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                SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.

LITIGATION RELEASE NO. 15083 / September 27, 1996

SECURITIES AND EXCHANGE COMMISSION V. RUSSELL S. SMITH, JAMES O.
FOUST, JOHN E. BURSE, AND JAMES E. FISHER, Civil Action No.      
1:96cv-166-R (W.D.Ky. September 27, 1996) (TBR)

     The Securities and Exchange Commission today sued four
individuals currently or formerly associated with an Albany, KY
oil exploration company for their roles in selling working
interests in the company's oil properties.

     The suit, filed in Federal District Court for the Western
District of Kentucky, alleges the following:

     Russell S. Smith, president of Smitco Oil, Inc. ("Smitco"),
James O. Foust, a former principal of Smitco, and two salesmen
formerly employed by Smitco, John E. Burse and James E. Fisher,
over a period extending from fall of 1992 to the fall of 1993,
used, or directed others to use, high-pressure telephone calls to
sell investors working interests in oil wells then being drilled
by Smitco.  These techniques, employed by Burse and Fisher under
the supervision of Smith and Foust, included the use of written
offering materials that portrayed the working interests in a
misleading fashion and failed to adequately state the risks of
the ongoing offering, and oral sales presentations which
similarly failed to adequately discuss the risks of the
investment and included misstatements of material fact about the
offering and Smitco.  For example, according to the Complaint,
certain individuals solicited by Smitco were told that an
investment in a Smitco working interest was similar to an
investment in a savings account or a certificate of deposit. 
Prospective investors were also sent written materials describing
their prospective investments which contained numerous false and
misleading statements, including a discussion of investment risk
that likened the risk of a Smitco investment to the risk of
"driving your car everyday [sic]."   
  
     Using responses received from direct-mail postcards, Burse
and Fisher, acting under the direction and supervision of Smith
and Foust, telephoned individuals and delivered a sales
presentation from an outline prepared by Burse.  These oral sales
presentations included false and misleading information about
investment risks (including overstated estimates of yield from
Smitco's various drilling projects), misrepresented the cost of
drilling wells, and made false assurances that the offering was
registered with the Securities and Exchange Commission and met
the legal requirements imposed by the various states in which
prospective investors resided.  Potential investors were not
informed that a number of state securities regulatory agencies --
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including the Kentucky Department of Financial Institutions --
had issued orders barring Smitco from selling securities in their
states.   According to the Complaint, Burse, Fisher, and, later,
the other salemen hired by Burse, also told potential investors
that Smitco held oil rights in large tracts of land in
Queensland, Australia, rights which Smitco never, in fact, held. 
 
     In the event that an oil well drilled by Smitco did strike
oil, investors who held working interests in that well were, in
many cases, recontacted by Smitco salesmen and quoted "initial
production" figures, figures which the Defendants knew or had
reason to know would decline rapidly over the near term, and
given misleading projections of financial yield from the well in
which they had invested.  This was frequently done in order to
solicit additional investments from individuals who had already
invested in Smitco. 

     Over the course of the offering, approximately ninety
individuals located in 20 states made investments aggregating
some $1.4 million in Smitco's oil drilling venture.  These funds
constituted virtually the entirety of Smitco's revenues during
the offering period.

     The Commission's Complaint seeks injunctive relief barring
the defendants from future violations of Sections 5 and 17(a) of
the Securities Act of 1933 and Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder.  The Complaint
also seeks disgorgement of investment proceeds from Smith,
disgorgement of commissions and fees from Burse and Fisher, and
civil money penalties against all Defendants.  Smitco is
currently in Chapter 7 bankruptcy proceedings.

     The litigation is pending.

     The Commission acknowledges the assistance of the state
securities regulators of Arizona, Georgia, Idaho, Illinois, Iowa,
Kansas, Kentucky, Massachusetts, Missouri, Nevada, Pennsylvania,
South Dakota, Vermont and Wisconsin in investigating this matter.