Milgram wins suit over penny stock scheme
TRENTON, N.J. (Legal Newsline) - A Spring Lake, N.J., resident was ordered to pay $5.1 million in penalties and restitution for violating the New Jersey Uniform Securities Law, state Attorney General Anne Milgram announced Wednesday.
Brian Smith was charged with 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.
During the trial, it was revealed that from 1999-2007, Smith sold unregistered Digital Gas securities to at least 200 investors but was not a registered agent.
"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."
As a result of the verdict, Smith is permanently barred from the securities industry and Smith and Digital Gas were ordered to pay $4,693,280 in restitution.
Each also had to pay $500,000 in civil penalties, and Lynn Smith (Smith's wife) was ordered to disgorge $809,237 in funds she received from her husband's scheme.