Posted by Bob Zumbrunnen on Tony's behalf via his account. The words here are Tony's as are the charts I've provided links to.
--------------------------------------------------------------
Greetings to All,
I hope this post finds you happy and well. Before I get too far ahead, let me first touch upon a few things by way of explanation for those who may have no idea where this is coming from.
I am a short seller, which means I make my money when stock prices fall. It is NOT the opposite of going long; that is woefully simplistic. Short selling has always been poorly understood. Those who engage in it are typically portrayed as “messengers of doom and gloom.” Short selling, like abortion, is legal, yet can generate a physical and negative visceral response. Unfortunately it is also an easy “sell” to categorize short selling as “un-American”, “evil” or “wrong.” There is a universal negative bias against short sellers; that is most likely why there isn’t an opposing bronze statue of a Bear next to the Bull across the street from the NYSE. Had they ever put up this symbol of the mighty “downtick”, it would probably get blown up every other day. In reality, short sellers are behind much of the greatest research on Wall Street.
My name is Anthony Elgindy, aka AP, A&P, Anthony@Pacific. I started right here on Silicon Investor 7 years ago, when I started the “Dear Anthony” thread. I later started a private stock discussion site, anthonypacific.com, and a free site, Insidetruth.com that featured stock scams that I thought were outrageous and interesting enough to pick apart for public scrutiny as well as my own entertainment.
I started my career as a professional short seller back in 1995 when I founded Key West Securities in the tiny town of Hurst, Texas. I was harsh, abrasive, and apparently entertaining to some. It wasn’t long before I started popping up in magazines and on TV. In 1997 I appeared on ABC’s 20/20 with Brian Ross and Barbara Walters. I criticized the NASD for looking the other way and allowing frauds and scams to flourish on the OTC markets it oversaw. For years and years I exposed hundreds and hundreds of scams, and I made millions of dollars doing it. The scammers, con-men, promoters and snake-oil salesmen behind these deals moaned and groaned, cried and complained about my tactics, my words and anything I did. I was accused of everything imaginable, from helping Osama Bin Laden buy cars, to threatening to kill Alan Greenspan and even trading ahead of the 1st WTC bombing here in NY. I have been accused of paying off SEC attorneys, message board posters, reporters, and most recently FBI agents. Those complaints had always fallen on deaf ears. The FBI and SEC paid little attention to the woes and grievances of people who wanted to be allowed to fleece small investors unmolested. This all was about to change.
On September 11, 2001, two airplanes slammed into the WTC towers, and when those buildings collapsed, for the first time ever, my nationality mattered. Suddenly, scammers had a voice, con-men had an audience, and dishonest insiders could taste relief. These complaints, previously ignored, quickly found their way to an extremely ambitious and aggressive Assistant US Attorney named Ken Breen, who worked on a terrorist task force in Washington, D.C. when he moved to NY; he brought these “complaints” and “evidence” and presented them to a grand jury sitting in the Eastern District of New York, a district in which my contacts were virtually zero. Mr. Breen had an innate dislike and philosophical bias against short sellers in general. In fact many of the witnesses he called at my trial shared his dislike for short selling and short sellers in general.
Some time in the next 60 days a notice of appeal will be filed. The scope of the appellate issues will be far reaching, covering in more detail and with more specificity many more issues than can possibly be mentioned here.
I am currently being held in NY, a fact that should briefly be addressed. My professional trading activities were all centered in California, as were my bank accounts, computers, most relevant documents, and the majority of my site members, yet criminal charges were brought against me in Brooklyn, NY.
It is hard to conceive of a criminal prosecution that was more removed from the Eastern District of New York than this one. Virtually every single trade in every single security occurred in Canada, California or elsewhere, via telephone from my office at Pacific Equity training center or my home in San Diego. Further, the alleged "nerve center" of the charged RICO enterprise was not located in the Eastern District of New York, but rather in San Diego, California, where anthonypacific.com, my private website was based, and where the bank of twelve computers seized by the government, was taken.
I was arrested at my office in Encinitas, California, located in the Southern District of California, a district in which more than 200 Assistant US Attorneys serve. Yet Mr. Breen personally appeared at the initial appearance before the Magistrate, flying across the country for what should have been a routine bail hearing for an American citizen. Why was that done? It was done to enable him to make the following comment that set the tone for this entire prosecution: "Perhaps Mr. Elgindy had pre-knowledge of Sept. 11, and rather than report it he attempted to profit from it.”
For months the FBI had held steadfast to the contention that they had not found anyone or any agency that had any pre knowledge of Sept 11th. But suddenly, amazingly, and maliciously without a single shred of evidence to support and mountains of evidence to refute, Mr. Breen accused me, Anthony Elgindy, an American who attended USC, played football, wrestled, and graduated an Illinois State Scholar, of being the one person on the planet who knew about Sept 11th.
Why was this case brought to trial in New York, when I traded and lived in California, my servers were in Florida and my broker was in Canada? There was only one obvious reason. There could be no better place for the government to try an Arab American who “may” have known about 9-11 than in a jurisdiction next to ground zero. From that day until the verdicts were read, the dark cloud of 9-11 tainted every single aspect of this case. The words “terror” and “9-11” are mentioned over 350 times throughout the 37 day trial.
An impartial jury is an essential component of a criminal defendant’s fair trial, and, by exposing possibly biases on the part of jurors, voir dire serves to protect each and every defendant’s right to an impartial jury. Despite that, not once before or after the jury was empanelled, was anyone permitted to ask A SINGLE QUESTION of any juror about their feelings or possible involvement in 9-11 and/or its aftermath. For all we knew, all 12 jurors plus 6 alternates had breakfast together in the twin towers that morning. For all we know, each of them lost a loved one when they later collapsed. We don’t know. What we do know is that we WILL NEVER KNOW any of these things from any of those jurors.
I was convicted by this NY jury of various securities related charges under a “RICO” indictment. In my case, the government prosecutors loosely connected a number of defendants to each other under the umbrella of RICO, a very powerful and frightening tool that was used to transform me from a well known, credible, partly comical and partly offensive hyperbole ranting trader into an enemy of the United States overnight. By utilizing RICO, the prosecutors were able to intimidate and frighten literally hundreds of witnesses, thereby ensuring that their fictitious allegations would be presented to a jury virtually unchallenged. This is the first time since May, 2002, that anyone has discussed any aspect of this case IN DEPTH publicly; not surprisingly it’s ME who is doing it now.
What you are about to read is an accurate, factual and painfully conservative summary of certain issues that relate to the prosecution of the case now known as U.S. v. Anthony Elgindy. It has taken me over five months to complete this document, and I expect only one further edit before it will be left in its final form. Let me be clear that these are my words, case citations and research, and the facts are backed by the trial record and admitted exhibits.
The only story you were probably told or have read was that I corrupted an FBI agent and used him to get confidential information that I then used for trading, or that I extorted cheap shares from vulnerable con-men/CEO’s. You also were likely told that I somehow controlled the relay of negative information, in part through my website, in such a way that flooded the market with exaggerated negative sentiment in order to manipulate shares of bulletin board stocks downward. It is very possible that you were among the thousands of people with whom I interacted publicly, here on Silicon Investor or on InsideTruth.com. It is also possible that you were one of the 438 people who came and went on my old private trading site. I have much to say to those who interacted with me, those who believed in me, and those who relied on me. This is the beginning of what I have to say.
This case involved 6 stocks originally, but was later expanded to cover 41 unique stocks, thus forcing us to effectively defend 41 “mini-trials” within a trial. Factor in different defendants, a hedge fund or two, and the parameters become obscene. I was also charged with “extorting” 2 CEO’s of small scam companies for reasons that no one has ever offered. During the trial the government only managed to introduce “evidence” for 19 of the 41. Of these 19, I was convicted of only 4 of them. My calculated gains resulting from “inside trading” in these four add up to a little over $41,000.00. If one calculates the gains on all 19 mentioned but not proven to the jury, the amount tops out at approximately $160,000.00.
Among the players in this saga are Robert Hansen, “rhansen”, who was my website administrator and friend, Derrick Cleveland, a subscriber whose best friend was also an FBI agent, both of whom are from Oklahoma. Other players include Don Kent Terrell, aka “Quack” a subscriber from Minnesota whose connection with me is confined to the walls of my chat room, and Jonathan Daws, another subscriber, who managed a hedge fund, and also ran a secret chat room called “RC Chat” (retired chat).
There are two FBI agents charged in this case, Special Agent Jeff Royer and his girlfriend Lynn Wingate. I do not know Ms. Wingate, nor am I familiar with her role, so I will address Mr. Royer.
Derrick Cleveland we learned prior to trial had been a convicted drug trafficker, who had been sentenced to 10 years for trafficking in cocaine. We also learned that he had an extensive criminal background. Prior to watching me on TV, reading about me in the Wall Street Journal, or in WIRED magazine, Cleveland worked at a small day-trading outfit in Oklahoma, struggling to make a living as a day trader. Royer was a relatively green agent who was working white collar crime.
One day Royer walks into Cleveland’s office and discloses that he is investigating a “pump and dump” scheme being run by some unsavory characters. Cleveland seizes this opportunity to pass himself of as someone who is knowledgeable about the markets. Unfortunately for Royer, Cleveland knew less about the markets than Royer did about being an agent. Before long Cleveland, the former cocaine dealer, had become a paid informant for the FBI
Cleveland’s first move amazingly is to get Royer to “give him” information about the “pump and dumps”, not to expose them but to sneak in and buy them. Royer obliges, and immediately galvanizes forever their unholy alliance. Not surprisingly, Cleveland immediately manages to lose $25,000.00 that wasn’t his to lose. It didn’t take long before other shenanigans and dealings in yet another stock surfaced between Cleveland and Royer. This time the FBI took action, and pulled Royer off white collar fraud completely, and sends him to work “Indian Crimes” on an Indian Reservation near Gallup, New Mexico.
Royer is now obligated to Cleveland, and Cleveland never lets him forget it. During the trial, Cleveland testified that he had a “routine” to get information from Royer and Royer always obliged. In one of many interviews between Cleveland and AUSA Breen, Cleveland describes these routines as being “part of just another day in the life of Derrick and Jeff”. Having failed to make money on the long side with his best friend, and having Royer pulled off white collar crime was a setback. Unfortunately for me, Cleveland read news articles about me. He watched my 20/20 interview, and became fascinated with what I did. When he read in WIRED magazine that I had a private site, he set out to join, most likely with the goal of using his best friend Royer on the short side.
Throughout the trial, the prosecution called witness after witness, who testified how much they respected, admired and trusted Royer. Simply “being an FBI agent” carried with it enough prestige to impress most people around him. The mere fact that one could claim to have a friend or colleague who was an FBI agent created a certain awe in people, and that awe was something heavily relied upon by the FBI. Officer Mitchell, a police officer from New Mexico, testified that Royer was his close friend. He looked up to S/A Royer, trusting him implicitly. Former romantic interests testified that they were impressed and trusted him. They all spoke about the air of authority and confidence he presented. Even after S/A Royer left the FBI, SEC attorney Doug Gordimer testified that he maintained a close relationship to Royer and never believed or suspected that anything was wrong.
Office Mitchell testified that after Royer left the FBI, he also believed Royer was acting honorably and continued to trust Royer’s motives and actions. When S/A Royer asked Mitchell to do a criminal background search on a subject after leaving the FBI, he did it. Royer explained that he was in need of this information to follow up on some “unfinished business”, and Officer Mitchell believed him.
All of these witnesses who took the stand described their full faith and trust in S/A Royer during and after his tenure with the FBI. Many of these witnesses were trained and experienced veterans of law enforcement, who were diligent and proficient in detecting deception and identifying liars, yet every single one of them testified about their shock upon hearing of Royer’s arrest.
Royer testified in his defense. He testified that indeed I never asked or solicited any information from him. He testified that he did searches at Cleveland’s request, or as a result of his own curiosity in connection with a “legal purpose” that only he knew. He lashed out angrily and defensively about his actions and his role. He clearly did not like being questioned, and his arrogance was obvious to everyone in the courtroom. “He was the FBI”, and nobody should ever forget it. His testimony was truly a spectacle to behold, and I thought finally the jury will get to see how this man behaves, and what presence he exudes around others.
Extremely experienced officers and agents believed this man. Everyone trusted this man. If trained, professional and veteran FBI agents, SEC attorneys and police officers believed in him when he was with the FBI and continued to do so after he left the FBI, how can I be held to a different standard? How was I better equipped to know he was “no good?” If anything, I was more easily impressed, more flattered and more trusting. I was honored that an agent of the world’s top law enforcement agency, the FBI, saw value in what I did. For their argument to be valid, it would have been necessary that I was a better judge of character than all of the experts.
This case is ALL about searches, specifically the searches done by S/A Royer. An FBI Agent like Jeff Royer cannot simply run a search in the FBI databases if he is curious about something or someone. We learned at trial that there are specific rules and steps an agent must follow.
First there must be a legitimate suspicion or belief that there is some kind of illegal activity taking place, or some other legitimate reason for the search. In addition, the agent is required to specify what his suspicions are. To facilitate this, each FBI office has various “codes” that are assigned. There are obviously multiple purposes for this, the most obvious being the ability to allow agents world wide to know who, what and why a fellow agent is looking at a subject.
We also learned that the codes, once used, are never erased, and remain in the system forever. Agent Royer conducted over 1500 illegal searches during his 5 year tenure with the FBI. EACH of these searches is a felony, punishable by 10 years in prison. Agent Royer potentially faces 15,000 years in prison for these searches, however he was never charged for those crimes. Why? Because those searches showed that Royer considered these FBI confidential databases to be personal “super-google” machines. All these searches put together show a much different picture than the one the prosecutor needed to paint. Mr. Breen wasn’t interested in the 1500 felony searches, he was only interested in the few dozen searches he could forcibly link and attribute to me, through Cleveland. The evidence also showed that the searches were always initiated by either Cleveland or Royer himself. Cleveland testified that he was the one who decided which stocks among the thousands discussed on my site, should be checked by Special Agent Royer. Not once did Cleveland testify that I solicited any information from Royer. Naturally the Gallup office of the FBI didn’t have a code for “pump and dump” or “cooking the books.” When Royer ran a search on me or someone he was curious about, he used codes like “198F”. This is a code used for someone who is sexually abusing a child on an Indian Reservation, or he used a code for the suspected robbery of an ATM machine in New Mexico.
If this trial proved anything at all, it was that Jeff Royer was indeed a rogue and possibly corrupt agent. The corrupt relationship, if in fact there was one, existed between Derrick Cleveland and Jeff Royer. I use the word “possible” because I have yet to understand where or how exactly Royer benefited.
The government initially alleged that payments in excess of $30,000.00 were made by me through Derrick Cleveland, for the purpose of corruptly inducing Royer to give me confidential FBI information. This theory was later abandoned when the government was unable to document a single red cent passing from me to Royer or anyone else for information. Unable to support their initial allegations that money was exchanged for information, the prosecution theory then morphed into allegations that the corrupt inducement was a “lucrative job offer.”
Agent Royer had been interested in working for me, and we did have serious discussions about that, but he wanted to live in Denver, near his children; I on the other hand, had little interest in an out of state employee. Discussions about possible employment therefore were not actively pursued, and Jeff Royer was never hired. He remained unemployed for the entire five months from his resignation from the FBI until the day he was arrested.
The evidence presented at trial showed that for years and years, long before the existence of my websites, or any relationship with Royer, Cleveland or other characters in this saga, I already had developed relationships with numerous government regulators and Law Enforcement officials as part of my work as a short-seller and investigative analyst.
This case alleged, as did Cleveland, “Quack” and “rhansen”, that my “illegal enterprise” began the day I retuned from jail following a four month sentence for a false insurance claim I filed 7 years earlier. I served the four month sentence in 2000, and wrote almost daily about my experiences there. At that point I had hundreds of site members. I had believed and expressed that those four months were the worst of my life, and I vowed to never do anything to jeopardize my liberty again. Between 1993 and 2000 I had became an extremely successful short seller who had amassed millions of dollars in wealth. I was on T.V., in magazines, and the subject of three books. Things couldn’t have been better. There is no denying that the publicity about the four month sentence was embarrassing and humiliating. Here was the self described fraud buster being jailed for fraud himself. With the support of hundreds if not thousands of internet supporters, I served my sentence and sought closure to what had been the worst struggle of my life. Little did I know what lay ahead.
Upon returning home I was placed on probation for three years. For a new felon, dealing with law enforcement is subject to court approval. Any contact with other convicted felons is completely prohibited. Because my business as a short seller put me in touch with both felons and law enforcement, I repeatedly sought and obtained explicit permission to deal with both felons and law enforcement officials. A condition of that permission was that I disclose those contacts to my probation officer on a monthly basis.
The evidence showed that my dealings with law enforcement prior to the four months in jail continued after my release, changed only by the additional requirement that the contacts be reported to a probation officer. Initially my relationship with Special Agent Royer was no different than the relationships I had with the numerous other representatives of law enforcement and regulatory agencies with which I spoke often. Our relationship changed when Special Agent Royer expressed to me his desire to transition from law enforcement to trading. He believed that I was best suited to teach both himself and his best friend, Derrick Cleveland, how to trade.
Skipping forward, I was convicted of possessing information regarding an investigation into Sea view (SEVU), and disseminating that information to my site members. What was NOT made clear however, was that it was MY OWN SITE that generated the information that led to the investigation. The chat logs from my site are full of examples of the work the site members did on this investigation. We called purveyors, retailers, suppliers, even the company itself, all in an effort to investigate the company’s claims which we believed to be false. This sort of due diligence is exactly what the SEC directs the public to do before investing in a company. It was ME, not Special Agent Royer, who interviewed an employee, Ken Cook, regarding the fraud in the company. It was ME who directed him to the FBI office in Clearwater, Florida. Ken Cook was then interviewed by Special Agent Charlotte Brazeil and Special Agent Neil Palenzuela in the Clearwater FBI office. I was fully debriefed by them as well, and reported my debriefing to my probation officer (http://adserv.stocksite.com/images/tonyscan2.jpg ), along with their contact information.
It was during this initial period of research and due diligence conducted by us that our trading positions were taken. In FBI Special Agent Charlotte Brazeil’s first interview after my arrest, she stated under oath that the three investigations into SEVU by the FBI and SEC were initiated by the information generated on my website and the information that was obtained from Ken Cook. I began those investigations. Prior to my reports and investigative work, there was NO active investigation into SEVU by any law enforcement or regulatory agency for any reason. At trial, however, Agent Brazeil never testified.
It was not until January 12, 2001 that Special Agent Royer told me that there were three investigations into SEVU. I then told the site members what he told me, verbatim, and then documented it in my notebook and sent it to my US probation officer (http://adserv.stocksite.com/images/tonyscan2.jpg ). This investigation was MINE, all mine. I started it, and I provided all the information to the FBI. At trial, Special Agent Neil Palenzuela, Brazeil’s partner testified that he had no recollection of who started the investigation, although he did remember Ken Cook. He also testified that those investigations terminated when the CEO of SEVU died.
Like anyone else in my shoes might have done, when told that my work had been fruitful, I proudly communicated that praise to those who worked on the investigation with me. No one on my site needed, relied on, or used FBI information to make trading decisions. Just like the hundreds of equally corrupt companies we shorted before and after SEVU, we knew the company was corrupt, therefore we knew the stock price was doomed.
Much like a neighborhood watch group, we reported corrupt and dirty companies weekly to numerous regulatory and law enforcement agencies. Those reports, however, resulted in action only a fraction of the time, and we never relied on regulatory action to make a trade. The confirmation of an FBI investigation was provided long after we had initiated our positions in SEVU. There was no testimony that I relied on that FBI information to place a trade, because there were no such trade. My next SEVU trade was not until January 29, 2001, some 17 days after I received the information.
In both the initial and superseding indictments, the prosecution repeatedly references this specific chat excerpt. On January 12, 2001, I identified in the chat room the three investigations into SEVU, and I made the comment “Hansen, erase the logs.” I said this as I stated in the chat room later, because I didn’t want to jeopardize an ongoing FBI investigation by having anyone posting this information on public message boards. Unfortunately it was already too late, since Ken Cook had made that information public 5 days earlier. In post # 17,954, long since deleted, and 5 days before January 12, after being debriefed by the FBI, Ken Cook announced that both the SEC and the FBI were investigating SEVU. Mr. Cook made this post on a public SEVU message board located at Raging Bull.com, a popular public site for stock traders to exchange information and opinions. His post was noticed immediately by site members and the following exchange occurred on
January 7, 2001:
[12:52] DMG >> Is KCPoisenArrow, Ken Cook? Look at the last bullet item! Who is putting this out?
ragingbull.altavista.com
[12:52] stirlingmoss >> he denied being Ken Cook in an earlier post, but who
knows
[12:53] DMG >> "ONGOING FBI SEC CRIMINAL INVESTIGATION.
When I remembered that Ken Cook had already made that public disclosure, I decided not to erase the chat logs-nor were they EVER erased-since we realized the information had already been made public in a public forum frequented by both SEVU shareholders and management. The jury was never told that the chat was not deleted. Robert Hansen incorrectly testified that he deleted this chat when in fact he had not done so. The prosecutors solicited this testimony, and then embraced it instead of correcting it.
There were ongoing jokes about erasing the logs, mostly done during fights, when off color jokes were made, or when someone was posting inappropriate adult site links, not confidential regulatory information. On January 12, 2001, I posted the following in my chat room:
[16:44] AnthonyPacific >> 4 the 3 investigations are wire fraud, mkt
manipulation, and mail fraud officially by the FBI SEC is dong a title 15
investigation..and none of this can leave or go public..if you do you willbe
pros
[16:44] AnthonyPacific >> 4 thats a fact direct;ly from the FBI
[16:44] AnthonyPacific >> 4 erase the log Hansen
[16:45] AnthonyPacific >> 4 i dont think we will get anymore info again thast all we get
[16:45] Salogan >> no more info from FBI Tony?
[16:46] AnthonyPacific >> 4 sal i think we have gotten our fair share salogen
and this is out of courtesy for all the hard work
[16:47] AnthonyPacific >> 4 i think we did good
[16:47] AnthonyPacific >> 4 if anyone even mentions FBI on a message board I
think you will get in a woreld of trouble
[16:48] AnthonyPacific >> 4 ok folks?
[16:48] AnthonyPacific >> 4 Bye everyone
[16:49] Kris >> i thoght FBI was already mention on boards
[16:49] Kris >> i think ken cook menitoned them didn't he?
[16:51] AnthonyPacific >> 4 well from today on
The chat text following the now famous line “erase the log Hansen” has never before been made public, and obviously portrays a different picture than what the prosecutors have led everyone to believe.
Of the 1100 chat logs in this case, the prosecution was unable to find any chat log deletions even remotely associated with the SEC or FBI with the exception of a few hours on January 2, 2001, the same day Special Agent Royer accessed the FBI computers for a search on SEVU’s CEO, Richard McBride. Despite having retrieved the deleted logs during their investigation, the prosecution never introduced them into evidence. WHY? Because it was not Anthony Elgindy who asked that the logs be deleted, and the real reason they were deleted was to prevent the SEVU CEO from covering up or destroying his fraud, something he attempted to do when he staged a “break-in” at his headquarters, reporting that his mainframes and important documents were stolen. The deleted text was exculpatory.
I clearly had no belief that the receipt of this information was wrong. The stock had already experienced the majority of its decline, my coverage was over, and I didn’t make an additional trade for over 2 weeks. IF this belief was wrong, it was the fault of the FBI who should have known better. I was not charged with knowing what the FBI can and can’t disclose to me. Further, anyone who knows anything about shorting stocks knows that an “investigation” is meaningless information when making trading decisions-something that was frequently discussed among traders on the site.
Unfortunately the average American investor doesn’t understand that when the SEC, for example, informs a company or person that they are conducting a “formal non-public investigation”, that company is REQUIRED to publicly disclose that “non-public” information. The government’s star witness, Derrick Cleveland, testified that “this kind of information is the best in the world.” I knew differently.
Therefore there was no effort to attempt to capitalize on and use “inside information” because the flow of information on SEVU began with me and my site members. My short position began on Oct. 9, 2000 when the stock was $10 a share. By the time there was any information disclosed about an FBI investigation, the stock had traded around $3 a share. No one was entering positions at that point, and when asked if I was taking a position, I stated NO.
Further, the very information that was supposed to be so circumspect regarding an investigation was posted on the investment chat site “Raging Bull” 5 days prior to anything I posted on my website. Thus the question to be asked is what IS “public” information? Had the information that SEVU was garbage been effectively disseminated in a manner sufficient to ensure its availability to the investing public? Had the market ‘absorbed’ the disclosed information? It seems a stock going from $10 to $3 indicates that the investing public absorbed it quite well.
The testimony and evidence overwhelmingly shows that the motivation and purpose in providing this information to governmental agencies was to expose a fraudulent company, or ideally to cause them to be shut down while profiting at their expense.
We introduced evidence and testimony going back to 1997 showing my interactions, on tape and in writing, with lawyers and agents of regulatory agencies regarding fraudulent companies, many of which I was openly shorting at the time. For example, in 1997 in a stock called Quigley, “QGLY”, a company selling cold lozenges, I was contacted by SEC attorney Jonathan Levy and FBI Agent Mike Gaeta. Both were aware that I knew of their investigations into QGLY, both knew I was short, and both testified that no one else in the public would or could have known what I knew. The testimony showed that frequently when I spoke with regulatory agency representatives they often disclosed SEC or FBI interest in specific companies, acknowledging that the public did not know about that interest, while at the same time acknowledging my short position in the very companies they admitted to investigating. When these conversations occur on a regular basis, am I not to presume that the agent knows what he can and cannot disclose to me? Would any reasonable person have assumed otherwise?
When I initiate an investigation that is beneficial to the investing public by exposing a fraud, I obviously possess an informational advantage as a result of my due diligence and hard work. However, under the misappropriation theory of insider trading with which I was charged, a person violates the law when he misappropriates material nonpublic information in breach of a fiduciary duty or similar relationship of trust and confidence and uses that information in a securities transaction.
Agent Royer’s fraud was consummated, not when he gained the confidential information, but when, without disclosure to the FBI, he or his tippee used the information to purchase or sell securities. The securities transaction and the breach of duty thus coincide. The government was required to prove that I knew Special Agent Royer was sharing material, confidential, non-public information in violation of his fiduciary duty to the FBI, and that I traded on that information. Yet there was NO EVIDENCE that this was the case. On the contrary, if I had known that what Special Agent Royer said or did was wrong, would I have openly repeated it to my site members, and more importantly, would I have reported that information to my probation officer (http://adserv.stocksite.com/images/tonyscan2.jpg )? My site had between 150-200 people logged on at any given time during market hours, yet not a single one ever spoke up and said “Hey, what’s going on here?” No one ever filed a complaint with anyone. The words “FBI” and “SEC” appear over 4000 times in chat and there was ONE deletion, eventually recovered. I am simply confused as to what I could have done differently.
I was interviewed by Agent Brazeil, and completely debriefed on SEVU. I introduced her to Ken Cook, the product manager at SEVU, and I introduced her to the beginning of this investigation. I dealt with 12 different Law Enforcement agents/officers regarding SEVU. The jury found me guilty of inside trading in SEVU, yet I was acquitted of inside trading and manipulation in SULPHCO, “SLPH.” One cannot appreciate the jury’s confusion and prejudice unless you see what the prosecution presented for SEVU and compare it with what they offered for SLPH. What you see at the bottom is everything the prosecution offered and everything at the top is what they left out that we had to fill in. I started both investigations by the SEC and FBI into SLPH. I also started both investigations into SEVU when I sent Ken Cook to Agents Charlotte Brazeil, Neil Palenzuela., and SEC attorney Andrew Snowdon. I now stand convicted of knowing about the very investigations I began in SEVU, yet acquitted of the investigations I began into SLPH. In both cases I reported my contacts with Law Enforcement and S/A Royer to my probation officer. Once again I am stumped and frustrated because I don’t know what I could have done differently. Something is very wrong with this picture.
Next I would like to address the allegations of manipulation through group trading, staged release of information, dissemination of negative information and front running. To make out a claim of market manipulation, the government must present evidence that I intended to engage in some type of deceptive behavior in conjunction with my short selling that either injected inaccurate information into the marketplace or created artificial demand for the securities. The word intent is used in excess of 90 times in the instructions to the jury. To prove fraudulent intent, the government was required to prove that I intentionally devised or participated in a scheme with knowledge of the scheme's fraudulent nature and with the intent that the scheme's illicit objectives be achieved. They simply did not present that evidence, because it does not exist.
The prosecution had the task of getting 12 people to look and see what over 400 plus other people never saw, day in and day out, for years. Knowing they could never prove intent, they substituted character assassination. They also set out to “demonize” short selling. They painted the picture that all short sellers are bad and horrible sources of information. They introduced prejudicial, unfounded and ludicrous allegations of suspected activities relating to September 11. They introduced a blown-up photograph of me with an FBI business card on my forehead. They were so excited when they blew up the image of the fake ID they practically danced with it in front of the jury. The assault on my character was relentless. Every possible opportunity to chip at me, to tear me down, was seized. The message they wanted to send was that no one could possibly get information of value from me, because I was simply ME.
SEC attorneys who previously had sought information about stocks I was investigating and shorting could no longer recognize or remember emails they sent to me. SEC attorneys with whom I had worked in the past and who had patted me on the back no longer could recognize my work. The countless hours of work and research out into each Insidetruth.com report were summarily dismissed. It became clear that a pattern was developing. Insidetruth.com reports became “radio-active”, most couldn’t recall ever reading them or why they sent the reports to other SEC attorneys. Who needs “intent” when you can sling mud?
The government alleges that my website members sometimes coordinated to sell their shares all at once to pressure stock prices downward. I would point out that it is completely legal for a large group of people to buy or sell a stock at the same time. However by simply making these allegations, the prosecution was somehow able to invent a brand new crime during the trial. They called it “group trading,” defined by their witness as “Trading where everybody is trading in the same direction, same stock, with the same results of stock going down.” To support their allegations of criminal activity, they cite my own words in chat where I am describing my understanding of “collusion”. Collusion involves non-bona fide buy or sell orders placed by more than two people with the sole intent of creating a false market picture. There were never any such trades by anyone, nor is anyone alleged to have ever entered any fake orders. Groups of people are legally permitted to buy or sell a stock, and there is no such law that states otherwise. Even if they acquire a large position and the effect of that position is to depress the stock price, it does not constitute manipulative or deceptive activity. The truth is that short selling-even massive short selling-does not create a false impression of supply and demand in the marketplace because there necessarily are other parties betting against these positions. That short selling may depress share prices, which in turn enables traders to buy more shares for less money, is not evidence of unlawful market manipulation, or fraudulent intent, but rather is a natural consequence of a lawful and carefully regulated trading practice, namely short selling. GFL Advantage Fund, Ltd. v. Colkitt, 272 F. 3rd 189, 2001. “Short selling is simply not unlawful, even in large quantities and even if the trading does negatively affect the purchase price," as long as "the trading volume and price reflect supply and demand based on accurate market information." In re Olympia Brewing Co. Securities Litigation, 613 F.Supp. 1286. This is true even if more shares are sold short than physically exist. Sullivan & Long Inc. v. Scattered Corp., 47 F. 3rd 857, C.A. 7 (Ill.), 1995.
When it comes to short selling in general, the SEC itself acknowledges that "short selling provides the market with at least two important benefits: market liquidity and pricing efficiency." The SEC explains these benefits further saying that "Market liquidity is generally provided through short selling.”Market participants who believe a stock is overvalued may engage in short sales in an attempt to profit from a perceived divergence of prices from true economic values. Such short sellers add to stock pricing efficiency because their transactions inform the market of their evaluation of future stock price performance. This evaluation is reflected in the resulting market price of the security."
When you are in a chat room with 10, 20, 50 or 200 people, and you are all looking for trading ideas, long or short, and one of them bumps into a juicy looking, ripe scam that seems to be in the middle of a yet un-exposed pump and dump, it is not surprising to see the stock drop or even collapse when people begin to sell the stock. Insiders and pump and dumpers hate when anyone joins them in selling their stock. This stock movement is no different than the more commonly seen gap ups in a stock’s price after good news. One only need to watch any financial channel during a “buy, sell or hold” segment to see a massive change in a stock’s price as some analyst says it’s a great buy or an over-valued company while thousands of loyal viewers push the buy or sell button simultaneously.
I did nothing but tell the truth, or what I believed to be the truth; there was no testimony to the contrary. If information is truthful, how can it possibly be manipulative?
What we were doing was in effect promoting efficiency in the securities market by researching and exposing fraudulent companies, and profiting from that legitimate information advantage-an advantage created through our own hard work and due diligence.
The effect of trading on an information advantage is to penalize ignorance, and to bring market values into closer, quicker conformity with economic reality. Legitimate traders and analysts should be able to profit from their diligence without having to speculate as to the risk of a criminal penalty, or whether they will violate a duty by trading while in possession of public information. If a company is a fraud and a scam, having no value other than its own puffery, how can one exaggerate that fact? They have no legitimate earnings, and their value consists of nothing more than their creative ability to fabricate and publish fraudulent press releases. No trader, broker, analyst, fund manager or investor owes any obligation to the public, any group or agency to disclose their research, findings opinions or most of all their trading positions. The resulting selling pressure exerted on any stock is completely legitimate so long as every one of the buy and sell orders are legitimate, bona fide orders that are placed by investors who actually intend to buy or sell the security. Quite contrary to the narrow minded views of the prosecutors in this case, to suppress well researched actions of short sellers would allow these fraudulent, scam companies to induce even more innocent victims into their web, only to sooner or later be fleeced of all their investment dollars. That is what ultimately erodes investor confidence in the marketplace causing them to choose other investments, which would hurt the liquidity of the exchanges, the liquidity of the marketplace, and eventually the capital structure of our country.
The front running allegations and convictions were especially incredible. Interestingly the prosecution never once in the indictment or in the trial disclosed my execution price, not even when it is directly related to my conviction, such as in the front running conviction for INIV. For example, I was convicted of front running for the following situation: I entered an order to short three thousand shares of INIV at 12:44 PM, at a price of $4.45. Within minutes I got a call with a trade report, confirming a sale of 3000 shares at $4.45. I then called it a short on the site at 12:50 PM. In chat I tell my site members that I had shorted 3,000 shares a few minutes earlier. You can see for yourselves, no one placed a short sale immediately after my call; the next trade in INIV was done 8 minutes later.
CHAT: 8/17/01
[12:50] anthony >> INIV<--short 15-20% @ 4.45>
[12:51] anthony >> INIV located in CHINA
[12:51] anthony >> caujseway bay, people s republic of china
[12:51] anthony >> phone 852-4329
[12:51] anthony >> PROP job
[12:51] anthony >> used to be ISOF
[12:54] anthony >> INIV already split
[12:54] anthony >> this ois the post split price
[12:54] doorman >> INIV volume hasn't moved since call? I'm showing 21600
[12:55] anthony >> i sold the 3 seconbds before the call
[12:55] anthony >> 3K
[12:58] anthony >> i waited for INVI to get high then called it
[12:58] chris431 >> 20k print 4.35 iniv
[12:59] anthony >> good let em choke
[12:59] anthony >> pete how many out on this pig.
[12:59] anthony >> anyone want to guess whose 20 that is
[13:01] ebrahim >> wow .. they filled me at 4.35 ;)
[13:01] anthony >> iniv is crooked
There was NO evidence presented that anyone was harmed by this or ANY OTHER trade that was alleged to be front running, or trading against the site. There were no site members to present testimony of harm because there was NO HARM. My pattern and practice was to trade what I said I was trading, Each time I said I shorted a certain stock at a certain price that’s what I did. The government presented no evidence to the contrary because such evidence did not exist. We presented chat from one of the dozens of site trading classes discussing what one could expect on trading calls.
[21:06] rhansen >> You will see two types of calls here
[21:06] rhansen >> Broadcast and Chat
[21:06] WhoLovesYa >> good calls and bad calls
[21:06] maximus >> and long and short
[21:06] rhansen >> Broadcast calls will not only sound the gong sound but also
go to your email and / or pager
[21:07] rhansen >> Chat calls are simply posted in chat because they are risky
or very short term and are only applicable to people in chat
[21:08] rhansen >> You have to remember, a call wether broadcast or not is just
a trader here saying that he or she is making a trade
[21:09] rhansen >> If you follow that trader a lot then you might chose to make
the same trade, but that is completely up to you
[21:09] rhansen >> They are not "telling" you what to do, simply saying what
they are doing
[21:10] anthony >> and in some cases,,they are telling you what they have just
done
Amazingly I was convicted of fraud through the act of front running my site members by selling INIV at $4.45 at 12:44 PM, then suggesting INIV was a good short at $4.45 a few minutes later. In chat we see a member at 12:58 referencing a 20,000 share print on INIV at $4.45, then 11 minutes after the short call at $4.45, another member is filled at $4.45. Anyone who knows trading must be shaking his/her head in disbelief. The jury simply did not get it.
Can we for a moment examine what front running actually is? As defined by the SEC itself, front-running occurs when a licensed broker executes a proprietary trade while in possession of unexecuted customer orders for the same security to the detriment of his customer. Was I a licensed broker? Absolutely not. Was there a scintilla of evidence of harm to ANYONE as a result of my trades? No, there was not. Further, the “directives” or “advice” which is how the government mistakenly characterize my opinions and beliefs on the site, were all at specific prices at which I believed a good short position should be executed. There was not a single example presented by the government that I encouraged or suggested that someone sell at a price less favorable than my very own execution. Yet I stand convicted of front running and trading against my own advice?
Another incredible example of the injustice of this case is the conviction for trading in VLPI in count 32. VLPI you may recall is the company that attempted to profit from the post 9-11 turmoil surrounding the ANTHRAX scare by claiming they were about to unveil a home test kit for Anthrax. This kit was to be sold at Ace Hardware among other locations. That was all false of course. But this didn’t keep the stock from moving from a few cents a share to almost $3.00 a share on 10’s of millions of shares.
This was the only chronology presented by the prosecution:
B/C means a Global site wide and email broadcast, meaning an official broadcast trading call sent by
email to every single site member and to live chat simultaneously.
10/23/01@ 9:17am Elgindy shorts VLPI
10/23/01@11:44am B/C VLPIàshort @1.80-200(add)
10/24/01 Elgindy covers VLPI
The chronology of VLPI calls and my trading calls are as follows: (http://adserv.stocksite.com/images/tonyscan3.jpg )
10/15/01 @ 13:10 Elgindy shorts VLPI @ .88
10/15/01 @ 13:17 B/C VLPIàshort 20% @ .88-.90 (scam, exploits attacks)
10/16/01 @ 11:45 B/C VLPI cover @ .60-.62 (gain of 33%)
10/16/01 @ 11:48 Elgindy covers VLPI @ .60
10/17/01 @ 2:07 pm B/C VLPIàshort 20% @ 1.26-1.30 (second pass)
10/17/01 @ 2:08 pm Elgindy shorts VLPI @ 1.25
10/17/01 @ 1:45 pm Email B/C VLPI-à is a 100% position candidate
10/18/01 @ 12:55am*( In the middle of the night) VLPIà making illegal claims
10/18/01 @ 7 :30 pm email B/C/ VLPIàbanned from posts on message boards
10/19/01 @ 9:23 am B/C VLPI-àshort 25% @1.95 (add)
10/19/01 @ 9:17 am Elgindy places order to short VLPI @ 1.96
10/23/01 @ 10:56am Elgindy shorts VLPI @ 1.83-1.90
10/23/01 @ 11:44am B/C VLPI-àshort 20% @ 1.80-2.00
10/23/01 @ 3:57pm email B/C-à VLPI report on InsideTruth
10/23/01 @ 4:10pm email B/C “go audio, my last ‘til my return”
10/23/01 @ 5:02pm email B/C/ “new policy while I am gone”
10/23/01 @ 7:24pm email B/C “Ace Hardware denies selling VLPI Anhrax kits”
10/24/01 @ 10:56am during the day, Elgindy covers 90% of his VLPI position @ .80
10/28/01 @ 12:55pm email B/C “I am in Cairo, it appears to be incredibly safe”
11/20/01 @ 8:09pm email B/C “I am home, hope everyone is well”
11/20-11/27/01 Elgindy re-shorts VLPI @ average .60
11/28/01 @ 12:30 B/C “VLPIàSEC investigation, Tests were never certified”
12/14/01 B/C “VLPI à raided by FBI, cover at 18 cents.
12/14/01 Elgindy covers all VLPI short position @ 18 cents
I was convicted of front running based on a short sale made on 10/23/01. This was the third call made on this stock, adding to a position that we had begun trading on 10/17/01, and traded almost every day for a week. As you can see in the chronology, I made a call on VLPI on 10/17 @ 1.26. I then made a second call, adding to my VLPI short, on 10/19 @ 1.95. I clearly state it’s an “add” to an existing short position. Finally on 10/23 I make a third call, also an add, @ 1.80-2.00. I sold 5,000 shares at an average price of 1.85 on the 23rd. I was short over 100,000 shares of VLPI, yet this one 5000 share trade resulted in a felony conviction of wire fraud? This is not even front running. Further, how can any additional short sales in VLPI possibly front run anyone since they are presumably already short?
Count 21 alleged that I traded against my advice. What advice? The sell short calls on 10/23/01 that preceded the SELL recommendation I published on InsideTruth.com were made when the stock was trading near $2.00 as you can see from the above chronology.
This chronology shows that I participated in every trade I suggested with one exception. On 10/23/01 at 7:24 pm Ace Hardware denied they were selling the test kits. The next day, VLPI shares plunged. My previous short call and sales were at roughly 1.90, and the stock was at .80 on 10/24. However, since I was leaving the country, and could not monitor the position, I decided to quietly book most of my VLPI profits of over 50% so I wouldn’t have to worry about a six figure short position in a penny stock while I was away. Upon my return, I quietly re-entered my short position, at a price lower than where I covered. In other words, I paid a .20 premium just for the peace of mind I had of not having to worry about an open position while on vacation.
The prosecution failed to disclose the price at which I sold VLPI on 10/23, or the price at which I bought it on 10/24. They also never disclose the critically important intervening announcement that Ace Hardware was not selling the Anthrax test kits as had been represented. The price dropped by 50% overnight. ANY trader in my shoes would have covered that position. Had the government been candid and the jury understood what had occurred, they would have seen the last “short” call on VLPI was a cover @ .18 on 12/14/01.This would have given anyone who followed my calls a profit of close to or above 90%. Site members weren’t empty headed children; they were fully grown, mature traders perfectly capable of making their own decisions and managing their own money. None of them required that I “call” each and every transaction I made on my own behalf, nor did they expect that, nor did I promise that. How does my covering a position prior to my vacation relate in any way to their own money management decisions?
The Government was not unable to find any huge amounts of money made by me in any of these tiny scams that Cleveland and Royer searched, nor could they find any victims. They had no choice but to dig into minutia of thinly traded stocks that, on average, made me $10,000 each. The significance of these transactions are put in perspective by understanding that I made more trading HAND, the rival of PALM, than ALL of the stocks mentioned in the indictment combined. These thinly traded scam stocks were more for my entertainment than for profit.
This was part of the government’s strategy – confuse the jury, and then offer simplistic, contrived “explanations” to make them think they understood when they clearly didn’t. The jury was faced with an enormously complex case, which made it easier for them to be persuaded by the government’s pre-packaged account of the facts as well as the prosecutor’s own bias against short selling in general.
I was convicted even though I did exactly what I said I was going to do. No fraud, no testimony of fraud. Can you imagine a stock fraud prosecution in which the prosecutor never tells the jury the price at which the defendant bought or sold the stock? Where the prosecution never shows harm as a result of the trade, or puts a single “victim” of the alleged fraud on the witness stand?
I ask myself how is it possible to exaggerate negative sentiment in a company that is a fraud to begin with. Where is the line between appropriate negative and exaggerated negative? Is it now a crime to express extreme views, or have strongly held beliefs? Why am I not allowed to believe a stock is a good short or a scam, and communicate that opinion to others? How can it be a crime to tell 10, 20 or 100 people that a scam trading at $5.00 is in fact a scam? Is it manipulation because 50 people try to short a stock at $5 and only 7 or 8 get the position at $5, another 3 or 4 get it at $4.50 and the rest get nothing? If a company is a real company, any price dip will be met with enthusiastic buyers, happy to get a good deal, and normal market conditions will regulate the stock price. Smart investors will recognize the opportunity to buy more shares for less money. Only if a stock is a fraud will there be no buyers, because the price was artificially inflated to begin with. Scammers and insiders rely on pump and dump schemes, and become angry and vindictive against those who uncover their fraud, because the price will soon collapse when selling based on truthful information is combined with the insiders own selling.
Similarly, is it a crime to be short 10,000 shares of a stock, and trim down that position to 7,000 shares, or 3,000 shares as one manages his own capital and risk exposure? Is it really so inconceivable to believe a stock is a scam, and yet still trade it cautiously because the manipulation upward was so strong? Why should I not be allowed to profit from a trade simply for believing that the company share price will eventually implode to pennies per share? Why am I not allowed to close positions and restart them while always trading from a net-short position? Those on the site knew all about “recycling”, “milking the cow”, “private trading” and numerous other expressions used almost exclusively on the site. Most site members could tell you in detail how to extract 3-4 points from a $2.00 stock, using trading volatility.
Unfortunately that testimony was not presented at trial, since many site members who wanted to testify were intimidated by the government’s threats of possible prosecution, or being named as un-indicted co-conspirators. They were confused by the ability of the government to keep the names of the stocks sealed until time of trial, thus preventing both site members and their legal counsel from adequately assessing their own legal status. Those actions by the prosecutor, who according to the ABA Model Rules of Professional Conduct is required to act as a "minister of justice," meant that the jury had to rely in large part on Derrick Cleveland for information about how the site worked.
Common sense tells you that you don’t make money unless you take your profits. Especially in scam companies, one never knows when the next false press release will generate a 20-50 or 400% rise in the stock price. I was always trading the scams from the short side, but as a trader part of my discipline is always to book profits when they become available. We called it the 15-20% profit rule on the site.
It was further pointed out that in every one of my reports was a disclaimer stating that “I can and often do maintain a position consistent with my reports.” By extension this also means that I may NOT maintain such a position, although I usually did. Somehow the prosecution believed that partially covering a profitable short position, just like selling some of a profitable long position was not smart trading but rather trading against my advice and against my site members. It is a ludicrous concept, but yet that’s what the jury was led to believe. It is just another example of how confusing and contrived their presentation was, and how the jury really was misled. The fact that there was no trade that I broadcast that I did not actually do at a similar time as the broadcast, or that there was no evidence of a price differential to my benefit or to a site members’ detriment simply did not matter.
The allegations of “spreading false or misleading statements” concern two statements taken from hundreds of thousands of public statements made about thousands of topics over a period of many years. The first statement was my accusation in an email that Paul Brown was a convicted felon and the second was a statement that Insidetruth.com had uncovered ties between Adnam Kashoggi and Osama Bin-Laden. This latter report was released on September 25, 2001, AFTER trading in GENI had already been halted by the NASDAQ. Incidentally, after that report was published, GENI shares NEVER traded again.
The Paul Brown accusation was the result of a routine criminal background search that was conducted by a site member on December 18, 2001 showing Paul Brown to be a convicted felon. The site member “Quack” testified that he sent me that information the next day, December 19, 2001. I then contacted the Idaho Dept. of Corrections, and on a taped, site-wide audio broadcast phone call confirmed with them that Paul Brown was indeed a convicted felon. It was only later that I learned that Paul Brown’s conviction had been expunged, which I acknowledged to him both privately and publicly. At all times, however, I believed what I said to be true.
Meanwhile the alleged Osama Bin-Laden and Kashoggi link, it came from a published Dutch report that we had translated into English and once again we believed it was a true statement. During the trial, SEC attorney Rob Long admitted that the SEC itself was investigating the possible connection. Regardless of whether or not such a connection between a well known arms trader and Osama Bin-Laden existed, we believed it to be true-or at least plausible-just as others far more knowledgeable than ourselves did. More importantly, since when is it a crime to publicly express an opinion, even a mistaken opinion? The true perverse irony of the government’s accusation-that I wrongly tied a high-profile individual to terrorism in order to capitalize on the ensuing negative hype-is exactly what the prosecutors did to me. The difference was that if I did so, I did it unknowingly.
I now turn to the testimony of Derrick Cleveland, the star witness for the government. Having succeeded in frightening and intimidating most site members, the prosecution was able to present the avalanche of lies fabricated by Cleveland, virtually unchallenged, before the jury.
Derrick Cleveland testified that my price targets in InsideTruth.com were “unreasonable.” When I gave SEVU a price target of .05, he testified that he and everyone else expected me to stay short until SEVU hit that price of .05. Thus any cover of my position would cause me to be guilty of trading against my own advice, and trading against site members. Cleveland testified that he traded NSOL after obtaining inside information about Paul Brown from Jeff Royer. This is a lie. In fact, on December 18, 2001, members of my site learned that he had a felony conviction from a publicly available website; it was not until the next day, December 19, 2001, that Derrick Cleveland asked Jeff Royer to check it out in the FBI database. I traded based on the December 18th information as did many other site members. Ironically the significant person who did NOT trade NSOL was Derrick Cleveland himself since the check done by Jeff Royer showed that Paul Brown was not a convicted felon after all. Cleveland didn't trade NSOL like I and others did, because he knew the felony information was erroneous. He knew this because he was the only one who knew and apparently needed Royer’s information. It took me five days to learn what Cleveland knew on December 19th (http://adserv.stocksite.com/images/tonyscan1.jpg )
12/24/01
10:25] anthony >> 4 Brown had his felony conviction expunged
[10:26] anthony >> 4 He can legally deny it ever existed unless he is testifying
in criminal case
[10:26] anthony >> 4 I have the expungement document
[10:27] anthony >> he got it expunges to get the weopons permit
Cleveland testified that Royer was to remain a secret source of information and that both he and I knew that. The evidence, however, showed the opposite. I routinely and readily admitted on the site that some information was received from Royer; our relationship was not kept secret because I believed I had nothing to hide. My criminal liability necessarily must depend upon a showing that I knew Jeff Royer breached a fiduciary duty to the FBI-which evidence simply does not exist. Had I known there was something illegal about Jeff Royer’s comments, why would I so openly discuss them on my site that was comprised of hundreds of members? Even more baffling, why would I tell my probation officer (http://adserv.stocksite.com/images/tonyscan2.jpg ) exactly who I was meeting with, and what I was doing? Why would I put in writing-to a federal law enforcement official no less-that which I believed to be illegal?
Cleveland similarly testified that the chat alias “APCork” was Jeff Royer, but testimony by Robert Hansen, site administrator, showed that to be a lie as well.
Cleveland testified that he traded BIOP based exclusively on the “inside information” he received from Royer regarding a raid by Mexican authorities. Yet another lie, since the evidence showed that this information came from a publicly available news story reported on Bloomberg News 10 minutes earlier. (http://adserv.stocksite.com/images/tonyscan5.jpg ) There was no access of the FBI database about any raids; Cleveland simply made it up. The jury once again was misled. Too complex and convoluted doesn’t begin to describe the prosecutors’ tactics to distort the truth rather than to seek justice.
Cleveland testified under oath that he traded on illegally obtained information provided by Royer, and that in all but two instances he made money. Upon examination of his records, it becomes clear that Cleveland’s testimony is once again inaccurate. SEVU and BIOP are perfect examples of this.
Cleveland testified that he and I both knew that chatting about Royer, his information and the FBI was dangerous, yet the chat showed that I never hid Royer’s identity, and when asked about Royer or any information that I may have discussed with him I freely and openly admit it.
My website had two chat rooms, a “short” and a “long” room. Both of these were logged daily. The logs were maintained for several days, before being purged. There was also an audio component that allowed members to hear me on their computers regardless of where they were. If you can hear “AOL’s “you’ve got mail” you could hear me. In addition there was broadcast email and text messaging for those members who were not able to be on the site all day. Members could also communicate among themselves in private chat rooms, to which they could assign special names. The primary purpose of these chat rooms was to enable members who wanted to discuss some issue in depth to do so without cluttering up the site with their dialogue. Any member could create a room, or enter a room at any time. At the same time, at the top of their screens, every member could see exactly how many rooms were open and how many members were logged into each room; entry was open to all members. Often members were in several rooms simultaneously.
Derrick Cleveland testified that as 2001 progressed, I moved most of my illegal activity from the main chat rooms to the “unlogged” private chat rooms. He also testified that I disclosed my “illegal inside information” and criminal plans on site wide audio broadcasts. This explanation was offered because there was no concrete evidence of illegal activity to offer to the jury. It was a way for Cleveland to fabricated events, conversations, and documents as he saw fit in order for him to make his story believable. It is important to bear in mind that the capacity to log the chat in these rooms or tape any or all of the countless the audio broadcasts was available to anyone on the site who chose to do so.
In the middle of trial I learned for the first time ever purely by accident that
the NY FBI office had obtained an undercover membership on my private site. The NY FBI office had signed up undercover on my site as a regular subscriber/member beginning December 7, 2001 through my arrest in May, 2002. They were present, and monitoring the site in real time. They started several weeks after September 11, and two weeks before Royer left the FBI.
During the time these “illegal activities” were allegedly ongoing in private chat rooms, the NY FBI had the capacity, at ANY TIME, to log the chat in any of those chat room, and preserve those logs to aid in their prosecution of whatever crimes they thought were being committed. In other words, they had the opportunity to monitor, capture and preserve the best evidence in the world. They had complete and unfettered access to every audio broadcast from December 7, 2001 through May 22, 2002, the day of my arrest, and chose to preserve and capture none of that. Instead they had to rely on Cleveland to describe what was said in those chat rooms and on the audios.
The following is a chronology of events related to a few of the indictment related stocks from September 11, 2001, through February 1, 2002. This period of time is critical because it encompasses the FBI’s joining the site and all the events surrounding the alleged “extortion.” This chronology uses all facts known to date.
NY FBI & NSOL
*** B/C means a Global site wide and email broadcast, meaning an official broadcast trading call
sent by email to every single site member and to live chat simultaneously.
9/11/01 Twin tower attacked
9/11/01 Site is shocked, markets are closed, the site gathers together, the attackers are condemned publicly and a message is sent out asking short sellers to show restraint and offer assistance. I along with other site members, send internet postings that could be of interest to the FBI in San Diego including FBI Special Agent Royer.
10/17/01 VLPI stock manipulation is picked up by my site. “Anthrax scare”
10/23/01 VLPI unveils their test kit at the Friar’s Club; InsideTruth.com release a report at the exact same time. I, along with another site member communicates directly with SEC office in San Francisco on VLPI; S/A Royer not involved.
10/24/01 I go overseas to Egypt, later to Lebanon. FBI in NY receives a copy of my travel permission from my probation officer, in response to allegations by Matt Tyson and John Liviakis that I knew about the attacks.
11/20/01 I return from my overseas trip.
11/28/01 VLPI raided by the FBI.. S/A Royer plays NO ROLE.
12/07/01 NY FBI OFFICE JOINS MY TRADING SITE AS A MEMBER.
12/14/01 VLPI coverage ends at 0.18. S/A Royer plays NO ROLE.
12/15/01 @ 11:16 PM :
B/C stating VLPIàPresident faces criminal indictment and fraud charges by SEC office in San Francisco. S/A Royer not involved. NY FBI office, as an official member also got that email.
12/18/01 @ 4:44 PM:
B/C asking members to go into an unlogged chat room to discuss issues related to NSOL. The NY office of the FBI does not attend the meeting, although invited to do so.
12/19/01 @ 1:30 PM:
B/C about Paul Brown’s felony, sent 5 minutes after copy of proof of conviction was emailed to Sean Maddox, my office manager. Email sent to the NY FBI office as well; they apparently discard the email.
12/19/01 @ 4:09 PM:
Announcements that multiple audio broadcasts are being made all day long. According to the testimony of Agent Chavez, the NY FBI office does not tune in to any of the broadcast.
12/21/01 @ 9:58 AM:
I am told by a site member that Paul Brown is trying to get rid of me.
[09:58] BostonBlackie >> NSOL. Dr, Brown denies up and down that he was ever convicted of a felony. He had a big meeting with his lawyers last night to plot how to get you off his back.
12/21/01 @ 10:30 AM:
B/C releasing Paul Brown’s felony conviction as a link. It had been verified by the State of Idaho on 12/19/01. Unfortunately the NY FBI office had missed the calls to Paul brown and the State of Idaho.
12/21/01 Royer contacts Ken Breen and offers to be an “informant” in place to assist with the 9/11 investigation into Anthony Elgindy. Ken Breen, the lead prosecutor, asks Royer how he can work with someone like me who could be a terrorist.
(Royer has FBI exit interview with his supervisor on or around this date)
12/22/01 5:36 PM:
B/C of an old news story about SEC going after non-existent batteries claimed by Brown in the past. NY FBI office doesn’t read it or preserve it..
12/23/01 Royer leaves the FBI. I indicated to him that I didn’t want the pressure or responsibility that comes from the uncertainty of trading income and his need to maintain an income to support his family, etc. I told him by phone that I could not offer him a job or pay anything to him.
12/24/01 @ 10:25 am:
In chat I disclose that Brown’s felony was expunged and confirm that he is not a felon.
12/26/01 @ 11.33 AM:
B/C sent to all site members, including the NY FBI office about Paul Brown’s partner, “disbarred attorney Bry Berman”. NY FBI office never kept that email.
1/15/02 @ 12:57 PM:
B/C from my office asking members to tune into their speakers for me. NY FBI office doesn’t tune in, despite not knowing what was to be discussed.
1/17/02: @ 3:05PM:
B/C asking site to tune into another audio session by A&P. NY FBI office misses this one as well.
1/17/02: NSOL sells 500,000 shares to a private party for 1.00 a share.
**NOTE**A few weeks later, on Jan. 31st, I purchase 300,000 shares of NSOL @ $1.00 on the open market with NASD stock watch approval as a below market trade, but the exact same price as NSOL established on January 17th in their private transaction.
1/22/02 @ 12:28PM:
B/C announcing another audio in 10 minutes. NY FBI misses this one also.
1/25/02 @ 10:24AM:
B/C announcing another audio in 2 minutes. NY FBI office misses this one also.
1/31/02 @ 10:12PM:
B/C email telling all members I am terminating coverage forever on NSOL! NY FBI office doesn’t preserve this email either.
2/1/02 @ 8:36 AM:
B/C telling site to get ready for audio 15 minutes after market opens. NY FBI office ignores this audio.
2/1/02 @ 9:38 AM:
B/C telling everyone, including the NY FBI office that we would be talking about NSOL on the audio as mentioned the night before. NY FBI office skips this audio that followed three (3) worldwide broadcasts advising members to tune in re: NSOL.
2/1/02: @ 9:43 AM:
In the midst of the audio on NSOL, I broadcast an email suggesting “NSOL, cover $1.27 & 1.35”. NY FBI office doesn’t keep this email.
2/1/02: @ 9:56 AM:
B/C to cover NSOL @ 1.27 & 1.35. It said “put your bids in if you want” NY FBI office didn’t save that email.
2/1/02 @ 10:57 AM:
B/C terminating coverage on NSOL. NY FBI office doesn’t keep this email.
2/1/02: @ 11:30 AM:
B/C asking site (including NY FBI office) to tune in for one final NSOL audio broadcast. NY FBI office misses the audio.
2/1/02---5/21/02: Multiple stocks alleged to be manipulated on site: IVSO, BGII, NECO, EGBT, MHUT, and IMCL among others. During this entire period of time, NY FBI monitors the site, having free and unfettered access to all my statements, audio broadcasts, and emails, yet doesn’t preserve a single chat log, audio broadcast, or email sent.
As is abundantly clear from the above chronology, there was nothing secret, hidden or covert about the NSOL transaction. In fact very few of the thousands of trading calls I made were as well advertised or explained. Unfortunately I was not allowed to confront my accuser or cross examine the alleged victim of my extortion because the fake doctor Paul Brown had gotten himself killed late one night drag racing.
At trial the allegations of extortion were supported only by testimony from Cleveland and Paul Brown’s sister who claimed she could hear her brother’s calls through his walls.
The truth is that it was Paul Brown himself who sought help from others to see how he could get rid of the short sellers. He actively pursued a meeting with me to get me out of his stock; he was told to contact me through Troy Peters by a third party, David Slavney, who is the same person who suggested another CEO, A J Nassar contact us for the same purpose. Nassar, like Paul Brown, was operating a scam company, and wanted the short sellers out of his stock. Why? Because short sellers make noise, tell the truth to the public and expose the lies generated by the company. The entry of short sellers into a stock usually marks the demise of the “pump” phase, NOT because of any alleged manipulation on their part, but because of the END of the manipulation by the insiders. Truthful dissemination of facts leads to market efficiencies, NOT inefficiencies.
I was acquitted of extorting Mr. Nassar, the only living CEO who claimed to have been extorted, yet convicted of extorting a man who could neither testify nor be cross-examined. Instead the jury was allowed to hear from his grieving sister, weeping on the witness stand. The jury was allowed to review chat that showed me making a seemingly callous and insensitive remark about Paul Brown after the site learns that he died drag racing. Upon hearing of his death I stated that “he is now worm food.” The jury was told that Mr. Brown died in a “tragic car accident” We were unable to introduce evidence that he died, much the way he had lived: breaking the law. He died when he endangered not only himself but others around him, in a drag racing incident. My requirement for covering NSOL and not publicly or privately discussing NSOL was simple. I agreed to terminate coverage of NSOL if Mr. Brown could prove to me that he was not a convicted felon, which he did. We then covered our short position at the very same price NSOL had recently received for another large block of stock in a private transaction on January 17, 2002, only two weeks earlier. It was in no way a secret or illegal transaction.
Next I would like to explain what I believe has been covered up,
and what I believe existed at one time
There were two FBI agents assigned to this case: former Special Agent Sutherland and S/A Chavez. Sutherland left the FBI prior to trial, so when Agent Chavez took the stand and testified that he “wasn’t responsible for every aspect of the investigation” this effectively closed most avenues of cross examination since he could point a finger at Agent Sutherland, who himself testified that he “could not remember” or “wasn’t sure,” or pointed a finger at an “unnamed agent.”
Agent Chavez testified that I was initially under investigation for a possible terrorism connection, and that this was extremely sensitive and important. Indeed, in late 2001, few investigations could have been more sensitive than one into possible terrorism connections. Given the importance of such a “terrorism” investigation, particularly during the months immediately following 9-11, it simply defies credibility that the NY FBI would not have preserved a SINGLE AUDIO broadcast, or a SINGLE CHAT LOG from my website between December 7, 2001, and May 22, 2002, the day of my arrest.
During that time the prosecution claimed I was aware of the investigation into my “terrorism” connection, as well as my trading, and that I was monitoring the investigation through Royer. Yet, incredibly, throughout this entire period, I continued to “manipulate” stocks openly on the site. Under this bizarre theory, they further claimed that, even with the knowledge that I was under investigation, I openly extorted a CEO, and continued getting illegal information form Agent Wingate, (yet oddly never traded on her information). Agent Chaves testified that they were trying NOT to call attention to the new member alias on the site, and so they never ventured into the un-logged chat rooms. They went so far as to secretly gain entry onto the site, yet refrained from ever accessing the rooms where they believed a “RICO enterprise” was operating? Nevertheless, his testimony was that the FBI was being careful to not draw attention to this new member amongst the other 200 plus members coming and going minute by minute, day after day. This was his testimony under oath. I learned of this entire undercover operation for the FIRST TIME during the trial itself. It is clear to me that this testimony was false. One only has to look no further than the name used when they signed up on the site. Of all the various and innocuous names to choose from, the FBI chose to sign up with the name “MOHAMMED RAHMAN” from Brooklyn, NY. They didn’t pick John Smith, or Bob Jones, or any plain all-American name. They picked an obviously Middle Eastern name, despite the fact that my site was NOT based in the Middle East, nor did I ever advertise that I am of Middle-Eastern decent. Why use the name Mohammed? Did Arabs become more or less conspicuous after September 11, 2001? Did people become more or less sensitive to Arab Americans in their midst? When you board an airplane, what kind of faces do you scan for first? Just as telling is the fact that the FBI under-cover member not only signed up as Mohamed from Brooklyn. They decided it would draw “less attention” if they disclosed that Mohamed worked for a company called “A&P Leasing,” knowing my moniker was A&P. These two actions are completely inconsistent with any desire to remain anonymous and discreet, but rather are an invitation to scrutiny.
The NY FBI office also claims that during this six month period they never once taped an audio broadcast, despite having more than 100 opportunities to do so. Nor did they ever see fit to save any of the chat logs they claimed contained so much evidence of my guilt. The NY FBI office knew Paul Brown had been complaining about short sellers in early January 2002, while they were was monitoring my site, yet they never bothered to click into a chat room to learn what was happening, or record any of the numerous audio broadcasts regarding NSOL??
I had advised everyone on the site, including the NY FBI office, I was pulling out of NSOL, that I was having audio broadcasts about NSOL, and that I was talking about the NSOL block trade. Yet according to Agent Chaves these were never recorded or preserved as evidence. WHY? In his testimony, Chavez conceded that all they would have needed was a TAPE RECORDER, yet claimed they were short on resources and couldn’t monitor the site 24/7. Unanswered is the obvious question “how could they afford the monthly site fees yet not afford personnel to document and preserve the fruits of the extremely and important terrorism investigation?” Derrick Cleveland testified that most of the “illegal” discussions and activities took place during the audio broadcasts, yet they were never recorded by the very agency that believed extortion was taking place. Surely they could have found a way to preserve the evidence if they believed there was illegal activity occurring?
I suppose the most glaring question anyone can ask is why? Why create a fake persona, along with a fake create a credit card, for the purpose of joining a pay site where you believe illegal activities are taking place, and yet not preserve a single shred of that “evidence”? What is the point of gaining access to the chat rooms, audio broadcasts and emails of an “illegal enterprise,” only to then fail to gather and preserve the evidence?
It is implausible that the NY FBI office, the most sophisticated, resourceful and arguably the most motivated following 9-11, could have gone undercover onto my site in a “terrorism” investigation, yet not have the minimal resources needed for wire taps, or even simple recording devices. It defies logic that they stood by and watched as extortion and stock manipulation transpired, while recording none of that evidence. That is why I believe there WERE recordings, and they DID save the chat logs which, when they proved to be exculpatory, then disappeared.
I believe the reason they secreted the truth is because it did not reveal what they wanted. It became necessary for them to allow Derrick Cleveland, a proven liar and criminal, to invent what was said on those audios and in those unlogged chartrooms. The government relied, in great measure, on the credibility of this one man, Derrick Cleveland. We proved, and he later admitted to fabricating SEC documents identifying the existence of an SEC investigation into SEVU when there was none. Once again, his version went unchallenged.
I am making a formal request for the recordings made during the time the NY FBI office was present on my site, undercover as “Mohammed Rahman.” I am further requesting the names of any and all agents who monitored my site during the period from December 7, 2001 through May 22, 2002.
The NY FBI office was present on the site from the minute Paul Brown complained about short selling until the day he died drag racing. They were there before, during and after the events that led to the 300,000 share trade of NSOL that is at the heart of the extortion charge, yet they offered no evidence of what their investigation yielded. They had the ability to capture and preserve EVERYTHING, yet they only produced Cleveland, a known liar, and Paul Brown’s sister, who could only offer teary-eyed and wall-filtered hearsay.
The Court severely limited our cross examination of Agents Chaves and Sutherland. I wanted to spend days and days if necessary to find out what “Mohammed Rahman” had seen and heard, but we were prevented from pursuing that avenue of examination. We still don’t know who was doing the monitoring. The two FBI agents who testified knew surprisingly little about Mohamed from Brooklyn, employed by A&P leasing, and it wasn’t until late in the trial that we even learned of his existence at all; clearly Brady and Giglio violations were rampant.
The evidence showed that the only fear Paul Brown experienced was fear of the truth. He was afraid that the price of his stock would fall because free market forces, knowing the truth, would cause it to drop, NOT because of any short selling “manipulation.” He even admitted that I was 99% correct about what I was saying about his company, and was afraid of that truth becoming public. Paul Brown, as an officer of a publicly traded company, was not entitled to operate critic free. The Judge instructed the jury that extortion is the obtaining of another person’s property or money, with his consent, when this consent is induced or brought upon through the use, or threatened use, of force, violence or fear. The audio tapes that I made and were played for the jury express exactly the opposite. Paul Brown entered into a typical bulletin board paper transaction because he was a crook, and wanted to continue to scam the public for as long as possible. Put another way, Paul Brown wanted to capitalize on the inefficiencies in the market place. He knew that as long as short sellers had positions in his stock the truth would eventually be exposed.
The fact that I was willing to cover NSOL and move on to other trades was my legitimate choice to make. I was not under any obligation to remain in that or any other short position, nor did I have any responsibility to expose every scam I came across. I am also NOT employed by shareholders. The “sizzle” in NSOL was his felony status. Debunking NSOL was left to others. I was sure there were dozens of other trading chat rooms that were buzzing with chat about his fake Ph.D. and non-existent batteries. I gave the man my word, and kept it until he died.
Writing an InsideTruth report, exposing past frauds in which he participated, debunking Paul Brown’s false claims are all legal activities. Even if I had the ability to convince every investor to sell their NSOL stock, or to go short NSOL stock, that would not amount to extortion. Moreover, Jeff Royer’s accessing of Paul Brown’s record from the FBI database was only done AFTER the site had uncovered the felony conviction, and Royer’s information was obviously not disclosed to me, nor did I rely on it to trade. Don Terrell, (alias “Quack”) a co-defendant turned government witness, testified that he only gave me the public information on Brown, and that he and Cleveland kept Royer’s information to themselves. Only Cleveland knew the truth, and that’s reflected in his LACK of trading in NSOL.
In hindsight, it seems there was indeed an enterprise; a Cleveland-Royer enterprise. There was no information that I needed or wanted in order to short the
(4) stocks for which I was convicted: SEVU, JUNM, PLMD, and OSIN.
In fact it was I who initiated the SEVU, NSOL, VLPI and OSIN investigations, and INIV was discussed in Business Week magazine as a cash bribe stock. One only needed to be a good researcher who understood how scams operated to know these companies were worthless.
My position is and always has been that knowledge of an SEC or FBI investigation is useless for trading purposes, despite the prosecutions characterization to the contrary. These stocks were good shorts because they were scams, not because they were under investigation by any Law Enforcement agency. They were under investigation presumably because someone at the FBI or the SEC also believed they may have been scams, and chances are they got their information from a short seller.
My trading was not based on these investigations. My experience taught me long ago that the existence of an investigation is virtually meaningless. To demonstrate this clearly, I can simply direct you back to the infamous chat of January 12, where I disclosed the details of the FBI investigations into SEVU to the site. Cleveland said this is the “best information in the world.” If this were true, where are the trades? One would expect, IF this information was considered material and was relied upon by myself and others to enter trades, one would expect dozens of short sales to be introduced into evidence by the government. There were NONE. No short sales by me or anyone else. Cleveland doesn’t short SEVU, Hansen doesn’t short SEVU, neither does Quack, nor does Daws. His hedge fund doesn’t short SEVU, nor did I. None of us shorted SEVU after getting “the best evidence in the world”.. This information that the FBI was proceeding with an investigation that I STARTED, based upon information provided to them by my site and sources, informed no one’s trading.
The sad reality of it all is that Royer conducted over 1,500 illegal searches for reasons only he and Cleveland know. I didn’t need nor did I ever ask for a single search on anyone or any stock. The total profits from all the stocks I was convicted of illegally trading totaled approximately $41,000. This $41,000 represents gains that I believe in all reality I “accidentally made”. When we took all 1500 of Royer’s searches, the 1100 days of chat logs, the millions of lines of text from those chat logs, tens of thousands of my own personal trades, 5,000 plus “trading calls”, 85,000 posts on SI, and combined them all together then we were able to find only $41,000 that anyone could possibly argue was made after disclosure or searches by Royer.
I am being asked to forfeit $11.8 million, which includes profits in 32 additional stocks for which the government received no conviction. These profits are from co-defendants Robert Hansen, Jonathan Daws, (alias, “Archer”), Don Terrell, (alias “Quack”), Jeffrey Thorpe, (alias “Mweka”) Gryphon Partners, Jonathan’s employer, David Slotnick, (alias “Ectopy”) and Derrick Cleveland. My sentence should be computed on the basis of the underlying racketeering activities with which I was charged in the indictment and any relevant conduct relating to those underlying charges, yet despite making only $41,000 in trading gains, the government is seeking forfeiture of $11.8 million from ME ALONE, while seeking nothing from the other convicted co-conspirators. All defendants are subject to a criminal fine and forfeiture of their "interests" in and "proceeds" from participation in a RICO enterprise, yet only I am asked to forfeit anything. There has never been a case in the history of the United States where one person is asked to forfeit “illegal gains” of others who are then allowed to keep those “gains.”
Even more outrageous is that Jonathan Daws, aka “Archer”, who did NOT cooperate, testify for the Government, or assist them in ANY WAY and fought them tooth and nail until my trial was finished, made $6.6 million for himself and Gryphon Partners. An analysis of Daws’ guilty plea suggests that the government attributes to him, for the purpose of his sentencing, a gain of between $120,000 and $200,000. At worst, this smacks of sentence manipulation by the government, and at best seems to raise an Eighth amendment issue of sentence proportionality. Strict proportionality between a crime and its punishment is not required by the Eighth Amendment, but an extreme disparity between the crime and the sentence offends the Eighth Amendment. If ever there was such an extreme disparity, this is it.
In summary, during this time period, I have posted over 300,000 statements on the internet, made over 3,000 trading calls, and traded literally hundreds and hundreds of stocks. Yet out of those 300,000, the government has culled less than a few dozen statements that they found to be questionable or misleading without bringing a single site member or witness to testify that they were negatively impacted or harmed by what I said. It has been over three (3) years since my life was shattered. It is likely I will lose my family, my home, my business, my livelihood, and every single dollar I have ever earned or saved. I have been wiped out. The most innocent victims in this case are three little boys in California who, like their father, can’t understand why their dad has been taken from them.
I was convicted of making a total of $41,000 illegally, and less than $160,000 if you allow in the stocks they claim were “tainted,” but never proved to a jury. There were no millions made by me. The stocks in this case comprised less than 2% of all the trading calls I made on my website. Every other co-defendant who traded has been treated with great disparity. Jonathan Daws, who made over $6 million, will serve 18 months in jail, while retaining almost every penny of profit; the rest will likely get probation. I, on the other hand, am being asked to forfeit $11.8 million that I never made or realized. But for me this is not about money-the figure of $11 million would incarcerate me until all three of my children are adults, a concept that is staggering. Not only am I being asked to pay that which I have never received, but I am also am being subjected to criminal penalties proportionate with the receipt of that money.
For as long as I remain on this earth, I simply will never understand this prosecution and conviction, and the single minded, almost obsessive zeal with which it was pursued. For the first time, telling the truth about a company can be considered “manipulation.” For the first time, even one’s own research can be considered “non-public information.” The unfortunate reality is that in their zealous drive to destroy me, you all have been silenced as well. .
This trial had nothing to do with the truth. It was a contrived affair from the first day Mr. Breen stood in that California courtroom making 9-11 allegations that had no merit or foundation. Witnesses were intimidated from day one. The search for justice took a backseat to a prosecutor’s ambition, rabid zeal and refusal to concede the truth. The pressure of prejudice, intimidation, and the overwhelming power of the prosecutor’s office succeeded in obscuring the truth and confusing the jury. I believe there was willful disregard for the truth, and serious misconduct that should frighten and offend every American.
There is no agency that tracks prosecutorial misconduct, no outside scrutiny of prosecutors, no mechanism for policing them other than the prosecutors themselves and chance discoveries of defense lawyers, judges and journalists. Prosecutors are almost never reprimanded for their courtroom misconduct, but rather more often than not rewarded with a favorable verdict.
The prosecutors’ actions in this case are intolerable. Possessed of knowledge that destroys the theory of their case, the prosecutors had a duty to not mislead the jury. Instead the prosecutors kept facts hidden and then presented testimony in such a way as to suggest the opposite of what they knew to be true.
In the end, my only surprise was that I had been acquitted of any of the counts. Fortunately for me I still have my appeal, and fortunately for me the truth never change, only the lies change.
As I prepare to file my appeal on multiple fronts, I once again reiterate my request for a complete and full investigation into the misconduct, false testimony, mysterious
lack of evidence and fabricated evidence that was solicited and offered at trial. We want to know what did Mohammed Rahman do for 6 months on my website? Where is any of the evidence?
Sincerely,
Anthony Elgindy |
