SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17159 / September 28, 2001
SEC v. TRANS ENERGY, INC., LOREN E. BAGLEY, AND WILLIAM F. WOODBURN, U.S. District Court for the District of Columbia, Civil Action No. 1:01CV02060
The Securities and Exchange Commission (Commission) announced today that it filed a federal civil action against Trans Energy, Inc. (Trans Energy), Loren E. Bagley (Bagley), its president, and William F. Woodburn (Woodburn), its vice president and principal financial officer, charging violations of the anti-fraud and reporting provisions of the federal securities laws. Trans Energy is an oil and natural gas exploration and distribution company based in West Virginia whose stock is quoted on the OTC Bulletin Board under the symbol TSRG.
The Complaint alleges 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 alleges that Trans Energy had no reasonable basis to value the potential reserves at that amount, and that the gross overvaluation caused Trans Energy's stock price to reach a six-month high. The Complaint further alleges 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 claims 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 alleges 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 alleges 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.
The Commission seeks a judgment against Trans Energy enjoining it 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. Further, the Commission seeks a judgment against Bagley and Woodburn enjoining them from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, from aiding and abetting future violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder, and assessing civil penalties against them.