Re: 6/30/03 - [Elgindy] Dow Jones: Justice Dept Files Superseding Indictment In Elgindy Case; Fund Manager Daws Charged In Elgindy Fraud Case; Judge To Rule On Motion To Dismiss Case; Daws Pleads Not Guilty, Released On $500K Bond
+DJ Justice Dept Files Superseding Indictment In Elgindy Case
06/30/2003
Dow Jones News Services
(Copyright © 2003 Dow Jones & Company, Inc.)
(MORE) Dow Jones Newswires
06-30-03 1101ET
*DJ Fund Manager Daws Charged In Elgindy Fraud Case
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(MORE) Dow Jones Newswires
06-30-03 1105ET
=DJ Elgindy -2: Insider Trading, Extortion Charges
By Carol S. Remond
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The Brooklyn U.S. Attorney's Office on Monday filed a superseding indictment against short seller Anthony Elgindy and four other defendants.
Fund manager Jonathan Daws was added to the original defendants, which include Jeffrey Royer and Lynn Wingate, two former Federal Bureau of Investigation agents and Troy Peters, a former broker. Derrick Cleveland, who was charged in the original indictment last May, pleaded guilty and is now cooperating with the prosecution.
"In order to earn greater profits for themselves and obtain an unfair advantage over other investors, the defendants (Elgindy, Royer, Daws, Peters and Wingate), together with Derrick Cleveland and others, engaged in a variety of schemes to defraud investors in connection with the purchase and sale of stock of certain traded companies," according to the superseding indictment.
The indictment names three companies that were alleged targets of Elgindy and others: Broadband International Wireless Corp., Nuclear Solutions Inc. (NSOL) and Potomac Energy Corp. Nine other companies are unnamed. Nuclear Solutions was the only company named in the original indictment.
Among charges contained in the indictment are: insider trading, stock price manipulation and extortion.
It's unclear why Robert Hansen, who managed Elgindy's Web sites and who was supposed to be charged in the superseding indictment, wasn't named.
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(MORE) Dow Jones Newswires
06-30-03 1137ET
=DJ Elgindy -3: Judge To Rule On Motion To Dismiss Case
Elgindy and his co-defendants were charged in a racketeering indictment unsealed in Brooklyn, N.Y., last May. Federal prosecutors alleged that Elgindy, with the help of FBI agents Royer and Wingate, used confidential FBI databases to guide short-selling strategies.
Short sellers profit when the price of the shares of a company declines.
Defendants Elgindy, Royer, Daws, "together with others, used the confidential law enforcement and regulatory information to make decisions whether to buy, hold or sell the stocks of the companies to which the information was relevant," according to the superseding indictment filed Monday.
The indictment alleges that Elgindy and others managed the release of information and short-selling recommendations "in a manner designed to maximize their ability to control the market impact."
The indictment also charges that Elgindy, Daws and Peters engaged "in additional manipulative activity designed to exaggerate the negative market sentiment for the stocks, including making false and misleading statements, and coordinating their short selling with the release of that information."
Elgindy and Peters, as well as Cleveland, are also accused of extorting "below-market-price or free shares of stock, and other things of value, from the targeted companies and their owners in exchange for the defendants agreement no longer to short sell the companies stock or spread negative information about the companies."
Most of the charges contained in the superseding indictment were already included in the original documents.
But in addition to adding a defendant, Daws, and previously unnamed companies, the latest indictment also makes new allegations, including the fact that defendants sometimes purchased shares in long accounts prior to short selling companies. Also new are charges that Elgindy defrauded his subscribers and that Royer tampered with witnesses.
Meanwhile, Federal judge Raymond Dearie is expected to rule later Monday on Elgindy's motion to dismiss the case against him or at least move it to southern California, where Elgindy lives.
-By Carol S. Remond; Dow Jones Newswires; 201 938 2074; carol.remond@dowjones.com
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(END) Dow Jones Newswires
06-30-03 1348ET
DJ Elgindy-4: Daws Pleads Not Guilty, Released On $500K Bond
New defendant Jonathan Daws surrendered in Brooklyn earlier Monday and pleaded not guilty to the charges.
Daws was released on a $500,000 bond secured by property and is restricted to travel to New York and in the Northern district of Texas where he resides.
Under his conditions of release, Daws has to surrender his guns and turn in his passport.
-By Carol S. Remond; Dow Jones Newswires; 201 938 2074; carol.remond@dowjones.com
(END) Dow Jones Newswires
06-30-03 1752ET
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