Jury Finds Elgindy Guilty Of Fraud in Stock Scheme
January 24, 2005 1:00 p.m.
NEW YORK -- A former Federal Bureau of Investigation agent and an Internet penny stock adviser were convicted Monday of mining government computers for confidential information they used to manipulate the stock market.
Former agent Jeffrey Royer was convicted of racketeering, securities fraud, obstruction of justice and witness tampering for leaking details of FBI investigations and executives' criminal histories to Anthony Elgindy, a stock picker based in San Diego.
Mr. Elgindy was convicted of racketeering, securities fraud and extortion for his role in the scheme. He dropped his face into his hands and sobbed uncontrollably as the jury foreman read the verdict; U.S. marshals led him weeping from the courtroom.
Prosecutors said Mr. Elgindy bet against penny stocks and drove down their prices by publicizing damaging information he received from Mr. Royer. Mr. Elgindy also extorted companies by offering to withhold the information in exchange for cash, prosecutors said.
Mr. Royer even tipped off the Egyptian-born financial analyst to an FBI probe into whether he profited from advance knowledge of the Sept. 11, 2001, terrorist attacks by selling stocks that plunged after the attacks, prosecutors said. Mr. Elgindy wasn't charged in that investigation.
Defense attorneys contended Mr. Royer fed FBI data to Mr. Elgindy and another trader as part of a free-lance effort to sniff out corporate fraud. They argued the former agent believed Mr. Elgindy needed the information as a starting point for finding out more about companies the two could investigate together.
Mr. Elgindy's defense similarly argued that the trader released the government information on his subscription Web site because he was crusading against corporate malfeasance.
Mr. Royer was an agent in the Gallup, N.M., office investigating
mostly crimes on Indian tribal land. He planned to leave the FBI and work as a private
investigator for Mr. Elgindy and other traders, prosecutors said. Mr. Royer also thought
the trader and his associates would help him pay off tens of thousands of dollars in
personal debt, they said.
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