=DJ Ex-FBI Agent:No Conflict In Giving Information To Elgindy
By Carol Remond . Of DOW JONES NEWSWIRES .
NEW YORK (Dow Jones)--Jeffrey Royer's claim that he used Anthony Elgindy
and Derrick Cleveland as informants came back to haunt him Tuesday as a
prosecutor showed that the former FBI special agent had financial dealings
with both men while at the bureau.
Such dealings are explicitly forbidden by Federal Bureau of
Investigation rules.
Testifying in his own defense Monday, Royer told jurors that he only
shared confidential law enforcement information with Elgindy and Cleveland
as a means to collect valuable information from them.
Royer, Elgindy and Cleveland were charged in the U.S. District Court for
the Eastern District of New York in May 2002 with securities fraud, market
manipulation and extortion. The government alleges that Elgindy used a
private investing Web site to share and trade on confidential information he
obtained from Royer. The government also claims that Elgindy and others used
some of that information to extort discounted shares from at least two
companies. Cleveland has pleaded guilty to conspiracy to commit securities
fraud and is cooperating with the government.
Under cross examination by Assistant U.S. Attorney Seth Levine, Royer
admitted that he shared confidential information with Elgindy while he was
negotiating a job offer with the San Diego shortseller. Royer said he didn't
believe this was a conflict of interest under FBI rules.
Asked about his financial dealings with Cleveland, the former FBI agent
admitted in court that he gave $15,000 to Cleveland for him to trade in his
account at about the same time that he was gathering and sharing with
Cleveland non-public information about Seaview Technology Inc., a company
that used to trade under the ticker SEVU.
Testifying for the government in November, Cleveland said that he had an
agreement with Royer to share 50-50 any trading profits generated from
confidential information he received from Royer. But Royer told jurors
Monday that no such agreement existed.
Documents introduced in court show that Royer accessed classified FBI
databases and shared information with Cleveland and Elgindy. Some of that
information ended up on Elgindy's private investing site.
On one occasion, Royer shared non-public information with Elgindy about
an ongoing investigation into a company called Global Asset Business Inc.,
or GAHI. Documents introduced in evidence show that the FBI was probing
whether the company was being used by the Russian mob to launder money.
Other persons mentioned in the documents included the president and vice
president of Moldova.
A chat log from Elgindy's Web site for July 12, 2001, shows that the
shortseller recommended to site members that they sell short Global Asset
Business shares. Elgindy told members that the company was involved in money
laundering.
Asked by Levine why he shared that information with Elgindy, Royer said
"that's the way I was attempting to get information...You have a source of
information, you tap into it, and you see what you get."
The prosecution will continue cross examining Royer after the lunch
recess.
-By Carol Remond, Dow Jones Newswires; 201-938-2074 .
(END) Dow Jones Newswires
January 04, 2005 14:34 ET (19:34 GMT)- - 02 34 PM EST 01-04-05 |
