Narrative:

Small aircraft X, M020, sebound at 5500 ft MSL, VFR. Air carrier Y descending to 6000 ft MSL, inbound to fargo. X mode C indicated 5700 ft. I asked him to verify he was at 5500 ft. He said he was level at 5500 ft MSL. Y's TCASII told him to climb because X was indicating 200 ft below him, when Y was level at 6000 ft. Y climbed to satisfy TCASII. Separation never was lost.

Google
 

Original NASA ASRS Text

Title: SMA X ERRONEOUS XPONDER MODE C CAUSED ACR Y TCASII RA EVASIVE ACTION CLB. SEE AND AVOID CONCEPT.

Narrative: SMA X, M020, SEBOUND AT 5500 FT MSL, VFR. ACR Y DSNDING TO 6000 FT MSL, INBOUND TO FARGO. X MODE C INDICATED 5700 FT. I ASKED HIM TO VERIFY HE WAS AT 5500 FT. HE SAID HE WAS LEVEL AT 5500 FT MSL. Y'S TCASII TOLD HIM TO CLB BECAUSE X WAS INDICATING 200 FT BELOW HIM, WHEN Y WAS LEVEL AT 6000 FT. Y CLBED TO SATISFY TCASII. SEPARATION NEVER WAS LOST.

Data retrieved from NASA's ASRS site as of July 2007 and automatically converted to unabbreviated mixed upper/lowercase text. This report is for informational purposes with no guarantee of accuracy. See NASA's ASRS site for official report.