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Pastimes : Investment Chat Board Lawsuits -- Ignore unavailable to you. Want to Upgrade?

To: PartyTime who wrote (3380)	7/4/2002 3:00:17 AM
From: EL KABONG!!!	Respond to of 12465

Hmmm... I don't recall seeing this "older" story posted anywhere on SI, so for what it's worth... online.wsj.com IN THE MONEY: Stock Scheme May Have Had More Targets By CAROL S. REMOND A Dow Jones Newswires Column (This was originally published Friday.) NEW YORK -- An alleged stock-fraud scheme that targeted six companies and led to the arrests of two federal investigators and a well-known short seller may have had more companies as potential targets. How many more companies than the original six mentioned in the federal indictment handed down late last month in Brooklyn, N.Y., isn't known. But testimony at a bail hearing earlier this week indicated that at least one defendant was looking for more information on 10 individuals or companies. And there is talk in the short-selling community that the same defendant - a former federal law enforcement officer - may have tried to peddle his services to other investors. His lawyer declined comment. As reported, short-seller Anthony Elgindy and two associates were arrested in the case, as were Jeffrey Royer, a former Federal Bureau of Investigation agent, and Lynn Wingate, currently on administrative leave from the FBI. Royer and Wingate were charged with supplying Elgindy confidential information from FBI databases that he and others used to pressure stock prices of companies they had already shorted. In addition, the indictment alleged, the information was used to extort stock from the target companies. Royer left the bureau in December and went to work with Elgindy in San Diego. At the bail hearing for former FBI agent Royer earlier this week, a New Mexico police officer was called to testify. Royer was reincarcerated last week after prosecutors charged he violated the terms of his initial release because he had contacted a potential witness in the case - the New Mexico police officer. Officer Michael Mitchell told the court he knew Royer from working with him on a joint law enforcement narcotics task force last year. He testified that Royer called him this past March and April "no more than 10 times" to run checks on people. The Gallup, New Mexico, police officer, who isn't charged in the case, was testifying in court at the request of Brooklyn Assistant U.S. Attorney Kenneth Breen. Law enforcement agencies across the country have access to a centralized computer that contains information on people's criminal backgrounds. It is this same kind of information that Royer had allegedly accessed and passed along to Elgindy that is at the heart of the government's case against him. Mitchell testified that Royer told him he needed the database searches because of unfinished FBI business and also for his new line of work as a private investigator. During the court hearing, Mitchell said Royer asked him to do some background checks on people, including past arrests. On one occasion, Mitchell said he provided Royer with information about an unnamed person's previous drug conviction in Florida. The officer, who said he ran searches in the National Crime Information Center Database, didn't say what names Royer asked him to check. However, people familiar with the matter said one person who Royer was looking for information about was Michael Zapetis, a large investor in a Boca Raton-financial startup company called Investco Inc. Zapetis was arrested in 1982 on drug smuggling charges. He was sentenced to 15 years in prison but the sentence was later amended, and he ended up serving just eight months. Zapetis and his relationship with Investco was explored in a Dow Jones Newswires column in early April. Additional columns about Investco explored an acquisition Investco said was key to its growth strategy but which never took place. And a third column explored the involvement of Investco's chief executive in the famous "Mob on Wall Street" case in the late 1990s. He received immunity for testimony against a defendant in the case. Investco, its chief executive officer Joseph Lents and First International Finance Corp. (FIFC), a company controlled by Zapetis, were charged with violating securities laws by the Securities and Exchange Commission in May. Elgindy mentioned Zapetis' previous drug conviction in several messages to subscribers of anthonypacific.com, one of his Websites, in April. Based primarily on Zepetis' previous conviction, Elgindy recommended to short sell Investco on April 4. During his testimony this week, police officer Mitchell said that he usually relayed the information requested by Royer by telephone and, on one occasion, by fax, "from my office to his office in San Diego." Brooklyn Assistant U.S. Attorney Breen last week said Royer attempted to tamper with a witness in the case when he called Mitchell shortly after his release on May 23. Mitchell said he stopped providing information to Royer in April after he developed a "bad feeling about him." "At that time, I decided I didn't have to have that association," Mitchell told Breen. Under cross examination by Lawrence Gerzog, Royer's lawyer, Mitchell said he didn't know that Royer was using the information for securities trading. In addition to Mitchell, Royer also contacted FBI special agent Vincent Sanchez on May 24, in what the prosecution says was an effort to learn more about the nature of the evidence gathered against him and agent Wingate. Later, when asked why Royer called the FBI agent, Gerzog said "it's not clear." Gerzog added that the phone call was not important because he would have access to all of the evidence anyway during the discovery process of the case. Royer and Wingate have pleaded not guilty. Egindy's two associates, Derrick Cleveland and Troy Peters, are out on bail and have yet to plead in the case. Elgindy remains incarcerated in San Diego. On Tuesday, he agreed to be moved to New York to face charges. A lawyer for Elgindy said the short seller would likely arrive in New York next week. -By Carol S. Remond, Dow Jones Newswires; 201-938-2074; carol.remond@dowjones.com Updated June 10, 2002 8:54 a.m. EDT KJC