Re: United States of America v. Amr. I Elgindy; Superseding Indictment (Part 2 of 4)
COUNT ONE
(Racketeering Conspiracy)
xxxiii) The allegations contained in paragraphs 1 through 32 are realleged and incorporated as if fully set forth in this paragraph.
THE RACKETEERING ENTERPRISE
xxxiv) Between approximately March 2000 and May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, JEFFREY A. ROYER, JONATHAN DAWS, TROY M. PETERS and LYNN WINGATE, together with Pacific Equity Investigations, Derrick W. Cleveland and certain subscribers to AnthonyPacific.com and others, were members and associates of an enterprise (the "ELGINDY Enterprise") as defined in Title 18, United States Code, Section 1961(4), that is, a group of individuals associated in fact. The ELGINDY Enterprise operated in the Eastern District of New York and elsewhere in the United States as well as abroad. The ELGINDY Enterprise engaged in, and its activities affected, interstate and foreign commerce. The ELGINDY Enterprise constituted an ongoing organization whose members functioned as a continuing unit for a common purpose of achieving the objectives of the enterprise.
xxxv) The chief purpose of the ELGINDY Enterprise was to obtain money for its members and associates by trading on material, non-public information that had been misappropriated from the FBI and the SEC, by manipulating the market to deflate artificially the price of stocks that they had short sold, and by extorting free shares of stock from company insiders.
xxxvi) Among the means and methods by which the defendants AMR I. ELGINDY, JEFFREY A. ROYER, JONATHAN DAWS, TROY M. PETERS and LYNN WINGATE, together with others, conducted and participated in the conduct of the affairs of the ELGINDY Enterprise were various criminal activities, including securities fraud, extortion and obstruction of justice.
xxxvii) In or about and between March 2000 and May 2002, both dates being approximate and inclusive, within the Eastern District of New York and elsewhere, the defendants AMR I. ELGINDY, JEFFREY A. ROYER, JONATHAN DAWS, TROY M. PETERS and LYNN WINGATE, together with others, being persons employed by and associated with the ELGINDY Enterprise, knowingly and intentionally conspired to violate Title 18, United States Code, Section 1962(c), that is, to conduct and participate, directly and indirectly, in the conduct of the affairs of the ELGINDY Enterprise through a pattern of racketeering activity as defined in Title 18, United States Code, Sections 1961(1) and 1961(5). The pattern of racketeering activity through which the defendants agreed to conduct the affairs of the enterprise consisted of the acts set forth below. Each defendant agreed that a conspirator would commit at least two acts of racketeering activity in the conduct of the affairs of the enterprise.
PATTERN OF RACKETEERING ACTIVITY
Racketeering Act One
(Securities Fraud Conspiracy)
xxxviii) In or about and between March 2000 and May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, JEFFREY A. ROYER, JONATHAN DAWS, TROY M. PETERS and LYNN WINGATE, together with Derrick W. Cleveland and others, did knowingly and willfully conspire to use and employ manipulative and deceptive devices and contrivances directly and indirectly, by use of means and instrumentalities of interstate commerce and the mails, in contravention of Rule 10b-5 of the Rules and Regulations of the SEC (Title 17, Code of Federal Regulations, Section 240.10b-5), and directly and indirectly to (a) employ devices, schemes and artifices to defraud; (b) make untrue statements of material facts and omit to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engage in acts, practices and a course of business which would and did operate as a fraud and deceit upon members of the investing public, in connection with purchases and sales of securities of the Targeted Companies, in violation of Title 15, United States Code, Sections 78j(b) and 78ff, all in violation of Title 18, United States Code, Section 371.
xxxix) It was a further part of the conspiracy that between March 2000 and May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY and JONATHAN DAWS, and others, solicited, obtained and received from the defendant JEFFREY A. ROYER, and, later, ELGINDY, ROYER, and others, solicited, obtained and received from the defendant LYNN WINGATE, material, non-public information concerning Targeted Companies and associated individuals, to wit: confidential law enforcement and regulatory information, which information had been unlawfully misappropriated from the Federal Bureau of Investigation by ROYER and WINGATE in violation of their fiduciary and other duties of trust and confidence, and which information was obtained and received before the information was publicly disclosed to the investing public.
xl) It was a further part of the conspiracy that between March 2000 and May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, JEFFREY A. ROYER, JONATHAN DAWS, TROY PETERS and LYNN WINGATE, together with others, devised, implemented and oversaw a fraudulent scheme to deflate artificially the price of various companies’ stock that they short sold so that they could profit by buying it back later at a lower price. ELGINDY, ROYER, DAWS and others sought to accomplish their manipulation by making false and misleading statements, and by coordinating the release of negative information, some of which was false and misleading, with short selling in a manner designed to exaggerate the negative market sentiment for the stock.
xli) In furtherance of the conspiracy and to effect the objectives thereof, within the Eastern District of New York and elsewhere, the defendants AMR I. ELGINDY, JEFFREY A. ROYER, JONATHAN DAWS, TROY M. PETERS and LYNN WINGATE, and their co-conspirators committed and caused to be committed the following:
OVERT ACTS
Job Offer
a. On or about February 26, 2001, the defendant AMR I. ELGINDY offered the defendant JEFFREY A. ROYER a job at Pacific Equity Investigations.
b. On or about February 26, 2001, the defendant JEFFREY A. ROYER accepted the defendant AMR I. ELGINDY's job offer to work at Pacific Equity Investigations.
Payments to ROYER
c. On or about November 28, 2000, Derrick W. Cleveland wired $8,500.00 to the account of the defendant JEFFREY A. ROYER.
d. On or about January 30, 2001, Derrick W. Cleveland wired $5,000.00 to the account of the defendant JEFFREY A. ROYER.
e. On or about May 22, 2001, Derrick W. Cleveland wired $9,925.00 to the account of the defendant JEFFREY A. ROYER.
f. On or about May 31, 2001, Derrick W. Cleveland wired $7,000.00 to the account of the defendant JEFFREY A. ROYER.
Broadband
g. On or about March 21, 2000, the defendant AMR I. ELGINDY short sold approximately 2,000 shares of the stock of Broadband, a company listed on the Over the Counter Bulletin Board ("OTCBB").
h. On or about August 31, 2000, Derrick W. Cleveland short sold approximately 10,000 shares of the stock of Broadband.
Potomac
i. On or about August 3, 2000, the defendant JEFFREY A. ROYER bought approximately 850 shares of the stock of Potomac, a company listed on the OTCBB.
j. On or about August 4, 2000, Derrick W. Cleveland bought approximately 1,000 shares of Potomac stock.
k. On or about August 4, 2000, the defendant JONATHAN DAWS, who was in Texas, telephoned Derrick W. Cleveland, who was in Oklahoma.
l. On or about August 4, 2000, the defendant JONATHAN DAWS bought approximately 12,000 shares of Potomac stock.
Company No. 1
m. On or about November 10, 2000, Derrick W. Cleveland sent to the defendant AMR I. ELGINDY confidential law enforcement information that he had obtained from the defendant JEFFREY A. ROYER regarding a company listed on the OTCBB ("Company No. 1").
n. On or about November 10, 2000, the defendant AMR I. ELGINDY short sold approximately 2,100 shares of the stock of Company No. 1.
o. On or about November 10, 2000, the defendant JONATHAN DAWS short sold approximately 3,000 shares of the stock of Company No. 1.
p. On or about November 10, 2000, Derrick W. Cleveland short sold approximately 1,000 shares of the stock of Company No. 1.
q. On December 10, 2000, at approximately 5:01 p.m., the defendant AMR I. ELGINDY stated in the AnthonyPacific.com chat room, regarding Company No. 1, "[t]he FBI are involved."
r. On December 12, 2000, at approximately 11:49 a.m., the defendant AMR I. ELGINDY stated in the AnthonyPacific.com chat room, regarding Company No. 1, "[t]his is a real scam and a real investigation ... so lets all [use] the info we have dug up ... to our advantage."
s. On December 22, 2000, at approximately 11:40 a.m., the defendant JEFFREY A. ROYER searched the ACS database for information and accessed nonpublic information regarding the president of Company No. 1.
t. On December 22, 2000, between approximately 11:40 a.m. and 12:40 p.m., the defendant JEFFREY A. ROYER communicated the information from the ACS database to Derrick W. Cleveland, who then communicated this information from the ACS database to the defendant AMR I. ELGINDY.
u. On December 22, 2000, at approximately 12:42 p.m., the defendant AMR I. ELGINDY stated in the AnthonyPacific.com chat room, regarding Company No. 1, "[Company No. 1's president] was involved in a bank fraud case in Boston ...im hearing ... very sketchy details filtering in now."
v. On December 28, 2000, at approximately 12:58 p.m., the defendant AMR I. ELGINDY stated in the AnthonyPacific.com chat room, regarding Company No. 1, "I have some names on [Company No. 1] ... These names are from the FBI."
w. On or about January 2, 2001, the defendant JEFFREY A. ROYER searched the NCIC database and found criminal history information regarding the president of Company No. 1.
x. On or about January 3, 2001, the defendant AMR I. ELGINDY issued a research report regarding Company No. 1, which disclosed its president's criminal history.
y. On January 12, 2001, at approximately 4:44 p.m., the defendant AMR I. ELGINDY stated in the AnthonyPacific.com chat room, regarding Company No. 1, "the 3 investigations are wire fraud, mkt manipulation, and mail fraud officially by the FBI SEC is doing a Title 15 investigation.. and none of this can leave or go public .. if you do you will be pros ... that’s a fact directly from the FBI.. erase the log..."
Company No. 2
z. On or about November 17, 2000, the defendant JEFFREY A. ROYER obtained information from an SEC Enforcement Attorney regarding the SEC’s investigation of Company No. 2.
aa. On or about November 24, 2000, Derrick W. Cleveland short sold approximately 2,000 shares of the stock of Company No. 2.
bb. On or about November 24, 2000, the defendant AMR I. ELGINDY short sold approximately 1,000 shares of the stock of Company No. 2.
cc. On or about November 24, 2000, the defendant JONATHAN DAWS short sold approximately 2,800 shares of the stock of Company No. 2.
Company No. 3
dd. On or about March 1, 2001, the defendant JEFFREY A. ROYER obtained information from an SEC Enforcement Attorney regarding the SEC’s investigation of Company No. 3.
ee. On or about March 1, 2001, the defendant JEFFREY A. ROYER communicated the information regarding the SEC’s investigation of Company No. 3 to the defendant JONATHAN DAWS.
ff. On March 1, 2001, at approximately 4:36 p.m., the defendant JONATHAN DAWS stated in the MIRC chat room regarding Company No. 3, "No one repeat this ... just talked to FBI agent ... [Company No. 3] under investigation by SEC ... maybe FBI gets involved as well ... nice to get confirmation..."
gg. On or about March 2, 2001, the defendant JONATHAN DAWS short sold approximately 5,500 shares of the stock of Company No. 3.
hh. On or about March 2, 2001, the defendant AMR I. ELGINDY short sold approximately 1,000 shares of the stock of Company No. 3.
Company No. 4
ii. On or about March 23, 2001, the defendant JEFFREY A. ROYER searched the ACS database and accessed nonpublic information concerning a company listed on the NASDAQ National Market System ("Company No. 4").
jj. On or about March 26, 2001, the defendant JONATHAN DAWS bought approximately 20,000 shares of the stock of Company No. 4.
kk. On or about March 26, 2001, the defendant AMR I. ELGINDY bought approximately 2,000 shares of the stock of Company No. 4.
Company No. 5
ll. On or about May 4, 2001, the defendant JEFFREY A. ROYER searched the ACS database and accessed nonpublic information concerning a company listed on the OTCBB ("Company No. 5").
mm. On or about May 9, 2001, Derrick W. Cleveland short sold approximately 400 shares of the stock of Company No. 5 and covered.
nn. On or about May 11, 2001, the defendant AMR I. ELGINDY short sold approximately 500 shares of the stock of Company No. 5.
oo. On or about May 15, 2001, the defendant JEFFREY A. ROYER searched the ACS database and accessed nonpublic information concerning Company No. 5.
pp. On or about May 17, 2001, the defendant JONATHAN DAWS short sold approximately 11,700 shares of the stock of Company No. 5.
qq. On or about May 19, 2001, the defendant JEFFREY A. ROYER met with the defendant AMR I. ELGINDY and others, in Las Vegas, Nevada.
rr. On May 21, 2001, at approximately 4:39 p.m., the defendant JEFFREY A. ROYER obtained information from an SEC Enforcement Attorney regarding the SEC’s investigation of Company No. 5.
ss. On May 22, 2001, at approximately 11:06 a.m., the defendant AMR I. ELGINDY stated in the AnthonyPacific.com chat room regarding Company No. 5, "... i did get the [Company No. 5 information] from the us govt ... cant say what branch ..."
tt. On or about May 22, 2001, the defendant AMR I. ELGINDY wrote a check to the defendant JEFFREY A. ROYER in the amount of $428.71.
uu. On or about May 23, 2001, the defendant JONATHAN DAWS short sold approximately 1,000 shares of the stock of Company No. 5.
vv. On May 24, 2001, at approximately 1:05 p.m., the defendant JEFFREY A. ROYER searched the ACS database and accessed nonpublic information concerning Company No. 5.
ww. On May 24, 2001, at approximately 1:35 p.m., the defendant AMR I. ELGINDY stated in the AnthonyPacific.com chat room and in e-mails to his subscribers nationwide, including subscribers in the Eastern District of New York, regarding Company No. 5, "[Company No. 5] <– 3 difft FBI investigations into [this] guys son Jason ([Jason’s father] convicted felon of securities fraud) has large blocks of [Company No. 5's] stock, SEC is onto him) ..."
Company No. 6
xx. On or about and between March 26, 2001 and May 21, 2001, the defendant JEFFREY A. ROYER obtained information from an SEC Enforcement Attorney regarding the SEC’s investigation of a company listed on the OTCBB ("Company No. 6").
yy. On or about and between July 26, 2001 and August 23, 2001, the defendant JEFFREY A. ROYER searched the ACS database and accessed nonpublic information concerning Company No. 6.
zz. On or about July 30, 2001, the defendant AMR I. ELGINDY short sold approximately 7,000 shares of the stock of Company No. 6.
aaa. On or about August 13, 2001, the defendant AMR I. ELGINDY bought approximately 4,000 shares of the stock of Company No. 6 to cover prior short sales.
Company No. 7
bbb. On or about June 22, 2001, the defendant JEFFREY A. ROYER searched the ACS database and accessed nonpublic information concerning a company listed on the OTCBB ("Company No. 7").
ccc. On or about June 22, 2001, the defendant JEFFREY A. ROYER obtained information from an SEC Enforcement Attorney regarding the SEC’s investigation of Company No. 7.
ddd. On or about June 22, 2001, the defendant AMR I. ELGINDY short sold approximately 2,500 shares of the stock of Company No. 7.
eee. On or about June 22, 2001, the defendant AMR I. ELGINDY directed his subscribers, including subscribers in the Eastern District of New York, in the AnthonyPacific.com chat room and by e-mail, to short sell the stock of Company No. 7.
fff. On August 15, 2001, at approximately 11:26 a.m., the defendant AMR I. ELGINDY telephoned the defendant TROY PETERS at First Geneva Securities.
ggg. On or about August 15, 2001, the defendants AMR I. ELGINDY and TROY M. PETERS obtained a large, below-market-price block of the stock of Company No. 7.
hhh. On August 16, 2001, at approximately 11:45 p.m., the defendant AMR I. ELGINDY stated in the AnthonyPacific.com chat room and in e-mails to subscribers nationwide, including subscribers in the Eastern District of New York, "[Company No. 7] <------- Officially terminating coverage and cover positions at 2.45"
Company No. 8
iii. On or about September 19, 2001, the defendant JEFFREY A. ROYER searched the ACS database and accessed nonpublic information concerning a company listed on the OTCBB ("Company No. 8") in this regard.
jjj. On or about September 21, 2001, the defendant AMR I. ELGINDY short sold approximately 3,500 shares of the stock of Company No. 8.
Nuclear Solutions
kkk. On December 19, 2001, at approximately 11:15 a.m., the defendant JEFFREY A. ROYER searched the NCIC database and found criminal history information regarding the founder of Nuclear Solutions, a company listed on the OTCBB.
lll. On December 19, 2001, at approximately 1:31 p.m., the defendant AMR I. ELGINDY stated in the AnthonyPacific.com chat room and in e-mails to his subscribers, "NSOL - CEO ... is a convicted felon ..."
mmm. On or about December 19, 2001, the defendant AMR I. ELGINDY short sold approximately 12,200 shares of the stock of Nuclear Solutions.
nnn. On or about December 31, 2001, the defendant AMR I. ELGINDY short sold approximately 10,000 shares of the stock of Nuclear Solutions.
ooo. On January 3, 2002, at approximately 2:53 p.m., the defendant AMR I. ELGINDY stated in the AnthonyPacific.com chat room and in e-mails to his subscribers, "NSOL – short 20% @ 2.05 (add).
ppp. On or about January 31, 2002, the defendant AMR I. ELGINDY short sold approximately 10,000 shares of the stock of Nuclear Solutions.
qqq. On January 31, 2002, at approximately 10:14 p.m., the defendant AMR I. ELGINDY stated in the AnthonyPacific.com chat room and in e-mails to his subscribers, "[w]e are pulling out of NSOL" and "NSOL <--- coverage [terminated] for good."
Company No. 9
rrr. On or about March 4, 2002, the defendant LYNN WINGATE searched the ACS database and accessed nonpublic information concerning the Chief Executive Officer of a company listed on the NASDAQ National Market System ("Company No. 9").
sss. On or about March 4, 2002, the defendant LYNN WINGATE telephoned the defendant JEFFREY A. ROYER.
ttt. On or about April 24, 2002, the defendant JEFFREY A. ROYER met with the defendant JONATHAN DAWS in DAWS’s office.
uuu. On or about April 26, 2002, the defendant JONATHAN DAWS short sold approximately 24,000 shares of the stock of Company No. 9.
Racketeering Acts Two Through Eight
(Securities Fraud)
xlii) On or about and between the dates set forth below, both dates being approximate and inclusive, within the Eastern District of New York and elsewhere, the defendants set forth below, together with others, did knowingly and willfully use and employ manipulative and deceptive devices and contrivances in violation of Rule 10b-5 of the Rules and Regulations of the SEC (Title 17, Code of Federal Regulations, Section 240.10b-5), in that the defendants, together with others, did knowingly and willfully, directly and indirectly: (a) employ devices, schemes and artifices to defraud; (b) make untrue statements of material facts and omit to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engage in acts, practices and courses of business which would and did operate as a fraud and deceit upon members of the investing public, in connection with the purchases and sales of the securities set forth below, by use of means and instrumentalities of interstate commerce and the mails, in violation of Title 15, United States Code, Section 78j(b).
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