Here are the DOT rules on overbooking:
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Involuntary bumping
DOT requires each airline to give all passengers who are bumped involuntarily a written statement describing their rights and explaining how the carrier decides who gets on an oversold flight and who doesn't. Those travelers who don't get to fly are frequently entitled to denied boarding compensation in the form of a check or cash. The amount depends on the price of their ticket and the length of the delay:
* If you are bumped involuntarily and the airline arranges substitute transportation that is scheduled to get you to your final destination (including later connections) within one hour of your original scheduled arrival time, there is no compensation.
* If the airline arranges substitute transportation that is scheduled to arrive at your destination between one and two hours after your original arrival time (between one and four hours on international flights), the airline must pay you an amount equal to your one-way fare to your final destination that day, with a $400 maximum.
* If the substitute transportation is scheduled to get you to your destination more than two hours later (four hours internationally), or if the airline does not make any substitute travel arrangements for you, the compensation doubles (200% of your one-way fare, $800 maximum).
*You always get to keep your original ticket and use it on another flight. If you choose to make your own arrangements, you can request an "involuntary refund" for the ticket for the flight you were bumped from. The denied boarding compensation is essentially a payment for your inconvenience.
Like all rules, however, there are a few conditions and exceptions:
* To be eligible for compensation, you must have a confirmed reservation. A written confirmation issued by the airline or an authorized agent or reservation service qualifies you in this regard even if the airline can't find your reservation in the computer, as long as you didn't cancel your reservation or miss a reconfirmation deadline.
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I think you need to get on to the DOT. Give a much detail as you have, including information given to you on the scene by AirTran employees. You have been screwed over and you need to pursue this. There is a link to the DOT in the Quick Links on this website.