The first of a few messages posted on Anthony's behalf and at his request. As usual, these are his words as conveyed to me.
Bob Zumbrunnen aka SI Bob
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Greetings folks,
This document will deal with a very specific set of charges and counts that I recently defended. This document is for the general public but will be of the most significance to all those who spent any time on my private site and those who followed me here on SI. The evidence at trial showed that I sent out over 3,200 “official trade calls” via Email Broadcast to members of the private site. I also made countless thousands of chat calls. I also made thousands of calls here on SI.
Following my arrest in May 2002, The Prosecutor added 17 additional counts of securities and wire fraud, alleging that I “traded against my own advice” and that I was “front running” my own site members. These 17 counts were the insult to injury portion of their case in chief. These 17 counts were some of the most significant to me of all the allegations. Many of the site members were very dear to me, some I considered family and some I had a great deal of respect for. I had always believed that in order for me to be successful, for trying to drag short selling out of the shadows, those who followed and watched had to succeed with me.
These 17 counts represent every instance of front running and trading against advice they could find. They searched and picked through over 5,000 trading calls, tens of thousands of my trades, and millions upon millions of lines of text in chat. You will need to keep a few things in mind as you review all this. You will see the actual chat excerpts and selected trades the Prosecutor and the FBI agents in this case made and then numbered at the end of the trial.
Most significantly when you see a “time” next to a trade and transaction, those “trade times” are intended to appear as the actual execution time. They are NOT!
The Govt. Employee who compiled and checked these snippets testified that he was instructed to use only the earliest time visible on each trade ticket. Since I placed my trades by phone, my trade tickets had multiple stamps. After placing an order I’d get a call back reporting my fill. This some times took seconds, minutes, or hours depending on whether I had placed a limit or market order.
In Exhibit D 10536 we presented what site members were told to expect about calls:
CHAT LOG Nov 14, 2000
[21:06] rhansen >> Broadcast calls will not only sound the gong sound but also go to your email and / or pager
[21:06] rhansen >> chat calls are simply posted in chat because they are risky or very short term and are applicable only to those in chat
[21:08] rhansen >> You have to remember, a call whether 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 to choose 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] rhansen >> The users are listed at the right, with the blue users at the top
[21:06] anthony >> and in some cases,, they are telling you what they have just done
This chat clearly explains that all calls, official or not are NOT “directives” but rather suggestions based upon a person’s beliefs and expectations.
Before we move on I’d like to share with you the definition of “front running” the Government of the United States of America offered to the jury. I direct your attention to page 4,548 of the Trial record at line1, and on page 4,549 at line 22. The government employee testified that front running is any “ trading before giving information to others.” He testified “that is what all SEC examiners use.” I will simply state for the record that this testimony is false, misleading and unforgivable.
You are about to see, for the 1st time ever, each and every single instance of “front running” and “trading against my advice” they claim I committed. Out of over 380,000 Internet statements and calls made by me they compiled a total of 35 instances of securities and wire fraud and they then spread them out over 17 counts, in Counts 16 to 32 of the superceding indictment.
You will immediately notice that they never once disclose my execution price, the chat before or after, any news before or after, and they omit many of the trades before, after and in between their selected snippets. The words and trades were offered to the jury in a vacuum.
In count 16, for example, you see that I’m charged with “front running” on JUNM. This is a felony securities fraud count punishable by 5 years in jail. They claim that on 8/24/01 at 3:03 pm I sold 1500 JUNM and then at 3:04 pm, one minute later, I sent out an “official call” via email on JUNM. The prosecutor is asking the jury to find me guilty because of a 60 second delay in one out of over 3,200 trading calls made by me.
Is this what you expected to see when you had heard they had added charges alleging that in addition to all the other stuff I had also harmed my own members?
In the very next count, No 17, we see that on 6/26/01 at 4:02 pm I release a report on Insidetruth.com about SLPH. Then on 6/28/01, 2 days later, at 11:04 & 11:11 am, I reduce an existing short position in SLPH by 2,000 shares. None of the trades, news, chat or price action between 6/26 and 6/28 are ever mentioned or offered. It doesn’t matter that my site and the world had been told I’d be releasing a SLPH report days earlier. It doesn’t matter that SLPH tried to stop the report by suing me and it certainly doesn’t matter that the report was 100% truthful and accurate as it exposed SLPH’s fraud.
The reason reality is not offered and doesn’t matter is because reality is exculpatory. It helps me and the only UNCHALLENGED fabricated twisted fiction presented in a vacuum helps them. Going back to Count No 16, we see that 60 seconds is what separates me from potentially 5 years in jail. My execution in JUNM was at 3.90, the trade call was made at 3.90, no one who got the call was hurt nor did I benefit at anyone’s expense.
The prosecutor was forced to scrape and scrounge, even splitting multiple hairs, as he madly searched everywhere for anything that he could pile on. These charges have the exact same flavor as the first 15. As you look through you will see that anyone who relied on any of my words in chat or email would have profited and benefited. My position is and has been that the jury was prejudiced and misled. They simply didn’t get it. This jury knew little about the stock market, nothing about bulletin board stocks and nothing about short selling; after this trial, I would argue they know even less. |
