Ex-Gallup FBI agent guilty of fraud
Royer convicted of insider trading
By Zsombor Peter
Staff Writer
GALLUP — A former Gallup FBI agent was convicted of passing on lucrative and confidential government information to inside traders in a New York courtroom Monday.
According to the federal indictment, Jeffrey Royer received private deposits and a pickup truck for providing dirt on targeted companies to a team of financial analysts.
Royer was convicted of racketeering, securities fraud, obstruction of justice and witness tampering for leaking details of FBI investigations and executives' criminal histories to San Diego stock picker Anthony Elgindy.
Elgindy was convicted of racketeering, securities fraud and extortion for his role in the scheme. He dropped his face into his hands and sobbed uncontrollably as the jury foreman read the verdict; U.S. marshals led him weeping from the courtroom.
The charges carry a sentence of up to 20 years in prison.
Royer, according to the indictment, was first contacted by Elgindy with tips about other companies engaged in securities fraud during his assignment in Oklahoma City; however, it didn't take long for information to begin flowing the other way.
Elgindy and a partner, Derrick Cleveland, eventually enticed Royer to provide them with private government information on small, publicly traded companies, some of them under investigation by the federal Securities and Exchange Commission, information they'd use to smear those companies' reputations and drive down the value of their stocks.
In a practice known as selling short, Elgindy would sell a given company's stock, wait for the price to fall, and buy the stock back, pocketing the difference. Prosecutors said Elgindy also extorted companies by offering to withhold information in exchange for cash.
After arriving in Gallup Nov. 6, 2000, Royer began mining a pair of FBI databases for dirt on the companies Elgindy and Cleveland wished to target. Royer would search the Bureau's National Crime Information Center database, filled with individuals' criminal histories, and its Automated Case Support database, which keeps track of ongoing criminal investigations.
In return, between Nov. 28, 2000, and May 31, 2001, Cleveland wired Royer $30,425 that went unreported to the Bureau.
Cleveland, who pleaded guilty to the charges and cooperated with prosecutors, testified during the trial that Royer used the Gallup FBI office's fax machine to send him a photocopy of the title to a pickup truck he was being paid off with.
Prosecutors said Royer also thought Elgindy and his associates would help him pay off tens of thousands of dollars in personal debt and planned to leave the FBI to go work as a private investigator for them.
Defense attorneys contended that Royer fed FBI data to Elgindy as part of a freelance effort to sniff out corporate fraud. They argued that Royer believed Elgindy needed the information as a starting point for finding out more about companies that he and Royer could investigate together.
Bill Elwell, the FBI's Albuquerque-office spokesman, believes Royer's criminal activities, whatever damage they've done, never jeopardized any federal investigations.
Elwell said he occasionally ran into Royer during official business, but did not know him personally, and that his transfer from Oklahoma City to Gallup was a routine affair.
Elwell said he did not know how it was that Royer was eventually caught.
The Associated Press contributed to this story
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