Wednesday, May 22, 2002 11:25:28 PM
And now, Reuters has it.......................
UPDATE 1-Shortseller, FBI agents nabbed for stock fraud
22 May 2002, 6:11pm ET
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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Reminds one of an old nursery rhyme (..modestly paraphrased..): "...Mary, Mary, quite contrary, how doth your [...portfolio...] grow.....
John
.
UPDATE 1-Shortseller, FBI agents nabbed for stock fraud
22 May 2002, 6:11pm ET
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
---------------------------------------------------
Reminds one of an old nursery rhyme (..modestly paraphrased..): "...Mary, Mary, quite contrary, how doth your [...portfolio...] grow.....
John
.
.......According to the Great Pumpkin, ".....You're in .....iHub....., Charlie Brown....."!!!
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