For those who might not have had time to read through the transcripts, every now and then I'll try to post a piece of interest. Here, Derrick Cleveland brags how it was his idea to make money using confidential FBI information:
19 Q Did there come a point time when you and Royer discussed
20 trading together?
21 A Yes.
22 Q When, approximately?
23 A Again, this was the early summer of 2000.
24 Q Was it one conversation or a series of conversations?
25 A A series of conversations.
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1 Q Who brought it up first?
2 A I did.
3 Q Describe the circumstance when it came up for the first
4 time?
5 A Okay. One evening I was sitting at the office, Mr. Royer
6 called me, asked me how long I was going to be around the
7 office. I asked him why. He said he had something he wanted
8 me to take a look at. I told him I'd wait around. He came
9 by. I was there by myself. He handed me a couple of
10 documents, two pieces of paper that I started looking over and
11 immediately realized that they were government documents that
12 gave specific information about undercover operations that
13 were taking place on a couple of different securities.
14 Q Would you describe the details that you remember from
15 seeing those?
16 A Yes, the first document was on a company called Select
17 Media, ticker symbol SMTV. It started off, it had some coding
18 at the top, then it started off: A confidential informant who
19 is or is not in a position to testify stated the following.
20 Q Is that from where you drew the conclusion that it was an
21 undercover operation?
22 A Yes.
23 Q What else do you remember seeing on those sheets?
24 A On -- again, specifically on SMTV, I remember going down,
25 the name Tony DeSalvo from the Gambino Crime Family, the name
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1 Frank Cerruvo, who was a mobster out of Philadelphia. There
2 were a couple of other names. It also talked about Select
3 Media being around five dollars and they were going to try to
4 take the stock up to $25. It was basically a pump and dump
5 scheme that they were orchestrating.
6 Q That was one of the sheets. What do you remember from
7 other sheet?
8 A The other sheet was on a stock called Cafe One, CATH was
9 the sticker symbol. It was similar the way it started. It
10 had the coding at the top. It said a confidential informant
11 who is or is not in a position to testify stated the
12 following. And again it talked about them moving in stock, a
13 pump and dump scheme on this stock. It named specific names
14 and I don't remember who they were.
15 Q Did Mr. Royer give you a copy of these documents or just
16 show them to you?
17 A He gave them to me.
18 Q How did you react to having viewed and read these
19 reports?
20 A I was excited. The documents, I told Mr. Royer that they
21 were fascinating documents.
22 THE COURT: When you say documents, you are talking
23 about single page documents?
24 THE WITNESS: Yes.
25 THE COURT: Two one-page documents?
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1 THE WITNESS: Yes.
2 THE COURT: Okay.
3 A That they were fascinating, that the information that
4 they provided was incredible information, that you couldn't
5 get that anywhere else, talking about again these pump and
6 dump schemes which we had checked on SMTV, the stock was at
7 five, it hadn't taken place yet and I was telling him there is
8 no telling how much money we would make having that type of
9 information.
10 Q What was his response to that?
11 A He told me that there was a lot more of those where that
12 came from.
13 Q Who raised the subject of your trading together with him?
14 A I did.
15 Q Describe how the conversation went specifically?
16 A After I told him that we could make an incredible amount
17 of money. The first question he asked me was: Long or short?
18 And I said: Well, both. I said on SMTV, the stock hasn't,
19 the pump hasn't taken place yet. We'll go long on the stock
20 at five. They say they are going to take it to 25, we'll hop
21 out at 20, somewhere in there to make sure we get a good exit
22 on the stock, then we'll turned around, short the stock, give
23 it to Tony and with the power of Tony's site, we'll crush this
24 thing back down to nothing, so we'll make money on the long
25 side, then turn around, short it, crush it, make money on the
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1 short side.
2 Q So was the idea that you had Royer's information and
3 Elgindy's power?
4 A Yes.
5 MR. BERKE: Objection.
6 THE COURT: Sustained, characterization. Disregard
7 that question, ladies and gentlemen.
8 Q Was there a focus at this time on any particular type of
9 information that Royer had?
10 A Basically, yes, on the FBI investigations into pump and
11 dump schemes.
12 Q Pump and dumps specifically?
13 A Not specifically. Any company that was under FBI
14 investigation for whatever reason would be a company of
15 interest.
16 Q Did you and Royer talk about a financial relationship
17 between the two of you?
18 A Yes.
19 Q What did you say and what did he say?
20 A What I told him was that with his information, with my
21 capital put together, that we would make in my opinion
22 enormous amounts of money, that on stocks that he brought me
23 with information that we traded in, I would do a 50/50 split
24 with him because I told him that his information was just as
25 valuable as the money it took to trade these stocks, one
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1 really couldn't be done without the other.
2 Q Did Mr. Royer respond to that suggestion?
3 A Yeah, he said that that was fine.
4 Q Did Mr. Royer say what he would do?
5 A He said that -- he had told me that there were thousands
6 of companies out there like that, what he was going to do was
7 go back, start going through files, looking at old files that
8 he had been over, going to find some new files to see what
9 other securities he could come up with.
10 THE COURT: Could you again fix the time generally
11 for us?
12 THE WITNESS: Again, this is early -- early summer,
13 early to mid-summer of 2000.
14 Q Did he say how it was that he would get the information?
15 A No.
16 Q Did he explain how the databases worked at the FBI?
17 A No.
18 Q You mentioned before Elgindy's power?
19 A Yes.
20 Q Was that something that you discussed with Mr. Royer?
21 A Yes.
22 Q Only in this conversation or in a number of
23 conversations?
24 A A number of conversations.
25 Q In this timeframe?
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1 A Yes.
2 Q During these discussions in this timeframe, what terms
3 did you and Mr. Royer use to describe Elgindy's power?
4 A Several terms. We -- when it came to shorting stocks, we
5 talked about blasting stocks, killing stocks, kicking the crap
6 out of stocks, crushing stocks, destroying stocks and several
7 other terms. We used several.
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