Re: 7/1/04 - [Elgindy] Dow Jones: Elgindy Co-Conspirator Terrell Pleads Guilty
IN THE MONEY: Elgindy Co-Conspirator Terrell Pleads Guilty
By Carol S. Remond
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--A member of Anthony Elgindy's investing Web site has pleaded guilty to conspiracy to commit securities fraud and is now cooperating with the government.
Elgindy was arrested in May 2002 and charged in the U.S. District Court for the Eastern District of New York in a case involving the use of confidential government information to manipulate the stock of several small-cap companies.
According to a court transcript, Donald Kent Terrell said last week that he conspired with Elgindy and others to use non-public information obtained from a Federal Bureau of Investigation agent to manipulate the price of securities. Terrell, who was a member of Elgindy's Web site from December 1999 to May 2002, was released on a $150,000 unsecured bail. He used the alias "Quack" online.
Elgindy and five co-defendants were charged in 2002 on charges they conspired to drive down the price of the shares of companies they targeted in a short-selling scheme. Also charged in that case are two former FBI agents, Jeffrey Royer and Lynn Wingate; two traders, Troy Peters and Derrick Cleveland; a fund manager, Jonathan Daws; and Elgindy's Web master, Robert Hansen. Cleveland has pleaded guilty to racketeering and Hansen has pleaded guilty to one count of conspiracy to commit securities fraud. Both are cooperating with the government. The case is scheduled to go to trial on Oct. 4, 2004.
Terrell said in court last week that from November 2000 to January 2001, Cleveland provided Terrell and others "law enforcement and regulatory information that he had obtained from Jeffrey Royer regarding a public company." Terrell said that on Jan. 3, 2001, he sold short 3,000 shares of the stock of that company. Terrell also said that on Oct. 12, 2001, he transferred $2,000 to a Bank of America account controlled by Cleveland in Oklahoma City. "I believed at the time that some of this money was to go to Jeffrey Royer," Terrell said.
The company mentioned by Terrell isn't identified in the court transcript. Court documents indicate that the government has alleged that Elgindy and others engaged in manipulative conduct on the stocks of more than 40 companies, most of which haven't been identified.
But the indictment of Elgindy and others suggests that the stock illegally traded by Terrell was likely Seaview Video Technology Inc. (SEVU).
According to the indictment, Elgindy issued a research report on "company #1" on Jan. 3, 2001. A search of Elgindy's Web site shows that there was only one report issued on Jan. 3, 2001, one about Seaview which disclosed the criminal history of Seaview's president, Richard McBride. The Elgindy indictment also shows that in December 2000, Royer searched a classified FBI database and found non-public information about the president of "company #1," information that Royer passed on to Cleveland who then shared it with Elgindy.
According to the indictment, Royer revisited the FBI database on Jan. 2, 2001, at which point he uncovered information of the criminal history of the president of "company #1."
Elgindy, who had been out on bail since mid 2002, returned to jail in April after he was arrested at the MacArthur Airport in Islip, N.Y., attempting to board a plane using a fake ID.
(Carol S. Remond is one of four "In The Money" columnists who take a sophisticated look at the value of companies and their securities and explore unique trading strategies.)
-By Carol S. Remond, Dow Jones Newswires; 201-938- 2074;
carol.remond@dowjones.com
(END) Dow Jones Newswires
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