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FBI insiders allegedly part of stock scam

By TOM HAYS
The Associated Press    05/23/02

NEW YORK - Two FBI agents helped an Internet stock analyst shake down publicly traded companies by sneaking him confidential information on investigations of the companies, authorities alleged Wednesday.

Lynn Wingate, an FBI agent assigned to the bureau's Albuquerque, N.M., office, Jeffrey Royer, a former Oklahoma City agent who resigned late last year, and analyst Amr "Tony" Elgindy were among five defendants charged in a securities fraud indictment unsealed in federal court in Brooklyn.

In exchange for money, the agents used an FBI database to provide their co-conspirators inside FBI information on publicly traded companies, the indictment said. In 2000 and 2001, an associate of Elgindy, Derrick Cleveland, wired Royer $30,000 while he was still an FBI agent, the papers said.

Elgindy spread negative information on the companies on his Web site and to Brooklyn subscribers of his e-mail newsletter, InsideTruth.com, while betting that the companies' stock would go down.

The defendants "sometimes reported negative information about the targeted companies to the Securities and Exchange Commission and the FBI in order to initiate or hasten regulatory and law enforcement action, which they knew would cause the stock prices to fall sharply once such action became public," court papers said.

In one case, Royer searched the FBI's confidential National Crime Information Center database and discovered the criminal history of a top executive for a company called Nuclear Solutions, the papers said. The same day, Elgindy began sending e-mails calling the executive "a convicted felon," then shorted the company's stock, the papers added.

Elgindy "cultivated the perception that he had the ability to devastate the targeted company's stock price," the papers added.

Elgindy and Cleveland also extorted cheap or free shares of stock in exchange for agreeing to stop their smear campaign, authorities said. After they became the focus of a grand jury investigation, Wingate allegedly fed Royer - by then an employee of Elgindy - secret information, including descriptions of subpoenaed documents.

The charges "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.

Elgindy, 34, and another associate, Troy Peters, 39, were in custody in San Diego; and Royer, 39, and Wingate, 34, in Albuquerque; and Cleveland, 37, in Oklahoma City, pending court appearances. Their defense attorneys could not be immediately reached for comment.

If convicted of racketeering conspiracy and other charges, each defendant could receive 20 years in prison.

submitted  by: Werner Hetzner

source:  Gazette Newspapers

 

 

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