U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17385 / February 27, 2002
SEC v. TRANS ENERGY, INC., LOREN E. BAGLEY, AND WILLIAM F. WOODBURN, U.S. District Court for the District of Columbia, Civil Action No. 1-01-CV-02060
On February 26, 2002, the United States District Court for the District of Columbia entered a permanent injunction against Trans Energy, Inc. (Trans Energy), its former president, Loren E. Bagley (Bagley), and its former vice president and principal financial officer, William F. Woodburn (Woodburn), permanently enjoining them from future violations of Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 12b-20, 13a-1, and 13a-13 thereunder. The Court's order further enjoins Bagley and Woodburn from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder and orders Bagley and Woodburn to each pay a $20,000 civil penalty. Trans Energy, Bagley, and Woodburn consented to entry of the permanent injunction and the imposition of civil penalties without admitting or denying the Commission's allegations.
The Commission's Complaint alleged that from 1998 through 2000, Trans Energy, at the direction of Bagley and Woodburn, disseminated a number of false and misleading statements to the investing public through press releases, wesbite postings, and Commission filings. Specifically, Trans Energy issued press releases in October 2000 touting a supposed $612 million worth of oil reserves. The Complaint alleged that Trans Energy had no reasonable basis to value the potential reserves at that amount. The Complaint further alleged that in a November 2000 posting on its website, Trans Energy inaccurately minimized the significance of the "going concern statement" included in its most recent filing with the Commission at a time when Trans Energy's ability to continue as a going concern was greatly in doubt. Additionally, the Commission claimed that in a December 2000 press release about its Chapter 7 bankruptcy, Trans Energy misled the investing public by failing to disclose that the bankruptcy arose from Trans Energy's inability to pay a $600,665.36 consent judgment entered earlier that year, and that a Chapter 7 trustee had been appointed. Finally, the Complaint alleged that Trans Energy's Commission filings from 1998 through 2000 misrepresented the status of, or failed to disclose the existence of, material lawsuits that resulted in over $1 million in consent judgments against the company. The Complaint alleged that Bagley and Woodburn, as Trans Energy's only officers, knew or were reckless in not knowing that the above statements were false and misleading.