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Strategies & Market Trends : US vs Amr Elgindy - Trial Transcripts

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From: ravenseye12/4/2006 10:34:10 AM
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United States Attorney’s Office
Eastern District of New York


October 2, 2006

Robert Nardoza United States Attorney’s Office (718) 254-6323


Defendant Provided His Co-conspirators with Confidential Law Enforcement Information Used in “Short Selling” Stock Fraud Scheme

Roslynn R. Mauskopf, United States Attorney for the Eastern District of New York, announced that former FBI Special Agent JEFFREY A. ROYER was sentenced to six years’ imprisonment on his conviction for racketeering conspiracy, securities fraud conspiracy, securities fraud, obstruction of justice, and witness tampering. The sentence was imposed this afternoon by United States District Judge Raymond J. Dearie at the U.S. Courthouse in Brooklyn, New York.

ROYER, and his co-defendant, Amr I. Elgindy, were convicted after trial on January 24, 2005. On June 19, 2006, Elgindy was sentenced to nine years’ imprisonment for his leading role in the racketeering conspiracy and to a consecutive two years of imprisonment on a separate conviction for making false statements to federal officials while on pre-trial release. Elgindy was also ordered to forfeit approximately $1.5 million.

Elgindy was a trader and financial analyst who engaged in the “short selling” of stock, a securities trading technique in which the trader establishes a “short position” by selling stock he has borrowed and later purchases the stock to return to the lender. The short seller realizes a profit if the stock price has decreased subsequent to the establishment of the short position. In pursuing their lucrative short selling strategy, ROYER corruptly used his position as an FBI agent to steal confidential criminal law enforcement information about companies under investigation by the FBI and the Securities and Exchange Commission, and, in exchange for the promise of cash and future employment, passed that information to Elgindy and others, who then established short positions in those companies’ stocks. To ensure that the price of these stocks fell, Elgindy and his co-conspirators engaged in various manipulative activities, including the dissemination over the Internet of the confidential law enforcement information and other negative information about the companies. Elgindy also engaged in a conspiracy to use the extortionate threat of further dissemination of stolen information to procure discounted stock from issuers.

In December 2001, ROYER, who had been an FBI Special Agent since 1996 – first in the Oklahoma Field Office and later at the Resident Office in Gallup, New Mexico – left the FBI to work as an investigator for Elgindy, a position he believed could bring him millions of dollars. Before leaving, ROYER induced another FBI Special Agent, Lynn Wingate, to continue to steal information from the FBI and give it to the scheme’s participants. In June 2005, Wingate pled guilty to obstruction of justice charges for her role in the fraud, and, in July 2006, she was sentenced to three years’ probation. Another scheme participant, Jonathan Daws, pled guilty to securities fraud charges in April 2005, and in August 2006 was sentenced to three years’ probation.

“ROYER and his co-defendants engaged in a vast securities fraud conspiracy and a shocking breach of trust for their own personal profit,” stated United States Attorney Mauskopf. “We will vigorously prosecute such schemes in order to ensure the integrity of our financial markets and the security of confidential law enforcement information.” Ms. Mauskopf thanked the Federal Bureau of Investigation, New York Field Office, and the Securities and Exchange Commission, Northeast Regional Office, for their assistance.

The government’s case is being prosecuted by Assistant United States Attorneys John A. Nathanson and Michael Goldberger.
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