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Strategies & Market Trends : Banned.......Replies to the A@P thread. -- Ignore unavailable to you. Want to Upgrade?

To: StockDung who wrote (1554)	1/3/2005 3:34:15 PM
From: scion	Read Replies (4) \| Respond to of 5425

Former FBI Agent Testifies In Elgindy's Securities Trial 01-03-05 03:11 PM EST NEW YORK (Dow Jones)--Former Federal Bureau of Investigation Special Agent Jeffrey Royer testified Monday that he had a typical agent-informant relationship with Anthony Elgindy and Derrick Cleveland, and that his goal was to gather information about stock fraud. Royer told jurors that Cleveland and Elgindy were viable informants who " offered a very unique approach to information-gathering." Royer and Elgindy are standing trial in the U.S. District Court for the Eastern District of New York. They, and three others to be tried separately, are charged with several counts of securities fraud, market manipulation and extortion. The government alleges that Elgindy used a private investing Web site to share and trade on confidential information he obtained from Royer. Cleveland, who also was charged in the case, pleaded guilty to conspiracy to commit securities fraud and is cooperating with the government. The case resumed Monday after a 10-day holiday recess. Closing arguments are now scheduled to begin next week, and the case should go to jurors in the week of Jan. 18. Elgindy showed up in court Monday morning with a large bandage around his head, following an altercation with another inmate at the Metropolitan Detention Center, where he has been detained since April 2004 following his arrest after he tried to board a plane with fake identification. Cleveland testified for the government that he had an agreement with Royer to share 50-50 any trading profit generated from confidential information he received from the agent. But Royer in court Monday told jurors that he never had any conversation with Cleveland about trading on information he shared with him. Royer said that he was very interested in the market and trading, and that he saw Cleveland, who at one time was an FBI informant for the agent, as a valuable source of information. Royer told jurors that his desire to quash securities fraud was fueled by his own losses in a company called Webtel. Royer said he invested about $82,000 of his own and his friends' and family's money, which was lost when the company blew up. Royer said he asked Cleveland to invest some short-term money that he got from a settlement of his Webtel losses and that Cleveland returned the same exact amount, $15,000, a few weeks later when the agent asked him for it. Royer said he contracted Cleveland as an FBI informant to assist in an investigation into a fraudulent company called Broadband Wireless International Corp., which traded under the ticker symbol BBAN. Royer said that at one time he was himself an investor in Broadband Wireless but that he sold the stock when he realized the company's president, Don Knight, was under investigation. The former FBI agent said he was putting together in 2000 a proposal for a government task force that would have included the use of undercover informants to detect securities fraud. Royer said he wanted to recruit Cleveland and Elgindy for the job. Royer said his proposal mirrored an undercover investigation out of the Newark, N.J., FBI office. Royer said he had contact with the agent in charge there and was putting together a similar proposal. Royer said he took some documents related to the Newark securities fraud investigation to San Diego in February 2001 when he went to visit Elgindy to recruit him. These documents included confidential files obtained from the FBI database, some of which were seized form Elgindy's office at the time of his arrest. Royer said he continued working on putting together his task force proposal after he was taken off the Broadband Wireless investigation in Oklahoma City and transferred to the Gallup, N.M., FBI office. "It needed to be done. There was no limit to how much (Elgindy and other members of his investing Web site) could help," Royer said. Asked by his lawyer why he provided detailed information about an ongoing Securities and Exchange Commission investigation into a scam company called SeaView, Royer explained that it is standard procedure for FBI agents working with undercover informants. "I told Derrick about the SEC information so that they knew exactly what they had to do. You give; you get back. The more focused (information) you give, the more focused (information) you get back," Royer testified. Royer said he started contemplating leaving the FBI in April 2001 because of his desire to move to Denver to be close to his children. He said that at that time he began talking to Elgindy about his plan to hire a private investigator to help uncover stock fraud. Royer said that he discussed his financial woes with Elgindy but that the short seller never offered to lend him money. Royer is scheduled to resume testimony after the lunch recess. -By Carol S. Remond, Dow Jones Newswires; 201-938-2074 Dow Jones Newswires 01-03-05 1511ET Copyright (C) 2005 Dow Jones & Company, Inc. All Rights Reserved. news.morningstar.com