Re: 5/22/02 - [Elgindy] Dow Jones: Short-Seller Elgindy Is Charged With Manipulating Stocks; KOAT: N.M. FBI Agents Face Extortion Charges
Short-Seller Elgindy Is Charged With Manipulating Stocks
Wed May 22, 1:51 PM ET
By: Michael Rapoport and Carol S. Remond
Dow Jones Newswires
NEW YORK -- Anthony Elgindy, the controversial short-seller and Internet stock commentator, has been charged with manipulating stocks by using secret government information fed to him by collaborators within the Federal Bureau of Investigation.
Mr. Elgindy was indicted by the U.S. Attorney's office in Brooklyn , N.Y. , on charges of racketeering, insider trading, market manipulation, extortion conspiracy and obstruction of justice. Four other people, including a current FBI (news - web sites) agent and a former FBI agent, were also indicted.
The indictment alleges that Mr. Elgindy, through his FBI contacts, obtained confidential information from FBI databases about criminal history and investigations relating to companies that he was shorting or thinking of shorting. A short-seller sells borrowed shares and profits when a stock declines, so exclusive access to negative information about a company would be valuable to a short.
Mr. Elgindy then used the secret information to decide how to invest, prosecutors say, and distributed it to other short-sellers to encourage them to short the stock also. Paid subscribers to Mr. Elgindy's e-mail newsletter and investment Web site received the information also, prosecutors said.
In addition, according to the indictment, Mr. Elgindy extorted free or cheap shares of stock from the insiders of companies he had targeted in exchange for his agreement to lay off -- to stop shorting the companies and stop spreading negative information about them.
Mr. Elgindy was even able to spy on the government's grand jury investigation of him through his FBI contacts, prosecutors allege. One of the FBI agents indicted along with Mr. Elgindy gleaned information about the probe from an FBI database and told Mr. Elgindy of the direction of the investigation and that he was a target, according to the indictment.
A woman at Mr. Elgindy's home hung up the phone on a reporter who called seeking comment. Mr. Elgindy's attorney couldn't immediately be reached.
U.S. Attorney Alan Vinograd said in a statement that the indictment's allegations "reveal a shocking partnership between an experienced stock manipulator and law enforcement agents, undertaken for their illicit personal financial gain."
According to the indictment, Mr. Elgindy, who publicly has fashioned himself as a "scam-buster" of fraudulent companies, sometimes reported negative information about the companies he was targeting to government regulators, to try to prompt investigations. One person he provided with information, according to the indictment, was Jeffrey A. Royer, then a special agent in the FBI's Oklahoma City office.
After that, the indictment alleges that Mr. Elgindy "corruptly induced" Mr. Royer to provide the secret information from FBI databases, such as data about the criminal history of officials at public companies, even though access to that information is strictly limited to law-enforcement personnel. An Elgindy associate wired more than $30,000 to Mr. Royer, according to the indictment.
Mr. Elgindy used the information to make investment decisions, and disseminated it to other short-sellers, the indictment alleges -- first through paid subscribers who paid Mr. Elgindy up to $600 a month for his recommendations and later through public Internet sites.
In one instance cited in the indictment, Mr. Royer found criminal-history information in an FBI database about Paul Brown, the founder of Nuclear Solutions Inc. (NSOL), and passed it to Mr. Elgindy, who shorted the stock and distributed a report to his subscribers last December calling Mr. Brown "a convicted felon."
The stock of Nuclear Solutions fell sharply in the aftermath of Mr. Elgindy's report. A Nuclear Solutions spokesman couldn't immediately be reached for comment.
Mr. Royer, 39 years old, of Encinitas, Calif. , later moved to a New Mexico FBI office and eventually took a job with Mr. Elgindy. He was indicted along with Mr. Elgindy, 34 years old, of Encinitas, whose real name is Amr I. Elgindy.
Also indicted were Lynn Wingate, 34 years old, of Albuquerque , N.M., a special agent in the FBI's office there, who the government alleges also supplied Mr. Elgindy with secret FBI information; and Derrick W. Cleveland , 36 years old, of Oklahoma City , and Troy M. Peters, 40 years old, of Carlsbad, Calif. , both short-sellers and associates of Mr. Elgindy's.
story.news.yahoo.com
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Wednesday May 22 01:56 PM EDT
N.M. FBI Agents Face Extortion Charges
Two New Mexico FBI (news - web sites) agents are accused of helping a stock analyst extort publicly traded companies by providing confidential information on investigations of the companies.
One of the agents, Lynn Wingate, is assigned to the FBI office in Albuquerque. The other, Jeffrey Royer, resigned last year from his post in Gallup, officials said.
They are among five defendants charged in a securities fraud indictment unsealed in federal court in Brooklyn.
Also charged is analyst Tony Elgindy.
The indictment accuses the agents of using FBI databases to provide their co-conspirators with inside information.
It also accuses the agents of using the databases to track a grand jury investigation targeting the alleged scheme in exchange for cash.
Royer and Wingate are in custody in Albuquerque.
dailynews.yahoo.com
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