Not sure if this piece of news had been posted here or not,...sorry if it did.
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Posted on Fri, Nov. 05, 2004
San Diego financial analyst profited when stock went down
MICHAEL WEISSENSTEIN
Associated Press
NEW YORK - A corrupt FBI agent in cahoots with inside traders revealed a steady stream of sensitive information, including one corporate executive's alleged ties to the Russian mob and an undercover agent's presence at another firm, according to court testimony Thursday.
The companies' negative information was posted on the Web site of San Diego financial analyst and self-styled stock guru Anthony Elgindy, who profited when their stock went down, a former Elgindy associate testified in federal court in Brooklyn.
Derrick Cleveland testified that he rewarded the FBI agent, Jeffrey Royer, with a pickup truck and half the proceeds from trades based on the government information.
Cleveland is cooperating with prosecutors against Elgindy and Royer in their trial on racketeering and fraud charges.
Lawyers for Elgindy deny the charges, saying their client had a solid reputation for protecting investors by working with regulators to expose fraud by small publicly traded companies. Royer's attorney told the jury that he was an ambitious agent who recruited Cleveland and Elgindy as confidential informants and shared information with them with no corrupt intent.
Royer did a terrible job of concealing his tracks, Cleveland testified Thursday. He sent Cleveland a photocopy of the pickup truck title from the fax machine at the FBI's Gallup, N.M., office. The fax arrived bearing an FBI stamp and was introduced into evidence Thursday.
Royer also partied in Las Vegas with Elgindy and associates and chatted about his job as a federal agent in a chat room run by Elgindy for traders who paid him a monthly fee, Cleveland said.
Prosecutors showed the jury photographs of Elgindy and fellow traders cavorting in Vegas with Royer's FBI business cards stuck to their foreheads.
Also on display was the transcript of an online chat among Royer, Elgindy and his subscribers that included the boasts, "FBI in the house" and "FBI rules."
Cleveland described a near-constant flow of information from Royer about small companies with penny stocks, including several that were under Securities and Exchange Commission investigation, one whose CEO had Russian mob links and another that was the subject of an undercover federal probe.
Royer, who left the FBI before his arrest, did not jeopardize any federal investigations, said Bill Elwell, a spokesman for the bureau's Albuquerque office.
Cleveland told the jury he was protective of his FBI source and cautioned Royer against direct contact with Elgindy and the other traders.
"I told Royer that I didn't think it was very smart that he did that," Cleveland testified.
Cleveland said he made thousands of dollars on some trades and lost money on many others. He said he agreed to a 50/50 split with Royer and planned to help the agent purchase a new home, until his wife put her foot down.
After his arrest in late 2002, prosecutors suggested the Egyptian-born Elgindy may have known about the Sept. 11, 2001, terrorist attacks. The charge, which his lawyers dispute, has not been mentioned again in court.
Elgindy telephoned his broker on Sept. 10, 2001, and asked him to liquidate his children's $300,000 trust account, prosecutor Ken Breen said at the time. The defendant predicted that the Dow Jones industrial average, then trading at about 9,600, would drop to 3,000, Breen said.
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