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Exerpt from the 10Q.
All of the executive officers and directors of the Company and its subsidiaries
have either resigned
or been removed from office for failure to appear at meetings as of the date of
this report, with the exception of Mr. Richard Gregory, who is now the sole
executive officer and director of the Company.
OB
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http://www.katu.com/images/flagprint_sm.jpg
He was also appointed to the BOD of this company on 1/18/2000 DENN.
http://www.semcoenergy.com/index.html
OB
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http://www.katu.com/images/flagprint_sm.jpg
look who on the board of directors here..click the links ...
http://203.194.162.10/pipeline/us/chinaonline/contact.htm
well i see easysoft is back up again..http://www.easysoft.net/ . don't know why its up, nothing but old news and clips.i havn't heard any thing neither.you would at least think they would release some infomation , just to let some people know if its still plugging along...
Good morning DENN. I have not heard a thing about this for a very long time now. The CBQ web site is still working. They have stayed current with their SEC filings. That's the only good thing I see. Have a good weekend.
OB
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http://www.katu.com/images/flagprint_sm.jpg
I see http://www.easysoft.net is no longer up. was up just a week ago. wonder why. have you heard ant thing Blue... Denn.
Any one notice that where down to 8 MM now. schwab left and some others....Denn...
CBQI has filed a 10QSB as of yesterday.
http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0000939802%2D02%2D000315%2Etxt&FilePath...
OB
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http://www.katu.com/images/flagprint_sm.jpg
CBQI has filed an NT10Q.
http://www.nasdaq.com/asp/quotes_sec.asp?symbol=CBQI&selected=CBQI
OB
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http://www.katu.com/images/flagprint_sm.jpg
talk to the ceo today, after weeks of trying to get a hold of him by phone and fax. just lucky i caught him at the office, doen't seem to like to return calls or fax and when you do get a hold of him, he seems not to have time . any way he would not say any thing because of sec rules. i did ask him if they were going to sign up for the new BBX trading system, his answer was he did not know if they would. that means if they don't we go to the pink sheets and i told him that. so if any here want to keep what investment they got [which is almost nothing now], they better convey there thoughts on this to them right away.....pink sheets is usually the kiss of death for most companys......
Good morning Gary!! How's it going down there in Florida? Say hi to Liz and Tweety for us. Have a great day.
OB
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http://www.katu.com/images/flagprint_sm.jpg
Really ... I have not gotten into it yet but yes I believe that shorting without transparency is the problem. Thanks for pointing that out Denn.
Gary
:=) Gary Swancey
Good morning Rich!! Summer is great. I'm selling a few Edsels(snicker) and I am glad that you got a response from CBQ Inc. We hope You and your family are also having a nice summer. Have a great day!!
Frank & Grammy
OB
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http://www.katu.com/images/flagprint_sm.jpg
Ps. The # I was given is the Fax # listed on the web site.202-659-3020. rvd
Frank, I Received a response to my email requests. I was sent a fax # to request info from. I will send in a request for information on CBQ INC. Hope you are enjoying the summer Frank, it sure flies by too fast.Later, rvd
Thanks for the info Rich. I have been busy this week and I have not had the time to even try yet. Maybe tomorrow. Have a great evening.
Frank
OB
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http://www.katu.com/images/flagprint_sm.jpg
Hello Frank, Just sent in my 4th Request for Info about CBQ Inc. to this email adress as listed on the company web site; JAlbert729@aol.com. No response to any of my emails yet. Later, rvd
Hi Rich. I'll take a shot at it sometime this week. Have a great evening.
Frank
OB
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http://www.katu.com/images/flagprint_sm.jpg
Yes Frank, I saw that last week and have sent emails to the link provided in the "CONTACT US" section requesting information. As I expected there has been NO response. Maybe you can try and let me know if you get a response. Thanks, rvd
Correction: It is on the "about us" page.
http://www.globalequipmentexchange.com:80/equipment/homepage.jsp
OB
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http://www.katu.com/images/flagprint_sm.jpg
This site is included on the new "mission " statement page.
http://www.globalequipmentexchange.com:80/equipment/homepage.jsp
OB
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http://www.katu.com/images/flagprint_sm.jpg
CBQI has updated their website as of 6/29/02.
http://www.cbq.com/
OB
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http://www.katu.com/images/flagprint_sm.jpg
ha Gary been busy here. any way i was reading some of the new rules that will be in the new bbx system and one shot a red flag up. no rule on shorting. i sent a strong e-mail to them what i thought about shorting these small bbx companies. these companies have a hard enought time with out having market makers and canadians shorting. you might want to send them a e-mail and express your views on not letting shorting going on with this new system...Denn....
Thanks Denn. Here it is in full.
CBQ Appoints James Albertine as Vice President for Government
Relations
Business Editors/Hi-Tech Writers
WASHINGTON--(BUSINESS WIRE)--June 11, 2002--CBQ, Inc. (OTCBB:CBQI) today announced that it has appointed James J. Albertine as Vice-President for Government Relations.
Mr. Albertine is currently the President of the American League of Lobbyists, which represents the interests of lobbying professionals in legislative, executive and judicial proceedings, and encourages the implementation of ethical lobbying practices (see www.alldc.org).
He also is President of Albertine Enterprises, a leading public policy analysis and advocacy firm based in Washington, DC, which represents a broad spectrum of American corporations and trade associations on public policy issues (see www.albertine.com).
Mr. Albertine is a nationally-recognized spokesman on government relations, having been quoted recently in the ongoing debate on how to reconcile the need for security with the need for access by the nation's lobbyists in The Washington Post, The Hill, and many other national publications.
"Jim Albertine is an important addition to the management team we are building at CBQ," said Bart S. Fisher, Chairman of CBQ, Inc. "CBQ intends to take advantage of its location in Washington, DC and access to government officials. Jim Albertine will be of particular assistance with regard to businesses that CBQ intends to develop," Fisher said.
"I am excited by quality of the management team being developed by CBQ and the challenge of placing CBQ in the forefront on the government procurement process," said James Albertine.
About CBQ, Inc.
CBQ, Inc. is an end to end E-Business solution provider, which provides custom software, including web portal design and development, networking services and security, as well as many other web-based solutions. The company also provides information technology outsourcing resources to its clients.
--30--RM/ph*
CONTACT: CBQ, Inc.
by
Albertine Enterprises
John M. Albertine, 202/659-2979, ext. 11
KEYWORD: DISTRICT OF COLUMBIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS INTERNET NETWORKING SOFTWARE MANAGEMENT CHANGES
SOURCE: CBQ, Inc.
Today's News On The Net - Business Wire's full file on the Internet
with Hyperlinks to your home page.
URL: http://www.businesswire.com
-0- Jun/11/2002 12:04 GMT
OB
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http://www.katu.com/images/flagprint_sm.jpg
I cannot get onto CBQI's website?
Is it down, or it is not up at all anymore?
Joemoney
Hi Denn ... In the case of CBQI that did not happen that I know of to this date. the only escrow was done in the acquistion of Socrates assets and they could have shorted against the escrow but that would be danges since the shares are locked up until the legal proceedings conclude.
I know a lot of companies nailed by this and I have written numerous opinions on how this scam works.
Let me if the scammers get nailed.
:=) Gary Swancey
HHHMMMMMMMmmmmm. A little interest in this today. Last trade of 10,000 shares at .03 has this up 130%. I wonder whaaazzzzzuuuupppppp?
OB
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http://www.katu.com/images/flagprint_sm.jpg
here a interesting article. read about jagnotes at the bottom. wonder if thats what happen to cbqi and if they should do the same about new A common shares..
http://ragingbull.lycos.com/mboard/boards.cgi?board=FRTL&read=22627
5/22/02 - [Elgindy] Complaint: USA vs. Amr I. Elgindy
EOC:KMB
F. #2001R02074
ELGINDY.IND1
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - X
UNITED STATES OF AMERICA
- against -
AMR I. ELGINDY,
also known as "Tony Elgindy"
and "Anthony Pacific,"
JEFFREY A. ROYER,
DERRICK W. CLEVELAND,
TROY M. PETERS and
LYNN WINGATE,
Defendants.
I N D I C T M E N T
Cr. No.
(T. 15, U.S.C., '
78j(b) and 78ff;
T. 18, U.S.C., '
371, 1503, 1951(a),
1962(d), 1963, 2 and
3551 et seq.)
- - - - - - - - - - - - - - - - X
THE GRAND JURY CHARGES:
At all times relevant to this Indictment, unless otherwise indicated:
INTRODUCTION
The Short Selling Scheme
1. The defendant AMR I. ELGINDY, also known as Tony Elgindy and Anthony Pacific, was a trader and financial analyst who "short sold" shares of stock of various companies whose respective stock prices appeared to be vulnerable to the release of negative news and selling pressure. Short sales involve "borrowing" stock from another party and selling it, with an agreement to return the stock to the other party at a later date, thereby betting that the stock's price will fall, allowing the borrower to buy the stock back later at a lower price and return the stock to the lender. Thus, short sellers profit from decreases in the price of a stock that they have sold short. Conversely, short sellers lose money when the price of a stock that they have sold short rises.
2. After the defendant AMR I. ELGINDY short sold the stock of certain companies, ELGINDY and others engaged in various manipulative activities designed to lower the price of such stock, including spreading negative information about the companies and encouraging others to short sell the stock in a manner that would yield large profits to ELGINDY and others.
3. In order to maximize the adverse impact on the prices of certain stocks that he short sold, and, therefore, maximize his gain, the defendant AMR I. ELGINDY communicated with other short Sellers nationwide, including short sellers within the Eastern District of New York, via the Internet. For this purpose, ELGINDY founded a business named Pacific Equity Investigations, based in San Diego, California, which operated a public investment website, named InsideTruth.com, a subscription e-mail newsletter and a subscription-based investment website, named AnthonyPacific.com. ELGINDY has used these means of communications to spread negative information and to advise others to join him in short selling the stock of certain companies (hereinafter referred to collectively as "Targeted Companies").
4. The defendant AMR I. ELGINDY released information and his short selling recommendations first to his paying subscribers, and only later, and not in all cases, to the investing public. ELGINDY initially communicated negative news about the Targeted Companies and his short selling recommendations to the subscribers of AnthonyPacific.com, who paid him up to $600.00 per month, so that these subscribers would have the opportunity to short sell stocks before the public release of ELGINDY's recommendations. ELGINDY next advised subscribers of his e-mail newsletter, who paid up to $100.00 per month. In some instances ELGINDY also published the negative information and his recommendations on his public website InsideTruth.com. Once the information was publicly available, ELGINDY and his subscribers also posted it on various Internet bulletin boards, chat rooms and on related websites, often assuming fictitious identities to do so. The widespread dissemination of this negative information had the intended goal of exaggerating the downward pressure on the stock prices of Targeted Companies.
5. The defendants DERRICK W. CLEVELAND and TROY PETERS were short sellers who assisted the defendant AMR I. ELGINDY in the operation of Pacific Equity Investigations and its newsletter and websites. Market Manipulation
6. Often, after short selling the stock of a Targeted Company, the defendants AMR I. ELGINDY, TROY PETERS and DERRICK W. CLEVELAND, together with others, coordinated the release of negative, and sometimes false, information with short selling in a manner designed to exaggerate the negative market sentiment for the stock. ELGINDY's paid subscribers received the information and recommendations first, so that they could position themselves to profit if the broader market reacted to the exaggerated negative market sentiment for the stocks. The subscribers, including subscribers in the Eastern District of New York, passed a portion of their profits back to ELGINDY in the form of subscription fees.
7. The defendants AMR I. ELGINDY and TROY PETERS, together with others, sometimes reported negative information about the Targeted Companies to the U.S. Securities and Exchange Commission ("SEC") and the Federal Bureau of Investigation ("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.
The FBI Tipper
8. The defendants AMR I. ELGINDY and DERRICK W. CLEVELAND, together with others, traded on material, non-public information that they obtained from the defendant JEFFREY A. ROYER.
9. The defendant JEFFREY A. ROYER was an FBI Special Agent from November 12, 1996 through December 21, 2001. From March 7, 1997 through November 6, 2000, ROYER was assigned to the FBI's Field Office in Oklahoma City, Oklahoma. On November 6, 2000, ROYER was transferred to the FBI's Resident Office in Gallup, New Mexico.
10. While the defendant JEFFREY A. ROYER was assigned in Oklahoma, in or about 1999, the defendant DERRICK W. CLEVELAND began providing ROYER with information concerning individuals and companies that CLEVELAND claimed were engaged in securities fraud.
11. In late 1999, the defendant JEFFREY A. ROYER was introduced by the defendant DERRICK W. CLEVELAND to the defendant AMR I. ELGINDY. ELGINDY then began providing ROYER with negative information concerning the companies that ELGINDY had short sold or was considering short selling. Because ROYER was not assigned to investigate securities fraud, ROYER referred some of ELGINDY's information to other FBI offices so that criminal investigations would be initiated.
12. Beginning in and around 2000, the defendants AMR I. ELGINDY and DERRICK W. CLEVELAND corruptly induced the defendant JEFFREY A. ROYER to provide them with confidential law enforcement information concerning companies that ELGINDY, CLEVELAND and ELGINDY's subscribers had short sold or were considering short selling. ROYER obtained the information that he provided to ELGINDY, CLEVELAND and others from the FBI's National Crime Information Center database ("NCIC"), which contained confidential criminal history information, and the FBI's Automated Case Support database ("ACS"), which contained confidential criminal investigation information. Access to these confidential databases is strictly limited to law enforcement personnel for law enforcement purposes.
13. As part of the corrupt inducement to the defendant JEFFREY A. ROYER, the defendant DERRICK W. CLEVELAND wired funds to ROYER, while ROYER was an FBI Special Agent, in the following amounts on the following dates: (1) $8,500 on November 28, 2000; (2) $5,000 on January 30, 2001; (3) $9,925 on May 22, 2001; and (4) $7,000 on May 31, 2001. These payments were not reported to the FBI.
14. The defendants AMR I. ELGINDY and DERRICK W. CLEVELAND, together with others, used the confidential law enforcement information that they obtained from the defendant JEFFREY A. ROYER in order to make decisions whether to buy, hold or sell the stocks of the companies to which the information was relevant.
15. After short selling the stocks of such Targeted Companies, the defendants AMR I. ELGINDY and DERRICK W. CLEVELAND, and others, also disseminated confidential law enforcement information to other short sellers, in the Eastern District of New York and elsewhere, via the Internet, as described above, in order to encourage them to short sell the stock as well. As described above, ELGINDY's paid subscribers received the information and recommendations first so that they could position themselves to profit if the market reacted to the public release of the information.
Extortion
16. As a result of the above, the defendant AMR I. ELGINDY, cultivated the perception that he had the ability to devastate a Targeted Company's stock price. ELGINDY, together with the defendants TROY PETERS and DERRICK W. CLEVELAND, and others, used that perception to extort cheap or free shares of stock from the insiders of Targeted Companies in exchange for agreeing no longer to short sell the companies' stock or spread negative information about the companies.
17. The defendants AMR I. ELGINDY and TROY PETERS, together with others, used the confidential law enforcement information obtained from the defendant JEFFREY A. ROYER to assess whether the Targeted Companies were susceptible to extortion, based upon the premise that companies that are in peril of regulatory or criminal investigation would be disinclined to complain to law enforcement about such extortionate demands. Sometimes extortionate demands were coupled with threats to report a company's activities to the SEC or FBI.
18. Once the extortionate demands of the defendants AMR I. ELGINDY and TROY PETERS were satisfied, ELGINDY then communicated to his subscribers, in the Eastern District of New York and elsewhere, via the Internet, as described above, that they should stop short selling, cover their short positions by buying stock and refrain from further dissemination of negative information regarding the targeted company.
Obstruction of Justice
19. On or about September 18, 2001, the U.S. Department of Justice, Criminal Division set up a Capital Markets Unit within a Task Force to investigate certain financial and other criminal offenses.
20. On or about October 25, 2001, the United States Attorney's Office for the Eastern District of New York initiated a grand jury investigation ("the EDNY Grand Jury Investigation") to investigate whether the defendant AMR I. ELGINDY and others, had engaged in certain financial and other criminal offenses.
21. Beginning in or about October 2001, the defendant JEFFREY A. ROYER regularly accessed ACS to glean detailed information concerning the EDNY Grand Jury Investigation. ROYER then advised ELGINDY and the defendant DERRICK W. CLEVELAND of the direction of the EDNY Grand Jury Investigation and that ELGINDY was a target. All the while, the defendant JEFFREY A. ROYER continued to provide confidential law enforcement information to the defendants AMR I. ELGINDY and DERRICK W. CLEVELAND, and others, in order to guide their buying and selling of the stocks of Targeted Companies or companies being considering for targeting, and to assist in their assessment of the susceptibility of these companies to extortion.
22. In connection with the above described trading, the defendant AMR I. ELGINDY gave the defendant JEFFREY A. ROYER authority to execute trades in at least one account held in the name of ELGINDY.
The FBI Tipper Becomes a Tippee
23. On or about December 21, 2001, the defendant JEFFREY A. ROYER resigned from the FBI and immediately took a job with the defendant AMR I. ELGINDY at Pacific Equity Investigations, where ROYER and ELGINDY worked together with the defendant DERRICK W. CLEVELAND.
24. While employed at Pacific Equity Investigations, the defendant JEFFREY A. ROYER obtained additional confidential law enforcement information and provided it to the defendants AMR I. ELGINDY and DERRICK W. CLEVELAND to guide them in buying and selling the stocks of Targeted Companies or companies being considered for targeting.
25. The defendant JEFFREY A. ROYER also actively sought new confidential law enforcement information from law enforcement personnel with access to NCIC and ACS, which he then provided to the defendants AMR I. ELGINDY and DERRICK W. CLEVELAND, and others, and which they all collectively used to make decisions whether to buy or sell the stocks of the companies to which the information was relevant.
26. In or about and between March 2002 and April 2002, the defendant LYNN WINGATE, an FBI Special Agent assigned to the Albuquerque, New Mexico Field Office, gathered confidential law enforcement information from ACS regarding criminal investigations of public companies and associated individuals. WINGATE then communicated this information to ROYER so that ROYER, together with the defendants AMR I. ELGINDY and DERRICK W. CLEVELAND, and others, could collectively make decisions whether to buy, hold or sell the stocks of companies to which the information was relevant.
27. Moreover, in or about and between March 2002 and April 2002, the defendant LYNN WINGATE accessed ACS and collected confidential law enforcement and grand jury information, including a description of subpoenaed documents, concerning the EDNY Grand Jury Investigation of ROYER and AMR I. ELGINDY. Shortly thereafter, WINGATE communicated that information to ROYER, who then a short time later informed ELGINDY and the defendant DERRICK W. CLEVELAND. The defendant LYNN WINGATE also searched ACS for references to her own name to determine whether she herself was a subject or target of the EDNY Grand Jury Investigation.
28. Earlier this year, the defendant JEFFREY A. ROYER attempted, unsuccessfully, to persuade another FBI Special Agent to access ACS for confidential law enforcement information regarding a company whose stock ROYER and ELGINDY had sold short.
THE ENTERPRISE
29. Between approximately November 2000 and May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, JEFFREY A. ROYER, DERRICK W. CLEVELAND, TROY M. PETERS and LYNN WINGATE, together with Pacific Equity Investigations and certain subscribers to AnthonyPacific.com and others, were members and associates of an enterprise as defined in Title 18, United States Code, Section 1961(4), that is, a group of individuals associated in fact (hereafter, the "Enterprise"). The Enterprise operated in the Eastern District of New York and elsewhere in the United States as well as abroad. The Enterprise engaged in, and its activities affected, interstate and foreign commerce.
30. The chief purpose of the Enterprise was to obtain money for its members and associates by trading on material, non-public information that had been misappropriated from law enforcement databases, by manipulating the market to deflate artificially the price of stocks that they had been short sold, and by extorting free shares of stock from company insiders.
31. Among the means and methods by which the defendants AMR I. ELGINDY, JEFFREY A. ROYER, DERRICK W. CLEVELAND, TROY M. PETERS and LYNN WINGATE, and other members and associates, conducted and participated in the conduct of the affairs of the Enterprise were various criminal activities, including conspiracy to commit securities fraud, extortion and obstruction of justice.
32. The Enterprise was led by the defendant AMR I. ELGINDY who owned and, together with the defendant DERRICK W. CLEVELAND, operated Pacific Equity Investigations, and its public investment website, named InsideTruth.com, its subscription e-mail newsletter and its subscription-based investment website, named AnthonyPacific.com. The defendants JEFFREY A. ROYER and LYNN WINGATE were Federal Bureau of Investigation ("FBI") Special Agents who, at various times, accessed FBI databases to gain information for use in making trading decisions, and obstructed the investigation of the Enterprise. ROYER was a member of the Enterprise, while WINGATE was an associate. The defendant TROY M. PETERS was a colleague of ELGINDY's who assisted ELGINDY in manipulating stock prices and extorting stock from Targeted Companies. The Enterprise constituted an ongoing organization whose members functioned as a continuing unit for a common purpose of achieving the objectives of the enterprise.
COUNT ONE
(Racketeering Conspiracy)
33. The allegations contained in paragraphs 1 through 32 are realleged and incorporated as if fully set forth herein.
34. In or about and between November 2000 and May 2002, both dates being approximate and inclusive, within the Eastern District of New York and elsewhere, the defendants AMR I. ELGINDY, also known as "Tony Elgindy" and "Anthony Pacific," JEFFREY A. ROYER, DERRICK W. CLEVELAND, TROY M. PETERS and LYNN WINGATE, togther with others, being persons employed by and associated with an enterprise as defined in Title 18, United States Code, Section 1961(4), that is, a group of individuals associated in fact (hereafter, the "Enterprise"), knowingly and intentionally conspired to violate Title 18, United States Code, Section 1962(c), that is, to conduct and participate, directly and indirectly, in the conduct of the affairs of the Enterprise, which engaged in, and the activities of which affected, interstate and foreign commerce, through a pattern of racketeering activity as defined in Title 18, United States Code, Sections 1961(1) and 1961(5). Each defendant agreed that at least two acts of racketeering would be committed in the conduct of the affairs of the Enterprise as set forth in the pattern of racketeering described below.
PATTERN OF RACKETEERING ACTIVITY
Racketeering Act One
(Securities Fraud Conspiracy)
35. The defendants AMR I. ELGINDY, JEFFREY A. ROYER, DERRICK W. CLEVELAND, TROY M. PETERS and LYNN WINGATE committed the following acts involving securities fraud, any one of which alone constitutes the commission of Racketeering Act One.
A. Securities Fraud Conspiracy - Insider Trading
36. The allegations contained in paragraphs 1 through 32 are realleged and incorporated as if fully set forth herein.
37. In or about and between November 2000 and May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, also known as "Tony Elgindy" and "Anthony Pacific," JEFFREY A. ROYER, DERRICK W. CLEVELAND, TROY M. PETERS and LYNN WINGATE, together with others, did knowingly and willfully conspire to use and employ manipulative and deceptive devices and contrivances directly and indirectly, by use of means and instrumentalities of interstate commerce and the mails, in contravention of Rule 10b-5 of the Rules and Regulations of the United States Securities and Exchange Commission (Title 17, Code of Federal Regulations, Section 240.10b-5), and directly and indirectly to (a) employ devices, schemes and artifices to defraud; (b) make untrue statements of material facts and omit to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engage in acts, practices and a course of business which would and did operate as a fraud and deceit upon members of the investing public, in connection with purchases and sales of securities, in violation of Title 15, United States Code, Sections 78j(b) and 78ff, all in violation of Title 18, United States Code, Section 371.
38. It was a part of the conspiracy that between November 2000 to May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY and DERRICK W. CLEVELAND, solicited, obtained and received from the defendant JEFFREY A. ROYER, and, later, ELGINDY, CLEVELAND and ROYER, solicited, obtained and received from the defendant LYNN WINGATE, material, non-public information concerning Targeted Companies, to wit: confidential law enforcement information from the FBI's National Crime Information Center database ("NCIC"), which contained confidential criminal history information, and the FBI's Automated Case Support database ("ACS"), which contained confidential criminal investigation information, which information had been unlawfully misappropriated from the Federal of Federal Regulations, Section 240.10b-5), and directly and indirectly to (a) employ devices, schemes and artifices to defraud; (b) make untrue statements of material facts and omit to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engage in acts, practices and a course of business which would and did operate as a fraud and deceit upon members of the investing public, in connection with purchases and sales of securities, in violation of Title 15, United States Code, Sections 78j(b) and 78ff, all in violation of Title 18, United States Code, Section 371.
38. It was a part of the conspiracy that between November 2000 to May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY and DERRICK W. CLEVELAND, solicited, obtained and received from the defendant JEFFREY A. ROYER, and, later, ELGINDY, CLEVELAND and ROYER, solicited, obtained and received from the defendant LYNN WINGATE, material, non-public information concerning Targeted Companies, to wit: confidential law enforcement information from the FBI's National Crime Information Center database ("NCIC"), which contained confidential criminal history information, and the FBI's Automated Case Support database ("ACS"), which contained confidential criminal investigation information, which information had been unlawfully misappropriated from the Federal Bureau of Investigation by ROYER and WINGATE in violation of their fiduciary and other duties of trust and confidence, and which information was obtained and received before the information was publicly disclosed to the investing public.
39. It was a further part of the conspiracy that, in or about and between November 2000 and May 2002, both dates being approximate and inclusive, after obtaining and receiving this material, non-public information about the Targeted Companies, but prior to the information being publicly disclosed to the investing public, the defendants AMR I. ELGINDY, DERRICK W. CLEVELAND and JEFFREY A. ROYER, together with others, short sold stock of the Targeted Companies through brokerage accounts at Global Securities in Vancouver, British Columbia, Canada ("Global") and elsewhere.
40. It was further part of the conspiracy that, after short selling the stocks of such Targeted Companies, the defendants AMR I. ELGINDY and DERRICK W. CLEVELAND, and others, then began to spread the confidential law enforcement information to other short sellers, via the Internet, as described above, in order to encourage them to short sell the stock as well. ELGINDY's paid subscribers received the information and recommendations first, so that they could position themselves to profit if the market reacted to the public release of the information. The subscribers passed a portion of their profits back to ELGINDY in the form of subscription fees.
41. In furtherance of the conspiracy and to effect the objectives thereof, the defendants AMR I. ELGINDY, JEFFREY A. ROYER, DERRICK W. CLEVELAND, TROY M. PETERS and LYNN WINGATE, and their coconspirators committed and caused to be committed the following:
OVERT ACTS
Payments to ROYER
a. On or about November 28, 2000, the defendant DERRICK W. CLEVELAND wired $8,500.00 to the account of the defendant JEFFREY A. ROYER.
b. On or about January 30, 2001, the defendant DERRICK W. CLEVELAND wired $5,000.00 to the account of the defendant JEFFREY A. ROYER.
c. On or about May 22, 2001, the defendant DERRICK W. CLEVELAND wired $9,925.00 to the account of the defendant JEFFREY A. ROYER.
d. On or about May 31, 2001, the defendant DERRICK W. CLEVELAND wired $7,000.00 to the account of the defendant JEFFREY A. ROYER.
Company No. 1
e. On or about December 15, 2000, the defendant AMR I. ELGINDY short sold the stock of a company listed on the Over the Counter Bulletin Board ("Company No. 1").
f. On January 2, 2001, the defendant JEFFREY A. ROYER searched the NCIC database and found criminal history information regarding the president of Company No. 1.
g. On January 3, 2001, the defendant AMR I. ELGINDY issued a research report regarding Company No. 1, which disclosed its president's criminal history.
h. On or about January 8, 2001, the defendant AMR I. ELGINDY short sold the stock of Company No. 1.
Company No. 2
i. On or about August 9, 2001, the defendant JEFFREY A. ROYER searched the ACS database and accessed nonpublic information concerning another company listed on the Over the Counter Bulletin Board ("Company No. 2").
j. On or about August 17, 2001, the defendant DERRICK W. CLEVELAND short sold the stock of Company No. 2.
k. On or about August 21, 2001, the defendant AMR I. ELGINDY short sold the stock of Company No. 2.
Company No. 3
l. On or about August 11, 2001, the defendant JEFFREY A. ROYER searched the ACS database and accessed nonpublic information concerning another company listed on the Over the Counter Bulletin Board ("Company No. 3").
m. On or about August 14, 2001, the defendant DERRICK W. CLEVELAND short sold the stock of Company No. 3.
Company No. 4
n. On or about September 19, 2001, the defendant JEFFREY A. ROYER searched the ACS database and accessed nonpublic information concerning another company listed on the Over the Counter Bulletin Board ("Company No. 4") in this regard.
o. On or about September 20, 2001, the defendant AMR I. ELGINDY short sold the stock of Company No. 4. Nuclear Solutions
p. On December 19, 2001, at approximately 11:19 a.m. (Eastern Standard Time), the defendant JEFFREY A. ROYER searched the NCIC database and found criminal history information regarding Paul Brown, the founder of Nuclear Solutions, a company listed on the Over the Counter Bulletin Board.
q. On December 19, 2001, at approximately 1:31 p.m. (Eastern Standard Time), the defendant AMR I. ELGINDY sent an e-mail to his subscribers that stated: "NSOL - CEO, Dr. Paul Maurice Brown, is a convicted felon ..."
r. On or about December 20, 2001 the defendant AMR I. ELGINDY and others, began posting information regarding Paul Brown's alleged criminal record on Internet bulletin boards and chat rooms.
Company No. 5
s. On or about March 4, 2002, the defendant LYNN WINGATE searched the ACS database and accessed nonpublic information concerning the Chief Executive Officer of a company listed on the NASDAQ National Market System ("Company No. 5").
t. On or about March 4, 2002, after the defendant LYNN WINGATE's ACS search described in overt act (s), WINGATE telephoned the defendant JEFFREY A. ROYER.
B. Securities Fraud Conspiracy - Market Manipulation
42. The allegations contained in paragraphs 1 through 32 and 37 through 41 are realleged and incorporated as if fully set forth herein.
43. In or about and between November 2000 and May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, also known as "Tony Elgindy" and "Anthony Pacific," JEFFREY A. ROYER, DERRICK W. CLEVELAND, TROY M. PETERS and LYNN WINGATE, together with others, did knowingly and willfully conspire to use and employ manipulative and deceptive devices and contrivances directly and indirectly, by use of means and instrumentalities of interstate commerce and the mails, in contravention of Rule 10b-5 of the Rules and Regulations of the United States Securities and Exchange Commission (Title 17, Code of Federal Regulations, Section 240.10b-5), and directly and indirectly to (a) employ devices, schemes and artifices to defraud; (b) make untrue statements of material facts and omit to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engage in acts, practices and a course of business which would and did operate as a fraud and deceit upon members of the investing public, in connection with purchases and sales of various securities, in violation of Title 15, United States Code, Sections 78j(b) and 78ff, all in violation of Title 18, United States Code, Section 371.
44. It was a part of the conspiracy that between November 2000 to May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, DERRICK W. CLEVELAND and JEFFREY A. ROYER, together with others, devised, implemented and oversaw a fraudulent scheme to deflate artificially the price of various companies' stock that they had short sold and then to profit by buying it back later at a lower price. ELGINDY, CLEVELAND, ROYER and others sought to accomplish their manipulation by coordinating the release of negative information with short selling in a manner designed to exaggerate the negative market sentiment for the stock.
45. It was further part of the conspiracy that the AnthonyPacific.com subscribers received the information and recommendations first, so that they could position themselves to profit if the market reacted to the exaggerated negative market sentiment for the stocks, and so that a portion of their profits would be paid back to the defendants AMR I. ELGINDY in the form of subscription fees.
46. In furtherance of the conspiracy and to effect the objectives thereof, the defendants AMR I. ELGINDY, DERRICK W. CLEVELAND and JEFFREY A. ROYER, and their coconspirators committed and caused to be committed the following:
OVERT ACTS
a. On December 19, 2001, at approximately 11:19 a.m. (Eastern Standard Time), the defendant JEFFREY A. ROYER searched the NCIC database and found criminal history information regarding Paul Brown, the founder of Nuclear Solutions, one of the Targeted Companies.
b. On December 19, 2001, at approximately 1:31 p.m. (Eastern Standard Time), the defendant AMR I. ELGINDY sent an e-mail to his subscribers that stated: "NSOL - CEO, Dr. Paul Maurice Brown, is a convicted felon ..."
c. On or about December 20, 2002, the defendant AMR I. ELGINDY and others, began posting information regarding Paul Brown's alleged criminal record on Internet bulletin boards and chat rooms.
d. On December 22, 2001, the defendant AMR I. ELGINDY sent an e-mail to his subscribers that stated: "Convicted Felon Brown ... has history of lying & fraud..."
e. On or about December 24, 2001, the defendant AMR I. ELGINDY short sold the stock of Nuclear Solutions.
f. On December 26, 2001,the defendant AMR I. ELGINDY sent an e-mail to his subscribers that stated: "NSOL -info on [a Nuclear Solutions executive] the scumbag [attorney] ... has been disbarred..."
g. On or about December 27, 2001, the defendant AMR I. ELGINDY sent an e-mail to his subscribers that stated: "NSOL -- if u are short you need to [private message] me how many."
h. On or about January 2, 2001, the defendant AMR I. ELGINDY short sold the stock of Nuclear Solutions.
i. On or about January 3, 2002, the defendant AMR I. ELGINDY sent an e-mail to his subscribers that stated: "NSOL -- short 20% @ 2.05 (add).
j. On or about January 3, 2001, the defendant AMR I. ELGINDY short sold the stock of Nuclear Solutions.
k. On or about January 9, 2001, the defendant DERRICK W. CLEVELAND short sold the stock of Nuclear Solutions.
l. On or about January 16, 2001, the defendant AMR I. ELGINDY short sold the stock of Nuclear Solutions.
m. On or about January 24, 2001, the defendant AMR I. ELGINDY short sold the stock of Nuclear Solutions.
n. On or about January 25, 2001, the defendant AMR I. ELGINDY short sold the stock of Nuclear Solutions.
o. On or about January 30, 2002, the defendant AMR I. ELGINDY in a chat room discussion with his subscribers, stated "We are pulling out of NSOL" and "NSOL <--- coverage [terminated] for good."
Racketeering Act Two
(Extortion)
47. The defendants AMR I. ELGINDY, JEFFREY A. ROYER, DERRICK W. CLEVELAND and TROY M. PETERS, and other members and associates, committed the following acts involving extortion, any one of which alone constitutes the commission of Racketeering Act Two.
A. Extortion Conspiracy
48. The allegations contained in paragraphs 1 through 32, 37 through 41 and 44 through 46 are realleged and incorporated as if fully set forth herein.
49. In or about and between December 2001 and February 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, also known as "Tony Elgindy" and "Anthony Pacific," JEFFREY A. ROYER, DERRICK W. CLEVELAND and TROY M. PETERS, and others, did knowingly and intentionally conspire to obstruct, delay and affect commerce, and the movement of articles and commodities in commerce, by extortion, as that term is defined in Title 18, United States Code, Section 1951(b)(2), in that the defendants and others conspired to obtain, through extortionate demands, property, to wit, stock, with the consent of the owner of such stock, which consent was to be induced by the wrongful use of actual and threatened force, violence and fear.
B. Extortion
50. The allegations contained in paragraphs 1 through 32, 37 through 41 and 44 through 46 are realleged and incorporated as if fully set forth herein.
51. In or about and between December 2001 and February 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, also known as "Tony Elgindy" and "Anthony Pacific," JEFFREY A. ROYER, DERRICK W. CLEVELAND and TROY M. PETERS, and others, did knowingly and intentionally obstruct, delay and affect commerce, and the movement of articles and commodities in commerce, by extortion, as that term is defined in Title 18, United States Code, Section 1951(b)(2), in that the defendants and others obtained, through extortionate demands, property, to wit, stock, with the consent of the owner of such stock, which consent was to be induced by the wrongful use of actual and threatened force, violence and fear.
Racketeering Act Three
(Obstruction of Justice)
52. The allegations contained in paragraphs 1 through 32, 37 through 41 and 44 through 46 are realleged and incorporated as if fully set forth herein.
53. In or about and between October 2001 and May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, also known as "Tony Elgindy" and "Anthony Pacific," JEFFREY A. ROYER and LYNN WINGATE, together with others, did knowingly, intentionally and corruptly endeavor to influence, obstruct and impede the due administration of justice with respect to matters before a grand jury in the Eastern District of New York and elsewhere, by ROYER and WINGATE accessing a confidential FBI database to gain information concerning the EDNY Grand Jury Investigation to provide it to ELGINDY and others, in violation of Title 18, United States Code, Section 1503. (Title 18, United States Code, Sections 1962(d), 1963 and 3551 et seq.)
COUNT TWO
(Securities Fraud Conspiracy - Insider Trading)
54. The allegations contained in paragraphs 1 through 32, 37 through 41 and 44 through 46 are realleged and incorporated as if fully set forth herein.
55. In or about and between November 2000 and May 2002, both dates being approximate and inclusive, within the Eastern District of New York and elsewhere, the defendants AMR I. ELGINDY, also known as "Tony Elgindy" and "Anthony Pacific," JEFFREY A. ROYER, DERRICK W. CLEVELAND, TROY M. PETERS and LYNN WINGATE, together with others, did knowingly and willfully conspire to use and employ manipulative and deceptive devices and contrivances directly and indirectly, by use of means and instrumentalities of interstate commerce and the mails, in contravention of Rule 10b-5 of the Rules and Regulations of the United States Securities and Exchange Commission (Title 17, Code of Federal Regulations, Section 240.10b-5), and directly and indirectly to (a) employ devices, schemes and artifices to defraud; (b) make untrue statements of material facts and omit to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engage in acts, practices and a course of business which would and did operate as a fraud and deceit upon members of the investing public, in connection with purchases and sales of securities, in violation of Title 15, United States Code, Sections 78j(b) and 78ff.
56. It was a part of the conspiracy that between November 2000 to May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY and DERRICK W. CLEVELAND, solicited, obtained and received from the defendant JEFFREY A. ROYER, and, later, ELGINDY, CLEVELAND and ROYER, solicited, obtained and received from the defendant LYNN WINGATE material, non-public information concerning Targeted Companies which they then used to make decisions whether to purchase and sell the stocks of the Targeted Companies.
(Title 18, United States Code, Section 371).
COUNT THREE
(Securities Fraud Conspiracy - Market Manipulation)
57. The allegations contained in paragraphs 1 through 32, 37 through 41, 44 through 46 and 56 are realleged and incorporated as if fully set forth herein.
58. In or about and between November 2000 and May 2002, both dates being approximate and inclusive, within the Eastern District of New York and elsewhere, the defendants AMR I. ELGINDY, also known as "Tony Elgindy" and "Anthony Pacific," JEFFREY A. ROYER, DERRICK W. CLEVELAND, TROY M. PETERS and LYNN WINGATE, together with others, did knowingly and willfully conspire to use and employ manipulative and deceptive devices and contrivances directly and indirectly, by use of means and instrumentalities of interstate commerce and the mails, in contravention of Rule 10b-5 of the Rules and Regulations of the United States Securities and Exchange Commission (Title 17, Code of Federal Regulations, Section 240.10b-5), and directly and indirectly to (a) employ devices, schemes and artifices to defraud; (b) make untrue statements of material facts and omit to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engage in acts, practices and a course of business which would and did operate as a fraud and deceit upon members of the investing public, in connection with purchases and sales of securities, in violation of Title 15, United States Code, Sections 78j(b) and 78ff.
59. It was a part of the conspiracy that between November 2000 to May 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, DERRICK W. CLEVELAND and JEFFREY A. ROYER, together with others, devised, implemented and oversaw a fraudulent scheme to deflate artificially the price of various companies' stock that they had short sold and then to profit by buying it back later at a lower price for return to the lender.
(Title 18, United States Code, Section 371).
COUNT FOUR
(Extortion Conspiracy)
60. The allegations contained in paragraphs 1 through 32, 37 through 41, 44 through 46, 56 and 59 are realleged and incorporated as if fully set forth herein.
61. In or about and between December 2001 and February 2002, both dates being approximate and inclusive, the defendants AMR I. ELGINDY, also known as "Tony Elgindy" and "Anthony Pacific," JEFFREY A. ROYER, DERRICK W. CLEVELAND and TROY M. PETERS, and others, did knowingly and intentionally conspire to obstruct, delay and affect, commerce, and the movement of articles and commodities in commerce, by extortion, as that term is defined in Title 18, United States Code, Section 1951(b)(2), in that the defendants and others conspired to obtain, through extortionate demands, property, to wit, stock, with the consent of the owner of such stock, which consent was to be induced by the wrongful use of actual and threatened force, violence and fear.
(Title 18, United States Code, Sections 1951(a)).
COUNT FIVE
(Obstruction of Justice Conspiracy)
62. The allegations contained in paragraphs 1 through 32, 37 through 41, 44 through 46, 56, 59 and 64 are realleged and incorporated as if fully set forth herein.
63. In or about and between October 2001 and May 2002, both dates being approximate and inclusive, within the Eastern District of New York and elsewhere, the defendants AMR I. ELGINDY, also known as "Tony Elgindy" and "Anthony Pacific," JEFFREY A. ROYER and LYNN WINGATE, together with others, did conspire to knowingly, intentionally and corruptly endeavor to influence, obstruct and impede the due administration of justice with respect to matters before a grand jury in the Eastern District of New York and elsewhere, by ROYER and WINGATE accessing a confidential FBI database to gain information concerning the investigation to provide it to ELGINDY, in violation of Title 18, United States Code, Section 1503.
64. In furtherance of the conspiracy, and for the purpose of effecting the objectives thereof, within the Eastern District of New York and elsewhere, the defendants AMR I. ELGINDY, JEFFREY A. ROYER and LYNN WINGATE, and their coconspirators committed and caused to be committed, among others, the following:
OVERT ACTS
a. On or about October 4, 2001, the defendant JEFFREY A. ROYER searched the ACS database for references to "Elgindy" and an individual associated with the defendant AMR I. ELGINDY.
b. On or about October 12, 2001, the defendant JEFFREY A. ROYER searched the ACS database for references to "Elgindy, Anthony."
c. On or about October 17, 2001, the defendant JEFFREY A. ROYER searched the ACS database for references to "Elgindy" and "Royer, Jeff."
d. On or about October 20, 2001, the defendant JEFFREY A. ROYER searched the ACS database for references to "Elgindy, Anthony" and an individual associated with the defendant AMR I. ELGINDY.
e. On or about October 30, 2001, the defendant JEFFREY A. ROYER searched the ACS database for references to "Elgindy, Anthony."
f. On or about November 6, 2001, the defendant JEFFREY A. ROYER searched the ACS database for references to "Royer" and "Royer, J."
g. On or about November 7, 2001, the defendant JEFFREY A. ROYER searched the ACS database for references to "Elgindy, Anthony."
h. On or about April 18, 2002, the defendant LYNN WINGATE searched the ACS database for references to "Elgindy" and "Royer."
i. On or about April 18, 2002, after searching the ACS database for references to "Elgindy, Anthony" and "Royer, Jeff," the defendant LYNN WINGATE telephoned the defendant JEFFREY A. ROYER.
j. On or about April 18, 2002, the defendant JEFFREY A. ROYER telephoned the defendant AMR I. ELGINDY.
k. On or about April 23, 2002, the defendant LYNN WINGATE searched the ACS database for references to "Wingate."
l. On or about April 23, 2002, the defendant JEFFREY A. ROYER telephoned the defendant AMR I. ELGINDY.
(Title 18, United States Code, Section 371).
COUNT SIX
(Obstruction of Justice)
65. The allegations contained in paragraphs 1 through 32, 37 through 41, 44 through 46, 56, 59 and 64 are realleged and incorporated as if fully set forth herein.
66. In or about and between October 2001 and May 2002, both dates being approximate and inclusive, within the Eastern District of New York and elsewhere, the defendants AMR I. ELGINDY, also known as "Tony Elgindy" and "Anthony Pacific," JEFFREY A. ROYER and LYNN WINGATE, together with others, did knowingly, intentionally and corruptly influence, obstruct and impede, and endeavor to influence, obstruct and impede, the due administration of justice with respect to matters before a grand jury in the Eastern District of New York and elsewhere.
(Title 18, United States Code, Section 1503).
A TRUE BILL
----------
FOREPERSON
-------------
ALAN VINEGRAD
UNITED STATES ATTORNEY
EASTERN DISTRICT OF NEW YORK
:=) Gary Swancey
HEEELLLOOOOOOOO!! It's about time the feds started acting on the fraud that is rampant in the securities industry. Thanks for posting that Gary.
OB
(:>})))))
http://www.katu.com/images/flagprint_sm.jpg
Off Topic: Insider Info Basher and King of Short & Distort Indicted.
DJ 2 FBI Agents Indicted In US Stock Fraud
NEW YORK (AP)--Two FBI agents helped a stock analyst extort publicly
traded companies by providing 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 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.
The indictment accuses the agents of using FBI databases to provide
their co-conspirators with inside information, and also to track a
grand jury investigation targeting the alleged scheme in exchange for
cash.
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 and an associate, Troy Peters, were in custody in San Diego;
Royer and Wingate in Albuquerque; and the fifth defendant, another
Elgindy associate, Derrick Cleveland, in Oklahoma City, pending court
appearances.
If convicted of conspiracy, each defendant could receive 20 years in
prison.
(END) DOW JONES NEWS 05-22-02
12:37 PM
- - 12 37 PM EDT 05-22-02
--------------------
TAL News Server History:
ADD : 02/05/22 12:37
DJN: =DJ Govt Says Elgindy Used Secret FBI Info To Manipulate Stks
(Dow Jones 05/22 12:47:06)
By Michael Rapoport and Carol S. Remond
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Anthony Elgindy, the controversial short-seller and
Internet stock commentator, has been charged with manipulating stocks by
using secret government information fed to him by collaborators within the
Federal Bureau of Investigation.
Elgindy was indicted by the U.S. Attorney's office in Brooklyn, N.Y., on
charges of racketeering, insider trading, market manipulation, extortion
conspiracy and obstruction of justice. Four other people, including a
current FBI agent and a former FBI agent, were also indicted.
The indictment alleges that Elgindy, through his FBI contacts, obtained
confidential information from FBI databases about criminal history and
investigations relating to companies that he was shorting or thinking of
shorting. A short-seller sells borrowed shares and profits when a stock
declines, so exclusive access to negative information about a company would
be valuable to a short.
Elgindy then used the secret information to decide how to invest,
prosecutors say, and distributed it to other short-sellers to encourage them
to short the stock also. Paid subscribers to Elgindy's e-mail newsletter and
investment Web site received the information also, prosecutors said.
In addition, according to the indictment, Elgindy extorted free or cheap
shares of stock from the insiders of companies he had targeted in exchange
for his agreement to lay off - to stop shorting the companies and stop
spreading negative information about them.
Elgindy was even able to spy on the government's grand jury investigation of
him through his FBI contacts, prosecutors allege. One of the FBI agents
indicted along with Elgindy gleaned information about the probe from an FBI
database and told Elgindy of the direction of the investigation and that he
was a target, according to the indictment.
A woman at Elgindy's home hung up the phone on a reporter who called seeking
comment. Elgindy's attorney couldn't immediately be reached.
WSJ Interactive:
Short-Seller Elgindy Is Charged
With Manipulating Stock Prices
By MICHAEL RAPOPORT and CAROL S. REMOND
DOW JONES NEWSWIRES
NEW YORK -- Anthony Elgindy, the controversial short-seller and Internet stock commentator, was arrested on charges of manipulating stocks by using secret government information fed to him by collaborators within the Federal Bureau of Investigation.
Mr. Elgindy, who lives in the San Diego area, was arrested at his business on Tuesday, Jan Caldwell, a spokeswoman for the San Diego field office of the FBI, said Wednesday.
Mr. Elgindy was indicted by a federal grand jury in Brooklyn, N.Y., on charges of racketeering, insider trading, market manipulation, extortion conspiracy and obstruction of justice. Four other people, including a current FBI agent and a former agent, also were indicted.
The indictment alleges that Mr. Elgindy, through his FBI contacts, obtained confidential information from FBI databases about criminal history and investigations relating to companies that he was shorting or thinking of shorting. A short-seller sells borrowed shares and profits when a stock declines, so exclusive access to negative information about a company would be valuable to a short.
He then used the secret information to decide how to invest, prosecutors say, and distributed it to other short-sellers to encourage them to short the stock also. Paid subscribers to Mr. Elgindy's e-mail newsletter and investment Web site received the information also, prosecutors said.
In addition, according to the indictment, Mr. Elgindy extorted free or cheap shares of stock from the insiders of companies he had targeted in exchange for his agreement to stop shorting the companies and stop spreading negative information about them.
Mr. Elgindy was even able to spy on the government's grand jury investigation of him through his FBI contacts, prosecutors allege. One of the FBI agents indicted along with Mr. Elgindy gleaned information about the probe from an FBI database and told Mr. Elgindy of the direction of the investigation and that he was a target, according to the indictment.
A woman at Mr. Elgindy's home hung up the phone on a reporter who called seeking comment. Mr. Elgindy's attorney couldn't immediately be reached.
Write to Michael Rapoport at michael.rapoport@dowjones.com and Carol Remond at carol.remond@dowjones.com
Updated May 22, 2002 1:13 p.m. EDT
FBI Agent Charged in Insider Trading Ring
Wed May 22, 3:17 PM ET
NEW YORK (Reuters) - An FBI (news - web sites) special agent and a former agent were among five people indicted for using confidential law-enforcement information to operate an insider stock market trading and extortion ring, prosecutors said on Wednesday.
The indictment, unsealed on Wednesday, charged that Jeffrey Royer, an FBI agent until last December, and agent Lynn Wingate, disclosed details from FBI databases to trader and analyst Amr Elgindy and his associates Derrick Cleveland and Troy Peters, who used the information to short-sell stock.
The indictment did not specify which publicly-traded companies were targeted or put a specific dollar-value on profits made through the short-selling, a strategy whereby an investor 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," said U.S. Attorney Alan Vinegrad.
The defendants, all arrested Tuesday, are charged with racketeering conspiracy and securities fraud conspiracy. Elgindy, Royer and Peters were also charged with extortion conspiracy, while Elgindy, Royer and Wingate were charged with obstruction of justice and obstruction of justice conspiracy.
"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.
USED THE INTERNET
The racketeering conspiracy count carries a maximum sentence of 20 years as does the extortion charge. The other charges carry lesser sentences and fines.
The indictment alleges Elgindy and his cohorts used the confidential information to short-sell stocks and then disseminated the information via the Internet to other traders to encourage them to short sell as well, thus pushing down share prices so the first short sellers could maximize profits.
Elgindy owned and operated, together with Cleveland, Pacific Equity Investigations, InsideTruth.com, a public investment Web site, and AnthonyPacific.com, a subscription e-mail newsletter and subscription-based investment Web site.
Extortion charges resulted from efforts to extract payments from companies in return for not disseminating sensitive information, the indictment said.
Royer was hired by Elgindy's Pacific Equity firm after he quit the FBI in December 2001, according to the indictment, which claims that he later recruited Wingate of the FBI's field office in Albuquerque, New Mexico, to collect information.
]In addition to the criminal case, the government also filed a civil forfeiture action seeking to forfeit funds on deposit by Elgindy and Royer, along with vehicles including a Rolls Royce Bentley, a Jaguar and a Hummer, and the primary residence of Elgindy, which was purchased a year ago for $2.2 million.
More from > Business - Reuters
Prev. Story: Polo Profits Flat, Shares Fall on Outlook
Wed May 22,12:28 PM ET - (Reuters)
Next Story: FBI Agent Charged in Insider Trading Ring
Wed May 22, 3:17 PM ET - (Reuters) [/i}
:=) Gary Swancey
CBQI: 8-K/A is filed. http://www.freeedgar.com/search/FilingsResults.asp?SourcePage=CompanyList&CIK=814926&UseFram...
OB
(:>})))))
http://www.katu.com/images/flagprint_sm.jpg
Some of the insiders have accounts at Schwab ... not saying they are but it could just coincidence.
Gary
:=) Gary Swancey
he showed up the first thing this morning and push the bid up from .016 to .02, so he is buying or doing a head fake.. will watch and see...Denn....
Apparently he has stock for sell or to buy. If memory serves me right schwab may be the broker for a large holder ... Will have to wait and see how long they remain and on what side they dwell. ... Ask is selling and bid is buying.
:=) Gary Swancey
I have a feeling that theres more going on than is being told by Jack. I've been with this for a long time now and I'm not walking away from this for any reason now. Have a great evening DENN.
Frank
OB
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http://www.katu.com/images/flagprint_sm.jpg
they could know something we don't. its hard to believe they would just show up all of sudden. looks like next week for the filing, may be they will shed some light there. according to the post on RB the ceo is devoting all his time on cbqi...Denn
CBQI- NT10Q has been filed today.
http://www.freeedgar.com/search/FilingsResults.asp?SourcePage=CompanyList&CIK=814926&UseFram...
OB
(:>})))))
http://www.katu.com/images/flagprint_sm.jpg
Could very well be that they expect some action in this in the near future DENN.
OB
(:>})))))
http://www.katu.com/images/flagprint_sm.jpg
WE have a new market maker, SCHB. WONDER why he came on board....Denn...
Wednesday May 15, 2002 10:37 Am
MPID Bid Size Ask Size U O/C
SCHB 0.02 5000 0.05 5000 O
MLNJ 0.016 5000 0.04 5000 O
NATL 0.014 5000 0.045 5000 O
FRAN 0.012 5000 0.028 5000 O
LTCO 0.012 5000 0.032 5000 O
NITE 0.0101 5000 0.032 5000 O
GVRC 0.01 5000 0.04 5000 O
HILL 0.01 5000 0.045 5000 O
VFIN 0.006 5000 1.01 500 O
WIEN 0.006 5000 0.06 5000 O
WSEI 0.005 5000 0.4 5000 O
Agreed. The transparency is the main thing I feel the OTCBB lacks that makes me inherently distrust it and any company listed on it. I'm not talking market-making transparency here. I'm talking transparency of the companies. Improve that, and tighten up the listing requirements (especially with regards to filings and accurate, recent share counts), and the picture does improve a lot.
Heck transparency if that is all we got would make it 1000 times better than the manipulated market now. Also automatic executions. Those two items makes it somewhat a better playing field.
Gary
:=) Gary Swancey
I haven't combed through the details and done a close comparison, but overall I'm optimistic at this point.
Hope all is well ...
:=) Gary Swancey
Interesting stuff Gary. Thanks for posting it.
OB
(:>})))))
http://www.katu.com/images/flagprint_sm.jpg
The BBX is coming, time to get educated!
Written by: Staff
A new informational website is up and running on the new market, the BBX or Bulletin Board Exchange. Since in just over half a year the BBX will be a reality, it's probably a good idea for traders and investors to be familiar with the rules. At first reading, the new exchange rules seem to be a nice change to the current state of affairs in the OTCBB. As always though, we should take a closer look at the implications the new rules will have on day to day trading and investing. OTCFilings.com will continue to update readers as more information becomes available.
First and foremost in the new rules are the listing requirements. For BBX listing, companies must meet qualitative listing standards without having to meet financial or minimum share price standards. The Bulletin Board Exchange states that the listing requirements "have been created to provide an opportunity for the largest number of current OTCBB issuers to continue trading in the new listed environment, while at the same time offering a full complement of qualitative standards to provide enhanced protection to investors."
The listing standards can be found at: http://www.bbxchange.com/Listing_Information/reqs.stm.
The Public Interest Standard means the BBX will have "discretion to deny listing or delist an issuer to protect investors and the integrity of the BBX market in the context of both initial and continued inclusion. Imposition of this standard would consist of, among others, a review of all directors, officers and major shareholders for past regulatory or legal issues." This standard will be interesting to see implemented. Will OTCBB companies with previous SEC trade halts have a more difficult time passing the test? What about some of the habitual reverse split followed by dilution issuers? Should be interesting to see how some of the more famous or infamous OTCBB personalities will fare.
The Public Float/Shareholder requirement should be fairly simple to pass. BBX listing will require a minimum of 100 round lot shareholders and a 200,000-share public float.
The Corporate Governance Standards, according to the BBX "are basic and attainable by all current OTC Bulletin Board ® (OTCBB) issuers." The Standards include: Annual Shareholder Meetings, Proxy Solicitations and Quorum, Independent Director, issuers will have up to 12 months after the introduction to retain the independent director. Audit Committees/Conflicts of Interest, issuers will have 12 months to create an audit committee; in addition the committee will review related party transactions. It is possible this may curtail some of the more questionable practices by some of the OTCBB issuers.
Voting Rights: "Nasdaq rules prohibit the disenfranchisement of the voting rights of existing shareholders. This requirement will be established immediately upon launch of the BBX."
Auditor Peer Review: "All issuers must engage auditors that are subject to peer review consistent with the American Institute of Certified Public Accountants (AICPA)procedures."
Shareholder Approval: shareholder approval will be required for approval of certain transactions, including the granting of stock options to officers or directors, large below market issuance of stock and acquisitions and changes in control. This will prove very interesting for many OTCBB companies that survive by the S-8 filing. Although shareholder approval will be needed to vote on such transactions many times officers hold well over 50% of the voting stock, there probably will not be much change. Distribution of Annual Reports, Availability of Quarterly Reports.
In addition, companies listing on the BBX will encounter initial listing fees and annual fees along with fees for listing additional shares and convertible debentures. The fees are as follows:
Initial Listing Fee: "$5000 for the first class of securities listed. A non-refundable application fee of $1,000 is required.
A fee of $1,000 will be charged for each additional class of shares based on the greater of $1,000 or .001/share not to exceed $5,000. Convertible debentures will be charged a fee of the greater of $1,000 or $50 per million dollars face value of debentures not to exceed $5,000.
Annual Fee: $4000 for the first class of securities and $1000 for each additional class of securities.
Listing of Additional Shares (LAS) Fees: "$0.005 per share, up to a maximum of $8,750 per quarter and $17,500 annually. This is one half of the SmallCap maximums. No fee is assessed if the value of the LAS offering is under $500."
Hearing Fee: $4000 for written hearings; $5000 for oral hearings.
The listing fees should not be a problem for most companies currently trading on the OTCBB. In fact the BBX will help companies by waiving the initial listing fee for applicants until 6 months after the launch, in early 2003. Check OTCFilings.com for a previous commentary with an OTCBB company regarding the listing standards and fees.
Now on to the Market Rules. The BBX explains that market rules for the new exchange will more closely resemble the Nasdaq rules. The first rule is "market makers will be required to maintain continuous, two-sided markets, with quotes that are reasonably related to the market and that generally do not lock or cross the market." Excellent idea, in most cases this will prove to be a benefit for investors and traders. The second rule is "BBX market makers will be required to report their short interest on a monthly basis, as market makers in Nasdaq National Market ® (NNM®) and SmallCap stocks do today." This is interesting and transparency is always good although many hearts will be broken when investors realize their gem of a stock was not shorted 20 times the float after all. The final market rule states "the BBX proposes to adopt the same trade halt rule that currently applies to NNM and SmallCap issues. This provides BBX with broader authority consistent with its new relationship with BBX issuers." This last rule is unfortunately a problem for traders that have enjoyed jumping in for a fast ride on buyout or other market moving news. This third rule may be interpreted as halting a stock pending a news release as is done on Nasdaq currently. Therefore on a buyout the rule may allow the market makers to gap the price to the buyout offer before the stock reopens, leaving the traders out of the game.
Some rules will remain the same. Such as the minimum quote size depending on the quoted price of an issuer and 100% maintenance margin requirement. Doesn't look like we will be able to margin that $.001 stock unfortunately.
BBX Automated Trading Systems will prove to be the biggest change traders will have to learn to master. The BBX states "The proposed automated order delivery service (ODS) will enable BBX users to communicate electronically with one another to negotiate and confirm the execution of non-liability orders. It will offer much of the functionality of the SelectNet® service that is used for trading of Nasdaq National Market and SmallCap issues." Trading will probably be closer to the current NASDAQ penny stocks than the current OTCBB stocks. For traders not familiar with a NASDAQ environment, there is 7 months of practice time.
Nasdaq and NASD Regulation will maintain a high level of regulation over the BBX. The automated trading systems should allow for a closer surveillance of the BBX marketplace. Regulation will monitor for: Issuer news that warrants a news-related Trade Halt, Backing away, Excused withdrawals from the market, locked/crossed markets and trading during trading halts, Best execution obligations, Marking-the-close activity, Anti-competitive practices by market makers, Front-running of research, Short interest reporting and Insider trading. So in short, it looks like they will be monitoring for the daily occurrences in the OTCBB.
Things change and just when we were getting used to our little OTCBB. The BBX will be here shortly and the changes will undoubtedly bring opportunities for some and misery for others. The one positive out of all these changes is the possible influx of new money into the BBX, money that had previously shunned the OTCBB due to the lack of regulation and investor protection. Many will also welcome the automated trading, but that will come at a price. The 30 minute 200% runs in share prices may be the casualties. The trading halts pending news may cost many participants the "buy out play", a favorite among the fast and nimble traders. The BBX is coming, keep checking with OTCFilings.com to keep up with the latest developments.
http://www.otcfilings.com/BBXRulesandReg.htm
:=) Gary Swancey
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