Stuart Rabner, Attorney General
Division of Consumer Affairs
Stephen B. Nolan, Acting Director
For Immediate Release:
October 13, 2006
For Further Information Contact:
Kara Wood 973-504-6327
Consumer Information:


Penny Stock Digital Gas (DIGG.PK), Three Individuals Ordered to Cease Securities Related Activities, Assets Frozen State Seeks Restitution and Civil Monetary Penalties

NEWARK - Digital Gas, Inc., Brian Smith of Spring Lake, and William Brown of Bowmanville, Ontario, Canada, were charged with securities fraud in court papers filed Wednesday by the New Jersey Bureau of Securities, Attorney General Stuart Rabner, Consumer Affairs Acting Director Stephen B. Nolan and Bureau of Securities Chief Franklin L. Widmann announced.

In court papers, the Bureau of Securities alleges that Smith and Brown issued unregistered Digital Gas stock to themselves and their associates by creating fraudulent corporate documents. In addition, Smith generated false press releases on the Internet to manipulate the price and demand of the stock for his own benefit and the benefit of his associates, the Bureau charges, and Smith used Digital Gas funds for his personal benefit, including paying for renovations on his home.

“Smith and Brown went to great lengths to rip off honest investors for their own personal benefit,” said Attorney General Rabner. “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 and is reported on the pink sheets as DIGG.PK. The Bureau alleges that Digital Gas is a shell corporation with no known business operations. Digital Gas has no known bank accounts or revenue.

An ex parte Order to Show Cause, signed October 10, 2006 by Superior Court Presiding Chancery Judge Alexander D. Lehrer temporarily banned Digital Gas, Inc., Smith and Brown from the following:

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; and
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, Brian Smith and his wife, Lynn Smith, also of Spring Lake, including real property, personal property, checking and savings accounts, brokerage and trading accounts, Digital Gas stock certificates, and all other assets. A follow-up hearing is scheduled for November 3, 2006.

“Digital Gas was little more than a front for Brian Smith’s illegal activities. Smith enriched himself at the expense of investors,” said Acting Director Nolan. “Digital Gas and Smith are now prohibited from engaging in their unlawful securities related activities. By the Bureau’s action, this illegal activity has been stopped and the first step has been taken toward ensuring the defendants won’t profit from this scheme.”

The Bureau also alleges that Brian Smith and Brown used fraudulent corporate resolutions to cause the transfer agent to issue shares of DIGG publicly traded stock. As of May 23, 2006, transfer records showed over 24 million DIGG shares available for public trading. This scheme has resulted in the loss of millions of dollars to Digital Gas and its investors.

“This conduct is yet another demonstration of how the thinly traded over the counter market can be corrupted for the gain of a few at the significant expense of the investing public” Widmann said. “Here, Brian Smith, using his undisclosed control of the company, issued false press releases to make a virtually non-existent company appear to have many commercial prospects. This is a classic pump and dump scheme.”

The investigation was conducted for New Jersey by Chief Investigator Rick Barry, Supervising Investigator James Lane and Investigators Julian Leone, Isaac Reyes and Thomas LaGreca of the Bureau of Securities. Deputy Attorneys General Anna Lascurain and Chris Gerold handled the matter for the Division of Law.


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