas shares available for public trading.