FBI Agenten arbeiteten mit Shortsellern zusammen-verhaftet - 500 Beiträge pro Seite

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UPDATE 1-Shortseller, FBI agents nabbed for stock fraud
22 May 2002, 6:11pm ET
this story

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(New throughout, adds details, background)
By Per Jebsen
NEW YORK, May 22 (Reuters) - It`s a dream for a dishonest stock trader and nightmare for law enforcement: tap into confidential FBI databases and get information about companies in regulatory or criminal peril.
That is what transpired in the last two years, federal prosecutors said in an indictment unsealed on Wednesday. Even worse, two of the alleged conspirators were agents of the Federal Bureau of Investigation. When prosecutors began a grand jury probe into the scheme, the agents used the FBI databases to keep track of their progress, court documents said.
On Tuesday, the alleged scheme came to a halt with five arrests, including the two FBI agents and the alleged mastermind: controversial short-seller and online stock commentator Anthony Elgindy.
Elgindy, 34, is a corporate gadfly who owns and operates Pacific Equity Investigations, as well as www.InsideTruth.com, a public investment Web site, and www.AnthonyPacific.com, a subscription e-mail newsletter and subscription-based investment Web site.
He was charged with selling short the stocks of publicly-traded companies that he had identified through the confidential FBI data. He also extorted cheap or free shares from his corporate victims, according to court documents.
He encouraged his paid Web site subscribers to short sell the stocks as well, thus pushing down share prices so he and the others could maximize profits. Short-selling is a strategy whereby an investor, having borrowed shares, profits when a company`s stock price falls.
"The allegations in the indictment reveal a shocking partnership between an experienced stock manipulator and law enforcement agents, undertaken for their illicit personal financial gain," Alan Vinegrad, the U.S. Attorney for the Eastern District of New York, said in a statement.
Elgindy was not immediately available for comment,
CHALLENGE COMPANY MANAGEMENT
Elgindy has been frequently quoted in the financial press because of his willingness to challenge company management. Recent targets include biotech firm Aksys Ltd. (NASDAQ:AKSY) and electronic device maker Applied Digital Solutions Inc. (NASDAQ:ADSX).
Elgindy`s InsideTruth Web site issues stock research that stands the traditional, bullish Wall Street formula on its head: investors are urged to sell, with not-so-subtle warnings such as "We Smell Fraud!!"
"InsideTruth.com is committed to providing the Internet`s most straight-forward hard-hitting, fact-based Securities research," the Web site states. "We will work hard to uncover the truth behind the stocks."
According to prosecutors, that hard work in uncovering the truth included a wire transfer of mora than $30,000 to FBI agent Jeffrey Royer, 39, as payment for his accessing the FBI`s National Crime Information Center and Automated Case Support databases.
Royer is alleged to have recruited FBI agent Lynn Wingate, 34. Wingate, working from the FBI`s field office in Albuquerque, New Mexico, continued the monitoring through April, after Royer left the FBI in December to work directly for Elgindy.
Prosecutors have brought racketeering, securities fraud and other charges against Elgindy, Royer, and Wingate, as well as Derrick Cleveland, 36, and Troy Peters, 40, both colleagues of Elgindy. The charges carry a maximum sentences of up to 20 years and fines.
Contact information for the accused or their lawyers could not be obtained immediately.
Federal authorities are also seeking to seize various Elgindy accounts, as well as cars including a Rolls Royce Bentley, a Jaguar, and a Hummer, and Elgindy`s primary residence -- said to have been bought last year for $2.2 million, according to court documents.
"That both a current and a former FBI Special Agent are among the defendants in this investigation is particularly distressing to the thousands of men and women of the FBI," said Kevin Donovan, assistant director in charge of the FBI in New York, in a statement.
Copyright 2002, Reuters News Service

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front page WSJ /Anthony Elgindy


FBI Agent Charged With Using Secret Records for Stock Scheme

By AARON ELSTEIN, LAURIE P. COHEN and GARY FIELDS
Staff Reporters of THE WALL STREET JOURNAL


The government charged an FBI agent and a former one with giving stock traders confidential information about criminal probes of public companies, in a short-selling scheme that profited by spreading unfavorable information to drive stock prices down.

The scheme was allegedly headed by Anthony Elgindy, a colorful and controversial investing figure who also is known on the Internet as Anthony@Pacific, according to an indictment announced by the U.S. Attorney`s office for New York`s Eastern District in Brooklyn.

The government alleged that Mr. Elgindy received information from the FBI insiders, who used the bureau`s databases to tip him about public companies facing criminal problems or investigations. Then, according to the indictment, he used the information to sell the companies` shares short, advise others to do the same -- and to extort stock from companies that feared manipulation of their shares.

A short-seller unloads borrowed shares for a profit when a stock declines, so exclusive access to unfavorable information would be valuable. The six-count indictment alleged that the scheme thrived on confidential information supplied by two rogue agents -- Jeffrey A. Royer, who left the FBI`s employ last December to join Mr. Elgindy`s trading operation, and Lynn Wingate, who joined the bureau in 1999 and was relieved of duty Tuesday night.

U.S. V. ELGINDY, ET AL



See the full text of the indictment, by arrangement with Findlaw. To view the document, Adobe Acrobat is required.



Both are accused of providing confidential information to help Mr. Elgindy decide which companies to target. "The allegations in the indictment reveal a shocking partnership between an experienced stock manipulator and law-enforcement agents, undertaken for their illicit personal financial gain," said U.S. Attorney Alan Vinegrad in a prepared statement.

White-collar crime experts voiced shock at the allegations, especially the FBI agents` alleged involvement. "I`ve never come across a case like this one," said Robert Mintz, a former federal prosecutor who heads the government investigations practice at the Newark law firm of McCarter & English. "It seems incredibly bold to use the government`s own resources to orchestrate a stock-manipulation scheme."



He said the confidential information allegedly used in the scheme -- from the FBI`s Automated Case Support and National Crime Information Center databases -- would be a "gold mine" of information. The databases contain information about companies and individuals under criminal investigation and their criminal histories, as well as information about civil investigations undertaken by the Securities and Exchange Commission.

Two additional Elgindy traders, Derrick Cleveland and Troy Peters, were charged along with the other three with racketeering and securities fraud conspiracy. Messrs. Elgindy, Royer and Peters were also charged with extortion conspiracy. Ms. Wingate and Messrs. Elgindy and Royer face additional charges of obstructing a grand jury probe of the allegations. The most serious charge against each defendant carries a prison term of up to 20 years.

A person who answered Mr. Elgindy`s cellphone said he wasn`t available for comment. Calls to Mr. Elgindy`s firm, Pacific Equity Investigations, of San Diego, weren`t returned. Messrs. Royer, Wingate, Cleveland and Peters couldn`t be reached. The government said all five defendants were arrested on Tuesday -- Messrs. Elgindy and Peters in California, Ms. Wingate and Mr. Royer in New Mexico, where they were most recently assigned with the FBI, and Mr. Cleveland in Oklahoma.

Stephen T. McCue, a court-appointed federal defender who represented Ms. Wingate at Tuesday`s hearing, said she is now assigned to the drug squad. He said she is "a solid line agent who has done a number of different things in her time." He said Ms. Wingate "intends to plead not guilty." Mr. McCue said that her financial resources are "limited" and that counsel will be appointed for her in New York.

David Kitchen, who was Special Agent in Charge of the Albuquerque FBI office at the time of Ms. Wingate`s arrival, says she came to work for him fresh out of the FBI`s training academy in Quantico, Va., in the fall of 1999. Mr. Kitchen says Ms. Wingate was assigned to the bureau`s bank robbery squad for about six months and was then "moved up" to the white-collar crime squad, possibly putting her in touch with publicly traded companies under scrutiny. At the time Mr. Kitchen left the FBI, in May 2000, Ms. Wingate was just getting started in her new assignment.

"I am really surprised to hear she could be involved in something like that," Mr. Kitchen said.

Court Date

Ms. Wingate was released on her own recognizance. Mr. Royer was released but must wear an electronic bracelet. Both have been ordered to appear on noon next Tuesday before U.S. District Judge Raymond Dearie in Brooklyn. Doug Couleur, the court-appointed counsel for Mr. Royer, said he will have a different court appointed counsel in New York next week, where Mr. Royer plans to plead "not guilty."

The indictment didn`t say how much money the defendants netted from the scheme, though Mr. Royer was alleged to have been paid $30,425 while he was still an FBI agent. In a separate action authorities filed a civil suit seeking to seize funds from numerous accounts held by Messrs. Elgindy and Royer, as well as Mr. Elgindy`s Rolls Royce, Bentley, Jaguar and Hummer automobiles and his $2.2 million home.