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PASW .... meets thread criteria.
Gary
Yeah I drift in an out sometimes depending on the freetime I have. That is an excellent book. Fair and balanced in the writing by John. He did a great job.
Gary
sympathy I hope you do not mind being on board here. If you do I will remove you.
Gary Swancey
Hmmm ... seems like I will have to pay to do what I used to do. Do not know where the new spot is but I am researching all the sites: Most are dead ... seems like live chat is where most are now.
Not sure just searching out the sites.
Guess Grand fathering is out also.
Gary
Oh been out of the market for some time and working on Computer Atuomation and EMS systems ffor grocery stores. It is about time to reenter the market ...
How are you kicking arse ... LOL ...
GAry
What's Up Matt?
Oh Great Apepi! I love the artful representation of thy mystical world of Tiamat.
Gary
:=) Gary Swancey
Hey can you believe I got caught up with software and have an evening to browse. How's everything Matt?
Gary
:=) Gary Swancey
Amazing thought that after you read the book the characters are still the same only the cyber-names have changed but you have to wonder who has changed their cybernames and still posting as normal.
It hasn;t changed.
Gary :0
:=) Gary Swancey
That is a good book on the war for cyber territories back in the late nineties when most came on line to trade. I did not have to give permission because the posts are public domain and he acknowledged the author. He thought I was colorful since I went up against TMex and other day traders, P&Ders, S&Ders and so forth.
He also found it interesting I lost because instead of selling and walking I put myself through heck blowing the whistle on a crooked CEO. Most that is within that book is an accurate assessment of the events and the people.
I receive an autographed copy from Emshwiller. He put a lot of work into conveying the evil and those that go up against the evil. LOL ... thought he was going to call it "Cyber-Wars"
But no I received on compensation nor did anyone in the book to my knowledage nor did I give my permission but I did interview with John of which some he used and some he didn't. But that is the risk when doing interviews.
It is a great read when you start thinking anyone on the internet is anything more than a cyberspirit with an agenda of their own chosing.
I am not in there much though ... just 10 pages have me within them. But he covers my time very well and I am not the least a shamed of the writings and his opinions within those pages.
Gary
:=) Gary Swancey
Oh he might be back but he is under a gag order I would assume and there might be other scenarioes he will be hit with since all his criminal activity is in the market.
Just watching and waiting to see the outcome.
Gary
:=) Gary Swancey
Hey Matt ... I am still aeound ... busy as heck engineering, commissioning grocery chains software and hardware and teaching apprentices.
I read SI for the laughable nonsense on the King of Short & Distort though when I get brain tired or need a break from logic. LOL ... unlogical posts cheer me up.
Hope all is well for you Matt.
Gary
:=) Gary Swancey
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
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
nope
:=) Gary Swancey
Oh yeah and since it is Rico his entire email, subscriber list & whole nine yards is now and can be used to expose those that capitalized on this cartel. Plus his touters maybe in for a little close scrutinity also.
I believe this is just the tip of the ice berg and anyone on his side is probably going to have some major regrets in the future.
But it this busts shows exactly what I wrote in this post.
http://www.dimgroup.com/articles/05.html
Glad I have never supported or subscribed especially since this bust is Rico and that makes everyone in his database ... well you know what I am saying.
Gary
:=) Gary Swancey
A@P linked to Lebanon ...
TSX member Global wired Elgindy money to Lebanon
TSX Venture Exchange *TSX
Shares issued 0 May 26 2002 close $.000
Friday May 24 2002 Street Wire
by Brent Mudry
In the first detailed revelation of advance Sept. 11 knowledge, the U.S. government suggests controversial California short Amr Ibrahim (Anthony) Elgindy, an important client of Vancouver brokerage Global Securities, might have been tipped off about Osama bin Laden's Sept. 11 terrorist attacks on the World Trade Center in New York and the Pentagon in Washington, and tried to dump his shares the day before.
The stunning, and unproven, allegation was made Friday morning at a detention hearing in San Diego by Brooklyn Assistant United States Attorney Ken Breen of the Eastern District of New York. The Sept. 11 comments formed part of the government's successful argument that Mr. Elgindy poses a serious flight risk, and he was denied bail.
Mr. Breen also presented verbal evidence to Magistrate Judge John Houston of Mr. Elgindy moving funds offshore, including $700,000 transferred to Lebanon, and the fact that the short gave directions for his Web site operation to start sending profits to Lebanon. (All figures are in U.S. dollars.) While Stockwatch reported Thursday that Mr. Elgindy bought a hotel in Lebanon two months ago, citing an unconfirmed source, Mr. Breen did not mention the hotel in court.
Court testimony showed that Global Securities was a major origin of these offshore transfers.
Mr. Elgindy's San Diego attorney, Jeanne Knight, told the court that her client was buying a vacation home in Lebanon. The government presented no written documentation in court detailing Mr. Elgindy's financial dealings, including his offshore transactions, or any other details of the case. Mr. Breen was in transit back to New York after the California hearing and could not be reached for comment. Ms. Knight was not able to return calls from Stockwatch.
Mr. Elgindy, born in Cairo, has lived in the U.S. since age two or three, according to U.S. authorities, but he retains dual American-Egyptian citizenship. To bolster its flight-risk argument, the government suggests he might have been tipped off about the arrests Tuesday of several associates in Albuquerque, N.M. When police searched his house, the fax machine held documents giving power of attorney to Mr. Elgindy's wife to dispose of his assets.
Mr. Elgindy's brother, Khaled Elgindy, is a Washington-based Arab American activist involved in Islamic affairs and Amr Elgindy himself has shown a charitable interest in Muslim issues, but there is no evidence that either are connected to, or in any way condone, the cause of Mr. bin Laden, his Al Qaeda network or any other terrorist organizations.
"What we have going for us is the moral high ground," Khaled Elgindy told a Washington panel discussion on "How to Discuss Jerusalem with the American Public." Mr. Elgindy said that while the Jewish lobby has the art of manipulation, the skills and the experience, the Arab Muslim community has the "weapons" of truth and justice in its arsenal.
The San Diego court revelations are particularly striking as one of Anthony Elgindy's most important and trusted brokers is Art Smolensky, the founder and chairman of brokerage Global Securities, and Mr. Smolensky is a prominent member of Vancouver's Jewish community.
According to the government, Mr. Elgindy phoned one of his brokers on Sept. 10 and requested the liquidation of a $300,000 trust account in the name of his children.
Mr. Elgindy is charged only with securities fraud related offences, none of which relate in any way to terrorism or treason.
"The allegations under investigation, Your Honour, consistent with how I described them, which is as part of risk of flight and certainly not something that's charged at this time, but the investigation is continuing, is that on September 10th, in the afternoon, Mr. Elgindy contacted his broker at Salomon Smith Barney, the broker who was in charge of Uniform Gift to Minor trust accounts in the names of Mr. Elgindy's children, and he asked the broker to liquidate those accounts, and he made a comment predicting the market was going to drop to 3,000 at a point in time when the market was at approximately 9,600," Mr. Breen told the court.
"He was unsuccessful in doing that because it was late in the day, he didn't have authority to do that because the accounts were trust accounts. But certainly something that could be taken from his attempt in that regard is that perhaps Mr. Elgindy had pre-knowledge of the September 11th attacks and, rather than report it, he was attempting to profit from that information."
The Dow Jones Industrial Average closed at 9,600 on Sept. 10, plunged to 8,700 when trading resumed after the Sept. 11-related market halt, and bottomed out just above 8,100 a week later.
The judge told the court he would "disregard" the implication that Mr. Elgindy might have known in advance about the terrorist attacks, either in specific or in general.
Prosecutor Mr. Breen told the court that, with Mr. Elgindy's illicit access to FBI and grand jury databases, he would have been privvy to a report, an "FBI-302," describing an FBI interview with the Salomon broker who was in contact with him that day. "That was accessed by Mr. Royer (a former FBI Special Agent in league with Mr. Elgindy) and the information provided to Mr. Elgindy."
Judge Houston asked if this interview related to Sept. 11.
"Regarding Mr. Elgindy's attempt to make those trades on September 10th. And again, this is not something that at this point in time we have sufficient evidence to charge, and it may never be charged, but, to the extent that it's relevant here, it's relevant to the risk of flight and that Mr. Elgindy is potentially facing more serious charges," stated prosecutor Mr. Breen.
The court was told Mr. Elgindy made the Sept. 10 calls to his Salomon broker at about 12:00 or 12:15 pm Pacific time. Mr. Elgindy and his assistant had a series of conversations with the broker, asking him to liquidate the accounts, which had an approximate value of $300,000.
"In the course of the communications between the broker and Mr. Elgindy, Mr. Elgindy indicated or predicted that the market was going to drop to 3,000. There was no time frame for that context. But the evidence shows, and this 302 indicates, that Mr. Elgindy did have a meeting scheduled with the broker the next day but that he was calling on the 10th in order to try to effect this transaction," Mr. Breen told the court. The prosecutor confirmed the broker contacted the FBI with the information.
The federal prosecutor then traced out financial details regarding the flight risk assessment.
"Mr. Elgindy, as the Pretrial Services report indicates, does have significant foreign ties, including dual citizenship in Egypt. In addition that that, we've determined that he's transferred approximately $700,000 to Lebanon in a series of wire transfers, some of which came from Canada where Mr. Elgindy kept one of his securities accounts at Global Securities."
Two wires were identified: a $125,000 transfer on Nov. 24 and a $300,000 transfer on Feb. 13. "I've been advised by our forfeiture people that they've found additional transfers that total approximately $700,000, but I don't have that specific information."
"In addition to that, in February 2002, the defendant gave instructions to somebody who he was business partners with as to his website, that Mr. Elgindy's portion of the profits in the website should be sent by wire directly to Lebanon instead of to Mr. Elgindy here in the United States," Mr. Breen told the court.
"In addition to that, in April 2002, the defendant transferred the assets that he had in accounts in Canada from his brokerage accounts into a company that was set up in Beirut, Lebanon."
"In connection with the defendant's arrest, there was a search that was done at his business and at his residence and, during those searches, the agents found what I would describe as a getaway stash -- $43,000 in cash, gold jewelry, coins, and a loose diamond, along with a passport. They also found on the fax machine that the defendant had been tipped of the arrest shortly before it, presumably by somebody who is in New Mexico, where two defendants were arrested earlier in the day," states Mr. Breen.
The prosecutor also pointed out that Mr. Elgindy was on probation for his insurance disability compensation fraud, and that his stock fraud offences were during this probation period, while he also "has a history of drug abuse, including cocaine and marijuana."
"Mr. Royer, after being Mirandized, provided information about Mr. Elgindy and, in fact, indicated that it was likely that Mr. Elgindy would have drugs in his house. He didn't, although our position on that is because he had time to prepare for the arrest and the search, that he easily could have disposed of those," Mr. Breen told the judge. While no drugs were found, ammunition was located in the Elgindy residence, which is a probation offence.
Defence counsel Ms. Knight presented a better picture of her client.
"A flight risk is someone who is a fugitive or a head of a big drug organization or someone who has a lot to lose by staying here. Mr. client is a U.S. citizen. His wife is present in court, as she usually is, Mary Faith Elgindy, who was born in Louisiana. They have three beautiful sons ... His mother is a pediatrician in Chicago. His father's a professor. He has brothers -- a brother that works in the White House. All of his family are professionals."
Ms. Knight also pointed out that the liquidation of Mr. Elgindy's children's college fund accounts was executed on Sept. 18, and while he had $2-million in the market himself at that time, his accounts were not liquidated then. The defence lawyer stated Mr. Elgindy moved his brokerage account "to Yukon Territory, Canada, not Beirut, so my concern is part of this is just smacking of racial profiling."
Mr. Breen countered these points. "The address given for the Yukon corporation is a Beirut, Lebanon address, so I'm not sure what counsel means by that. The two million in stock, Your Honour, what he had invested were short positions that would only benefit from that kind of event. What he did is liquidated the long positions that were vulnerable to that kind of news."
Judge Houston notes the pretrial services report indicates that Mr. Elgindy travels to Canada four or five times a year, to Kosovo and Macedonia once or twice a year, and he was last in Egypt, a country which he needs no visa for, in November. "The court also notes that, and finds that you have a home in Lebanon." Mr. Elgindy was deemed a serious flight risk and denied bail.
(c) Copyright 2002 Canjex Publishing Ltd. http://www.canada-stockwatch.com
:=) Gary Swancey
(More on A@P) Lawyer: Accused Man Knew of Attacks
(Comtex 05/24 15:53:06)
SAN DIEGO, May 24, 2002 (AP Online via COMTEX) -- An Egyptian-born financial
analyst charged in a nationwide stock swindle may have known about the Sept. 11
terrorist attacks and tried to profit from them, a federal prosecutor said
Friday.
Amr I. "Tony" Elgindy telephoned his broker on Sept. 10 and asked him to
liquidate his children's $300,000 trust account, Assistant U.S. Attorney Ken
Breen told a federal judge at Elgindy's detention hearing.
"He made a comment predicting the market would drop to 3,000" at a time when the
Dow Jones stock index was at 9,600, Breen said. "Perhaps Mr. Elgindy had
pre-knowledge of the Sept. 11 attacks. Instead of trying to report it, he tried
to profit from it."
Elgindy, 34, of Encinitas, was ordered held without bond on charges of
racketeering, extortion and obstruction of justice. Before issuing the order,
Magistrate Judge John Houston said he was going to "disregard" the suggestion
that Elgindy had anything to do with the terror attacks.
Elgindy, wearing a tan jumpsuit, did not speak during the hourlong hearing.
His attorney, Jeanne Knight, said Elgindy did call his broker to make a trade,
but the timing was coincidental and the market had been dropping for months.
"It seems like the government, for lack of factual evidence, has decided to
smear my client with terrorist innuendoes," Knight said. "This is smacking of
racial profiling."
Breen made his accusations as prosecutors tried to convince Houston that Elgindy
was a flight risk and should be denied bail.
Elgindy, one of five defendants in the case, was arrested May 22 on an
indictment issued by a grand jury in New York.
In exchange for money, two FBI agents used confidential databases to provide
Elgindy and other co-conspirators with information on publicly traded companies,
the indictment said.
Elgindy allegedly spread negative information about the companies on his Web
site and to subscribers of his e-mail newsletter, InsideTruth.com, while betting
that the companies' stock would go down.
In one case, a former FBI agent searched the agency's confidential National
Crime Information Center database and discovered the criminal history of a top
executive for a company called Nuclear Solutions, the indictment said. The same
day, Elgindy began sending e-mail calling the executive "a convicted felon,"
then sold the company's stock short, the papers said.
Earlier this week, FBI agents raided Elgindy's $2.2 million mansion. Inside,
agents said, they found tens of thousands of dollars in cash and gold coins. The
government is seeking to seize Elgindy's fleet of cars, including a Rolls Royce,
a Jaguar and a Humvee.
If convicted of all counts, Elgindy faces a maximum 65 years in prison.
By SETH HETTENA
Associated Press Writer
Copyright 2002 Associated Press, All rights reserved
:=) Gary Swancey
Ok Smouch ... Here is my understanding. The Depository Trust Company ("DTC"), located in New York, New York, acts as a securities depository for the Stocks. The Stocks will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Stock certificate will be issued for each maturity of the Stocks, in the principal amount of such maturity, and will be deposited with DTC.
Thus DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.
DTC holds securities that its participants ("Direct Participants") deposit with DTC. DTC also facilitates the settlement among Direct Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Direct Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations.
Btw DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, LLC., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission.
Purchases of Stocks under the DTC system must be made by or through Direct Participants, which will receive a credit for the Stocks on DTC's records. The ownership interest of each actual purchaser of each Stock ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Stocks are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Stocks, except in the event that use of the book-entry only system for the Stocks is discontinued.
To facilitate subsequent transfers, all Stocks deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Stocks with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Stocks; DTC's records reflect only the identity of the Direct Participants to whose accounts such Stocks are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the Stocks within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to Stocks. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Stocks are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal, redemption premium, if any, and interest payments on the Stocks will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Trust or the Paying Agent on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts for customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the Trust, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trust or the Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.
The information in this section concerning DTC, CEDE and DTC's book-entry system has been obtained from sources that I believe to be reliable, but I take no responsibility for the accuracy of this post. This is merely the way I understand the system.
Hope this helps but remember to do your own DD.
Gary going back to work.
:=) Gary Swancey
Smouch I tried to put it on RB but it would not allow it I guess .... so here is the only source for this information.
:=) Gary Swancey
Financial Fraud & Money Laundering on Wall Street
The inside story on the
Depository Trust Company
a/k/a CEDE & Co.
--------------------------------------------------------------------------------
This is the third part of our ongoing investigative reports into the Depository Trust Company (DTC) (Part I) and CEDE & Co (Part II).
A simple scenario takes place each week within the upper echelon of the financial powers that control America - and the world - a/k/a International Organized Crime. In any other form of commercial interaction or business, the sale of non-existant stocks is considered absolute fraud. But, when you have the power to control paper or electronic accounting ledgers, you also have the power to create facsimile assets from nothing but thin air and journal entries. This is where the Depository Trust Company (DTC) and CEDE & Co., the DTC's "street name" or "nominee name", come into play. By holding their stock in the particular name of CEDE & Co., all "DTC Participants" have the means of making fast and immediate illegal profits. Of course, none of this could happen without the full consent of the DTC, et al.
For background reference, the Depository Trust Company (DTC) filed their original Organization Certificate with the New York Superintendent of Banks on March 20, 1973. In July 1999, The Depository Trust & Clearing Corporation (DTCC) became the name of the new holding company created by the merger of the DTC and the National Securities Clearing Corporation (NSCC). For a list of the DTC Participants and links to their public pages, go to DTC Participants.
Counterfeit Public Stocks
In the past year, we have been shown more than twenty ways to make illegal profits from fraudulent stock shares using the DTC "shield" - CEDE & Co. - to hide the fact that those particular shares are never actually issued by a public company. In simpler terms, these are counterfeit shares of public stock. A couple of "whistle blower" Wall Street brokers, along with a former employee of a major market operator, have shown us how this scam operates. We'll try our best to explain it to you in the simplest terms possible.
DTC Participants are exclusively able to issue and sell non-existent stock to the public. It's that simple. However, the process as to how this actually takes place is usually not quite so simple. This financial scam may seem like a shock to the average American, but it's time for a reality check. We've warned you since 1995 to insist on physically holding your stock certificates in your own name, and now we have more facts to support what Parts I & II of this investigative series were revealing.
When price is restrained below the balance of supply and demand, public buyers predominate and money pours in while more and more bogus receipts flood the market. Eventually, those corporations must be bankrupted as the market operator and his criminal co-conspirators will never buy back their counterfeit receipts. This has been the modus operandi of international organized crime throughout history and should be of no surprise to any of us. We should all read Isaiah, Chapter 10, verses 13-14 over and over until it sinks in that we're the victims of professional financial thieves.
According to the DTC, there are currently 11,000 brokerage firms, dealers, custodian banks, institutional investors, transfer agents, paying agents, and exchange and redemption agents for securities issuers considered as "DTC Participants". There is the possibility that any or all of these DTC Participants could issue counterfeit stocks at any given time. Being extremely conservative, let's imagine if this was done on a weekly basis by only 5% of the DTC Participants. In such a scenario, there would be 550 worthless offerings of counterfeit stock issued each week. If each offering is for 100,000 shares at a buy price of $7 ($700,000 each offering), the total profit to the DTC Participants each week would be $385 Million dollars from nothing more than ledger entries and thin air. That's an annual "profit" of $200,585,000,000 or more than $200 BILLION.
The sale of counterfeit shares of a public corporation is illegal, unlawful, and immoral, yet the purported agencies and departments (i.e. the SEC, FBI, etc.) that are supposed to "police" such illegal organized crime activities do nothing. As the market operators control prices, eventually those corporations will be bankrupted. This is because the market operators are not about to buy back their bogus receipts at higher prices. The entire Wall Street scam operation functions in this manner. Once the market operator sells bogus shares to control and manipulate prices, he puts himself, as well as his co-conspirators profiting from secret omnibus accounts, in a very profitable position.
If anyone believes that the Executive Branch, the Congress, the Justice Department, the FBI, the SEC, et al, are protecting your interests, you had better wake up. For example, why is the U.S. Treasury "borrowing" paper fiat money from the private Federal Reserve Corporation? The fake debt, based on "borrowed" counterfeit paper money, created by accounting notations, and printed by the U.S. Treasury when paper receipts are needed, would not exist if government were not protecting the thieves. Having to pay the private Federal Reserve Bank Corporation a billion dollars a day for bogus interest - the result of mere accounting notations - is blatant thievery from the U.S. Treasury and all Americans.
For more details, see Corruption in Government, Scam #1.
Derivatives & Depositary Receipts
We believe that the controlled media dis-information as to what a financial 'Derivative' actually is has been the greatest factor into the fraud now overpowering our nation's economy. Forget about the drug dealers and their alleged money laundering schemes. This is much larger in terms of monetary value.... and it's highly illegal and far from being lawful or moral.
The DTC allows their Participants (banks and brokerage firms) to issue Derivatives or Derivative Instruments. A derivative is basically defined as something that can be made or derived from another; a spin-off based on an original. As used in the current financial world, a Derivative is a Depositary Receipt (DR). There are two basic forms of Depositary Receipts: an American Depositary Receipt (ADR) and a Global Depositary Receipt (GDR).
In essence, DTC Participants issue derivative stocks - Depositary Receipts (DR's) - based upon previously issued shares of public stock held in the name of CEDE & Co. on behalf of the beneficial owners, the actual purchasers. The DTC Participants don't own the legitimately issued stocks they issue their DR's against. Those stocks are held in trust for the public, the purchasers of the stock, in the name of CEDE & Co.
First, let's assume that a DTC Participant decides to sell one million shares of non-existent stock, or unsecured DR's, in each of the next 100 Over-the-Counter Bulletin Board (OTCBB) companies at an average price of $3 per share [$300 million]. Given the fact that an average 98% of these OTCBB companies fail, they would earn $294 million in sales, plus interest, by selling stock shares that don't exist. This is not gambling. This is a sure bet knowing that the "DTC house rules" are guaranteeing them a fixed return. But.... the game isn't over yet! This still leaves them with 2 OTCBB companies that haven't failed and they can parlay that into even greater profits.
Secondly, let's also assume that the two left-over solvent OTCBB companies have a $10 per share price. Instead of "covering" - guaranteeing - the two successful OTCBB companies and taking a $16 million loss (2% of the original $300 million investment), the DTC Participant does an "Offshore Private Placement Regulation S" underwriting for these two companies. The standard brokerage discount on a Regulation S offering is 60%. This means they will pay the company issuing the stock $8 million. If they simply deduct their $3 million gains from the sale of these stocks several years earlier, the DTC Participant loses $2 million on the books but, in reality, grosses $292 million in profits, plus interest.
For more details, see Wall Street Thievery, Scam #2.
DTC Participant Tax Havens
Why doesn't the DTC Participant show this gain on their books? The DTC Participant creates their own tax haven client that technically sells the non-existent stock, or DR's, and this "tax-free client" makes the profit. Since the profit isn't legally taxable due to their tax haven status, nobody (particularry the IRS) cares who makes the money. However, neither the bank shareholders, nor the brokerage firm shareholders, share in this profit. This is a real fraud scam in the real world.
Now, let us explain how this works using a real scenario. Examine the recent Bear Stearns - a DTC Participant - SEC 10-Q Filing at the end of 1999 [the Securities and Exchange Commission Form 10-Q is a report filed quarterly by reporting companies which includes unaudited financial statements and is supposed to provide a view of the company's financial position during the year]. Their 10-Q report showed that Bear Stearns had about $819 million in assets with roughly a $34 Billion (that's BILLION) "short position". [A short position is a situation whereby an investor borrows stock certificates for delivery at the time of the short sale. Should the seller be able to sell the stock at a price lower than the borrowed cost, a profit is made]. So then, where does the profit from the short sales go since it doesn't seem to go to the brokerage firm or Bear Stearns' stockholders? It goes to their created "tax haven client".
The brightest red light concerning this is that these short positions are rarely "covered" nor guaranteed by any real assets. Everything is on paper and nothing of any substance value is backing it up. This is due to the fact that the public company eventually fails as a result of its share price collapse from the nonexistent stock. In layman's terms, this means that the profit from the short sale is NOT subject to taxes because the contract is never completed.
Banks and Organized Crime Syndicates
As previously discussed above, banks and stock brokerage firms use the actual public stock being held by the DTC - in their street name CEDE & Co. - to issue bank Depository Receipts (DR's). The bank does NOT physically, nor electronically, hold the stock for the Depository Receipt, nor do they actually own it. Rather, the bank or brokerage merely issues DR's and the public buys them as if they were actual and legitimate stock certificates. If any questions concerning the actual possession by the bank or brokerage of the stock certificates are asked by an investor-purchaser, they reply that the stock is being held by the DTC. It's very odd that the average investor never asks the bank or their broker to prove this. In essence, the banks and brokerages issue 100% non-secured and worthless paper. The DR's are worthless because they are not secured. The banks, along with the brokerage firms, make 100% PLUS on every sale of these counterfeit stocks. They get the full value for the DR's plus their commission on the sale. This is the scam of all scams.
At any time, anyone can issue an accepted financial instrument giving them the means to launder "money". For example, look at the recent money laundering by Russian organized crime syndicates where the international banks sold DR's representing stocks on the mob's behalf . The banks issued the DR's and the buyers accepted the DR's as equivalent to the stock. The bottom line is that the seller of the stock was the Russian mobs. However, the banks shared the profits with the mob to gain access to the mob's money. The newspapers centered their headlines on the mob's laundering without explaining that this could have never taken place without the involvement of the banks and the DTC. This is the risk behind "Derivatives". You never know if the people holding the stocks used as the basis for the DR's are legitimate.
Let's not forget that we live in an instant society. If the average world citizen can't make money right now, in an instant, few will play the "money game". Money, or rather its ledger created facsimile, has become the god of this world. The stark reality behind the existence of the DTC is that it's nothing less than a protective shield for DTC Participants to create instant paper profits. Otherwise, the DTC and CEDE & Co. would have no practical reason to exist.
Who pays if Derivatives collapse the Markets?
The banks are covered by FDIC insurance. This simply means that the U.S. taxpayer will pay for any losses. Consider the S&L Crisis during the1980's, especially in Texas and California when banks were collapsing left and right. It cost least one Trillion dollars to FDIC insurance, a.k.a. the American taxpayer, to "bail out" the banks. Stock and mutual fund brokers are covered by private SPIC insurance. SPIC isn't taxpayer backed, so a meltdown would mean the bankruptcy of the brokerage industry. Client accounts would be forfeited and there would be no taxpayers to pick up the tab. The alternative would be to have the derivatives covered by FDIC insurance as well. If there's risk in issuing these derivatives - and we know these risks are big - and the same derivative risks are to be covered by both the FDIC & SPIC, what would happen if these derivative scams are exposed to the public and investors opt for a cash market by demanding their physical stock certificates?
The doomsday "Stock Market Program" was put into effect after the October 1987 stock market exchange "correction". This was brought about by the DTC (See Part I). Directly attributable to this is the fact that the privately owned Federal Reserve System now has the "legal" right to buy "blue chip" Dow Jones Industrial Average (DJIA) stocks in a declining market. So far, the public has made money by having the FED support the stock market. The problem with this is that the full faith of the U.S. "dollar" now supports the stock market and that support is the investment made by the average working American. Binding the U.S. Federal Reserve Notes (FRN's), which are not "lawful dollars", to stocks increases the probability that FRN's must fail sooner or later. With each passing day, "sooner" becomes a timely reality.
How to legally launder money...
just like banks and brokerage firms do
As a result of our research, and thanks to a few "insiders" who helped us put this all together over the past year, we have come up with 21 Ways to Legally Launder Money which mirror the actual goings-on in the financial world today.
If you think the movie Wall Street was a shocker, wait to you read this script....
Traditional Short Sale- Borrow the stock against a fifty percent margin. This is the only type of short sale that can be "squeezed" when the share price goes up. That's because the short seller must add money to their margin account. This is the most "legal" way to "legitimately" launder money, but also it's the riskiest for the launderer.
Market-maker Short Sale- U. S. Market-makers are not required to take physical delivery of stock certificates when they sell them. They are assumed to be a repository of the company's shares.
Brokerage House Short Sale- This is a decision by the broker not to execute a "buy order" from a client. The broker merely shows the stock as "owned" by the client on their monthly brokerage firm account statement - a paper transaction without reality - securities fraud. [If you don't think this really happens, they also have some swamp land in Florida for sale to add to your monthly brokerage statement]. This is the first reason to insist on holding your own stock certificates in your own hands and in your own name. Never trust a broker, the DTC, or anyone else to "hold" your certificates. You become the "beneficial owner" when they placed your certificates in the "nominee name" of CEDE & Co.
Clearing House Short Sale- The Clearing House doesn't execute the buy order. Instead, they credit it to the brokerage firm client's account.
Naked Short Sale- This is where two brokerage firms agree to trade stock in a company with neither brokerage firm requesting physical delivery of the share certificates.
Insider Short Sale- This is when insiders, with restricted stocks, use their restricted shares to sell their company "short". It's supposed to be illegal according to the SEC. It was a common practice when the Regulation S Hold Period was 40 days, but a rarer occurance lately.
Dodge Viper Short Sale- This is where a bloc of stock is purchased, then, the same stock is converted to derivatives (DR's) thus multiplying the original stock 100% or more. The short sale doesn't occur in the stock market, but the derivative or Depositary Receit owners are holding a short position. We were told this is the most widely used method.
DTC Short Sale- This is when DTC sells short using the stocks they hold in their "street name", CEDE & Co.
International Short Sale- a/k/a stocks created offshore. The company is listed to trade outside the United States (usually in Canada). However, the company is trading in the United States and the shares are sold within the U.S. The short sale is moved into the primary country where the local brokers can ensure that the short position will be covered by the listed company if there is ever a successful short squeeze.
Judicial Short Sale- a/k/a LTV. Scattered Securities is an example of this short play. The Court in the LTV reorganization determined the exchange rate for new shares for old shares at three cents. The controlled financial media made sure that the Market didn't know about the Court decision. The old shares traded far higher than the Court Ordered exchange rate. The short sale was done by selling old shares and buying new shares before the Court mandated exchange of the share certificates.
Agent 007 Short Sale- Sellers who are insiders, or who allege themselves to be insiders, sell completely counterfeit stock to buyers outside regular or known market channels.
Desert Short Sale- Brokers sell stock at prices well above the actual trading price of the stock. This has been popular with German OTC stocks sold into the Middle East. The gap between the sale price and the trading price is an effective short sale.
DR Short Sale- Using counterfeit stock, the seller deposits it into an overseas bank. They then sell Depositary Receipts against the counterfeit shares held by the bank. This is done alot in Asia.
Rockford Short Sale- An investment firm buys shares and takes physical delivery of the stock certificates. They replace the actual share certificates with counterfeit share certificates. Next, they sell the real shares back into the market and repeat the process. This practice does wonders for their balance sheet! This tactic was popularized by an episode of the Rockford TV Series. It's done a lot in the Asian markets (especially Hong Kong) with NYSE shares.
Tax Haven Bank Short Sale- Small banks, especially Caribbean banks, act as agents for their clients unwilling or unable to reveal their real identity. However, the bank client wants to buy some legitimate stock. The bank never buys the stock on behalf of the client. Instead, they simply show the sale within the bank's accounting system. This practice extends to gold and other precious metals and is the biggest scam used against U.S. investors in offshore banks. Take note that a majority of the Caribbean banks are backed - and owned - by various organized crime syndicates throughout the "new" Europe, especially former Soviet Union provinces that are now independent countries and recognized by the United Nations and EU.
Lost in the Mail Short Sale- The client-purchaser demands their stock or share certificate. The broker sends it via certified or registered mail to the wrong address - deliberately. The actual certificate is eventually returned to the broker. Using the signed return receipt, the broker claims the client has the share certificate. For the investor, perhaps a year or more is spent in proving it never arrived. Meanwhile, the broker has the stock certificate and can use it to cover other short sales. This happens frequently.
Margin Short Sale- The purchaser buys stock on margin. They can't take physical delivery of their share certificates, so the broker sells the margined account a/k/a non-existent stock.
Public Media Takeover Short Sale- Brokers add non-existent stock into a highly publicized company takeover with a legitimate stock transaction. The buyer of the other company pays for the non-existent shares. The short seller gets cash or stock in the buyer's company.
AWOL Short Sale- For many OTC stocks, about 3% of the "beneficial owners" cannot be accounted for each year. Usually, they die or forget they have the stock. Brokers can safely sell short 3% of the "float" each year relying on the fact that these beneficial owners will most likely never claim their stock. Some brokerage firms, relying on retirement age portfolios, sell short 5-10% hoping that the younger relatives never find out. Considering the numerous stock splits over the years, 10 shares in 1965 may well be 1,000 shares in 2000. This gives the broker "safe" odds even if the original certificate shows up and is cashed in at a future date, provided the broker doesn't get too greedy.
Counterfeit Stocks- Professionals regularly send counterfeit share certificates to stock Transfer Agents. Believe it or not, a surprising percentage are accepted as real share certificates. The result is that the professional thief has effectively sold short the shares involved in the certificate.
DR Float- The issuance of Depositary Receipts without ever holding the stock certificates. This goes along with selling the Depositary Receipts at a profit even though they have no "cover" in real assets.
International common Law Copyright 2000
by The Christian Law Institute & Fellowship Assembly
http://web.archive.org/web/20010223224210/64.225.47.117/nbn/weekly10.html
:=) Gary Swancey
You don't own your Stocks
or Bonds anymore...
The Depository Trust Company does
This is Part II of a three part special research report on the Depository Trust Company. Part I can be accessed here.
In Part I of this series, excerpts of which were first published in November 1995 by the former North Bridge News, we exposed The Depository Trust Company (DTC) as the Unknown $ 9.1 Trillion Company. It appears that our startling discoveries of the inner-workings of the DTC had only scratched the surface. We'd like to add more fuel to this blazing fire by further exposing the DTC and those behind it.
The Depository Trust Company has grown since October 1995. On July 1998, this amount was estimated by a DTC employee at more than $11 Trillion. As of April 19, 1999, the DTC itself has stated in a press release that their asset value is nearly $19 trillion. In 3 1/2 years, their assets increased nearly $ 10 Trillion. That's a lot of stocks and bonds supposedly held in trust. The latest trend over the past ten years is for stock and bond brokers to offer "book-entry ownership" only. Every book-entry stock or bond is literally owned by the DTC. Since 1985, most bond and many stock issuers have converted from the issuance of certificates to book-entry systems administered and controlled by the DTC. As of March 1999, the National Securities Clearing Corporation (NSCC) and the Participants Trust Company (PTC) are now merged into the DTC. Practically, there isn't one stock or bond issued that is not controlled by the DTC.
If you purchase any stock or bond through a broker, it is being held for you under a "street name" by the DTC unless you have specifically requested to hold the certificate yourself. If you have a book entry stock or bond, you won't be issued a certificate. It's important to note that you have purchased that particular stock or bond without becoming a registered holder of the actual stock or bond certificate. Instead, you have become a beneficial owner. The difference between the two is like night and day. Take the time to absorb and understand the following definitions:
REGISTERED HOLDER- A Registered Holder literally possesses, owns, and holds, his stock or bond with his name appearing on the face of the certificate. The company that issued the certificate has registered the owner's (holder's) name on their official books. This is the safest way to own a paper asset. You literally possess the fully registered certificate and only you can transfer or sell it. By all Rights and definition of law, you are the owner. You have it, you hold it, you possess it, and you keep it. You have the complete control over it.
BENEFICIAL OWNER- A Beneficial Owner is nothing more than a beneficiary, "One who is entitled to the benefit of a contract"- A Dictionary of Law, 1893. All book-entry stocks and bonds you purchase make you the beneficial owner, not the registered holder. The owner of a book-entry stock or bond is the entity or name that it is registered under.
The DTC owns that bond or stock, not you. Rather than in your name, it's registered (as the legal Registered Owner or agent) in their "street name", Cede & Company. (In the past, it may have been registered in your broker's street name, but this is no longer allowed). The DTC is the Registered Owner - holder - of your stock or bond. The DTC is the legal property-holder, share-holder, stock-holder, owner and purchaser. Your name appears nowhere on the book entry or certificate as the actual owner. Instead, you have been designated by the legal registered owner, the DTC, as the Beneficial Owner. This means that your lawful Rights in that stock or bond are confined to that of a successor or heir.
At the University of Utah College of Law, we found the following examination question about Cede & Co.:
The common stock of LargeCo, Inc. is publicly traded on the New York Stock Exchange. Over 2/3rds of the shares are registered on LargeCo's books in the name of Cede & Co. Cede is a depository company which holds the shares as nominee on behalf of brokerage firms, mutual funds and other active traders. The brokerage firms in turn are also nominees with respect to some of the shares, which they hold on behalf of their customers. Nominees, such as Cede and brokerage firms holding for customers, view the customer as the beneficial owner of the shares and consider the customer to be the one with the right to vote the shares; mutual funds, however, view the fund as the owner of the shares it holds and vote the shares themselves.
Most of the remainder of LargeCo's stock (26% of the total) is held by the Large family, which is still actively involved in management. LargeCo is aware that the beneficial owner of about half the stock registered in Cede's name is the Small family, who live next door to the Larges in downtown Rome, and that the remainder of the Cede stock is beneficially owned by several well known mutual funds.
According to the DTC, under the US Security and Exchange Commission (SEC) rules, you only have the right to "receive proceeds or other advantages as the beneficiary". You are not the owner... you are the consignee, "One who has deposited with a third person an article of property for the benefit of a creditor"- A Dictionary of Law, 1893. In legal terms, you are considered the heir presumptive or heir at law to the stock or bond you paid for. The DTC controls, possesses as creditor, holds and owns your book-entry stock or bond. This is a difficult pill to swallow for those who have placed their assets in stocks and bonds over the past decade. Your broker sends you a fancy accounting every month of your purported holdings, along with dividend and interest payments paid. The fact is, you only receive the benefit of ownership (interest and dividends) without holding title to your property. You are at the mercy of the registered owner, the DTC. If you don't believe this is true, then call your broker right now and ask them who's name is listed as the Registered Holder of your book-entry stocks and bonds. If you're lucky, the broker will tell you "why of course you're the Beneficial Owner", then you'll know the truth. He may emphasize to you that the stocks and bonds are being held in "safe keeping" for your own protection. This is broker language for "your stocks and bonds are held by the DTC in their street name as the creditor".
From J.P. Morgan's internet site:
Registered and beneficial shareholders
There are two types of shareholders: registered, who hold an ADR in physical form, and beneficial, whose ADRs are held by third-parties and are listed under a "nominee" or "street" name (see chart below).
Registered shareholders are listed directly with the issuer or its U.S. transfer agent. The transfer agent handles the record-keeping associated with changes in share ownership, distribution of dividend payments, and investor inquiries; it also facilitates annual meetings. An issuer's depositary bank can provide the identities of registered shareholders on a regular basis. However, this may not provide the level of shareholder identification required for a successful investor relations effort. Registered shareholders are typically individual investors who have physical possession of their share certificates, generally in lots of 100 shares or fewer. The registered list also includes nominee names such as Cede & Co., which represent the aggregate position of the Depository Trust Company (DTC), the primary safekeeping, clearing, and settlement organization for securities traded in the United States. DTC uses electronic book-entry to facilitate settlement and custody rather than the physical delivery of certificates.
Beneficial shareholders, which can include individual as well as institutional investors, do not have physical possession of their certificates; third-party broker-dealers or custodian banks hold their securities on their behalf. These shares are said to be held in street name because they are kept with the DTC in the name of the broker-dealer or the custodian bank - not the underlying shareholder. Lists of beneficial shareholders who do not object to disclosing their holdings are available from banks and broker-dealers. These lists, called NOBO for Non-Objecting Beneficial Owner, typically provide the names of individual investors.
To help identify institutional investors, who do not usually disclose their holdings, issuers use publicly available filings. Large holders, including investment managers, are required to make periodic filings - such as 13-F, 13-G, and 13-D - with the Securities and Exchange Commission (SEC) disclosing the name and value of the positions in their portfolios.
Which brings us to the street name used, registered, and designated by the DTC as the registered owner of over $19 Trillion (USD) of our stocks and bonds... CEDE & Co. Everyone in the brokerage business keeps pronouncing this name as "See Dee" and Company, but it's spelled C-E-D-E and pronounced "Seed". This is where the real irony comes.
Black's Law Dictionary, Sixth Edition, 1990, the word Cede is defined as "To yield up; to assign; to grant; to surrender; to withdraw. Generally used to designate the transfer of territory from one government to another". In the Black's 1951 Fourth Edition, it lists the following as supportive case law; Goetze v. United States, C.C.N.Y., 103 Fed. 72.
Have you made the connection yet? Your book-entry stocks and bonds and all stock and bond certificates purchased through your broker and held by them under your brokerage account are owned by CEDE & COMPANY (the DTC) as the registered owner. You have surrendered, assigned and granted ownership to someone else other than yourself. Their name says it all.
How ironic and sarcastic can they be?
"CEDE- To surrender possession of, especially by treaty. See Synonyms at 'relinquish'." -American Heritage Dictionary of the English Language, 3rd Edition of 1992
If Americans had any idea that they have relinquished the lawful ownership of their stocks and bonds to someone or something else, there would be a revolution. In a sense, that's why we are exposing this paper asset scam to you. The point is, now that you know the truth, do something about it and get your assets back into your name.
Our suggestion to you is this: If you don't literally have every stock and bond registered certificate in your possession, then promptly call your broker and tell him you want all your securities transferred and re-registered into your name as the Registered Holder and Owner. If he says he can't do that because your stock or bond is a book-entry transaction only, we strongly suggest, for your own security, that you sell your book-entry assets immediately. Don't let the broker tell you that it's "safer" for you if they keep your certificates. Remember, you know the truth. Even if all your stock and bond certificates were burned in a fire, the process to have them replaced is simple. If someone were to steal your certificates, you simply report them stolen to the company that issued them and they're automatically cancelled, just like a stolen credit card. Replacement certificates are then issued to replace the lost or stolen originals.
Most people don't realize that when they open a brokerage account, they have entered into an contractural agreement allowing the broker to assign the stocks and bonds to an undisclosed creditor, the DTC. (We suggest you read the small print on your brokerage agreement). This gives the broker your express written permission to place all your securities into the ownership of the DTC. Your broker is an agent for the DTC through mandatory Securities and Exchange Commission regulations and mandates by the Federal Reserve System private bank. Your broker represents them, not you. Your brokerage account is nothing more than a ledger of accounting. It reflects no assets held in your name. The assets are registered in a "street name" that is not you or your name. Sure.... you receive the interest and dividends, but you do so as a beneficiary to the real owner. Your brokerage account in no way, shape, or manner reflects who literally owns your securities. What you own is a brokerage account and nothing more.
A greater consideration is just exactly who does the DTC hold these securities for? As the owner, who has the DTC pledged these securities to? Our research points to the Federal Reserve System, an international private banking cartel with major offices found in Moscow, London, Tokyo, and Peking. By treaty with the United Nations and in compliance with the Bretton Woods Agreement, the DTC under regulation of the Federal Reserve System has pledged all those stocks and bonds to the International Monetary Fund (IMF). These are the same paper securities found in your IRA and pension fund accounts, as well as in your brokerage account. Remember, you don't own them.... you're just a beneficiary.
The truth is, the securities you purchased and paid for with your hard earned money is collateral for the United Nations which is backed by the Federal Reserve System and it's associated agencies, such as the International Monetary Fund. Is it any wonder that the UN can operate year after year with increasing budgets, but without sufficient funds? The UN has nearly $11 Trillion of backing and reserves, thanks to millions of duped Americans. We are financing the New World Dis-Order with our stocks and bonds.
http://web.archive.org/web/20010216074034/64.225.47.117/nbn/nbn15.html
:=) Gary Swancey
For Smooch: The Depository Trust Company
The $19 Trillion Private Bank
This is Part I of III- This exclusive investigative report series is a compilation of interviews and background research from October 1995 through March 2000.
The Depository Trust Company (DTC) is the best kept secret in America. Headquartered at 55 Water Street in New York City, the average American has no clue that this financial institution is the most powerful banking corporation in the world. The general public has no knowledge of what the DTC is or what they do, but a clue can be taken from the sign at the front of the building, which says, "THE TOWER OF POWER". How can a private banking trust company hold assets of over $19 trillion and be unknown? In an official press release dated April 19, 1999, the Depository Trust Company stated:
"The Depository Trust Company (DTC) is the world’s largest securities depository, holding nearly $19 trillion in assets for its Participants and their customers.... Last year, DTC processed over 164 million book-entry deliveries valued at more than $77 trillion."
In dealing with the trust department of Midlantic Bank, N.A. in New Jersey [now PNC Bank, N.A.], this writer was authorized, as trustee and power of attorney, to transfer original trust assets comprising of common stocks and bonds to a new trust set up in another jurisdiction. An Assistant Vice President from the Trust & Financial Management Office of Midlantic Bank said to me "it will take at least 6 weeks to do this as the majority of the stocks and bonds are not held in the name of the trust". This same Midlantic Bank Assistant V.P. also stated in a letter dated November 17, 1995, "Of the 11 municipal bonds, 8 are held in book entry only. This means they cannot be physically re-registered with a certificate sent to the new trustees." (* these are not the actual figures quoted in the letter in order to protect the privacy of the account holder, at their request. Also, we were asked not to name the Midlantic Assistant V.P. in order to protect her privacy Rights. We respect these requests with full moral compliance). In disbelief, I brought this matter to the attention of our research assistants at the Christian Common Law Institute [formerly the North Bridge News] and we began our lengthy investigation into the matter. After 3½ years, the can of worms we've opened up should frighten every American. With the advent of reported Y2K computer glitches and the possible collapse of our 'paper asset' economy, every person who has a stock or bond in their portfolio had better read this report and act on the information we are disclosing here.
In November 1995, after encountering numerous "no comments" and a myriad of "that's not my department" excuses via telephone, I eventually spoke with Mr. Jim McNeff who told me his position was Director of Training for the DTC. He said he'd been employed there for 19 years and was "very proud" of his employer. During my initial telephone interview, either Jim's employer or some other unknown person or persons were illegally listening or taping our telephone conversation according to the electronic eavesdropping equipment we have installed on our end. Why did anyone feel it was necessary to illegally record our conversation without advising us? Was some federal alphabet agency monitoring DTC calls to safeguard National Security? That in itself is suspicious enough to warrant a big red warning flag.
Jim informed me back then (1995) that "the DTC is the largest limited trust company in the world with assets of $ 9.1 trillion". In July 1998, I spoke with Ms. Rose Barnabic of the DTC Finance Department who said that "DTC assets are currently estimated at around $11 trillion". As of April 19, 1999, the DTC itself has stated that their assets total "nearly $19 trillion" (see above). Mr. McNeff had also stated "the DTC is a brokerage clearing firm and transfer center. We're a private bank for securities. We handle the book entry transactions for all banks and brokers. Every bank and brokerage firm must secure their membership with us in case they become insolvent, so your assets are secure with DTC". Yes, you read that correctly. The DTC is a private bank that processes every stock and bond (paper securities) for all U.S. banks and brokerage houses. The big question is this; Just who gave this private bank and trust company such a broad range of financial power and clout?
The reason the public doesn't know about DTC is that they're a privately owned depository bank for institutional and brokerage firms only. They process all of their book entry settlement transactions. Jim McNeff said "There's no need for the public to know about us... it's required by the Federal Reserve that DTC handle all transactions". The Federal Reserve Corporation, a/k/a The Federal Reserve System, is also a private company and is not an agency or department of our federal government, according to the 1998 Federal Registry. The Federal Reserve Board of Governors is listed, but they are not the owners. The Federal Reserve Board, headed by Mr. Alan Greenspan, is nothing more than a liaison advisory panel between the owners and the Federal Government. The FED, as they are more commonly called, mandates that the DTC process every securities transaction in the US. It's no wonder that the DTC (including the Participants Trust Company, now the Mortgage-Backed Securities Division of the DTC) is owned by the same stockholders as the Federal Reserve System. In other words, the Depository Trust Company is really just a 'front' or a division of the Federal Reserve System.
"DTC is 35.1% owned by the New York Stock Exchange on behalf of the Exchange's members. It is operated by a separate management and has an independent board of directors. It is a limited purpose trust company and is a unit of the Federal Reserve." -New York Stock Exchange, Inc.
Now, let's see how this effects the average working American family. If you're not aware how the system works, you should visit or call a stock broker or bank and instruct them you want to purchase some shares of common stock or a small municipal bond, for example. They will set up a brokerage account for you and act as your agent with full durable power of attorney (which you must legally sign over to them) to conduct business on your behalf, upon your buy or sell instructions. The broker will place your stock or bond purchase into their safekeeping under a "street name". According to Mr. McNeff of the DTC, no bank or broker can place any stock or bond into their firm's own name due to Federal Trade Commission (FTC) and Security and Exchange Commission (SEC) regulations.
The broker or bank must then send the transaction to the DTC for ledger posting or book entry settlement under mandate by the Federal Reserve System. Remember, since your bank or broker can't use their name on the certificate, they use a fictitious street name. "Since the DTC is a banking trust company, we can't hold the certificates in our name, so the DTC transfers the certificates to our own private holding company or nominee name." states Mr. McNeff. The DTC's private holding company or street name, as shown on certificates we have personally examined from numerous certificate holders, is shown as either "CEDE and Company", "Cede Company" or "Cede & Co". We have searched every source known to learn who CEDE really is, but have been unable to get any background information on them. Is Cede Company fictitious or is their identity perhaps a larger secret than DTC? We must presume that the information Mr. McNeff gave us was correct when he confirmed that Cede Company was a controlled private holding company of the DTC. We have now found the following proof that CEDE is real from the Bear Stearns internet site:
NEW YORK, New York — March 16, 1999 — Bear Stearns Finance LLC today announced that it will redeem all of the 6,000,000 outstanding 8.00% Exchangeable Preferred Income Cumulative Shares, Series A ("EPICS") of Bear Stearns Finance LLC, liquidation preference of $25.00 per Series A Share, CUSIP number G09198105. All of the Series A Shares are held by Cede & Co., as nominee of The Depository Trust Company, and the payment of the redemption price will be made to Cede & Co. by ChaseMellon Shareholder Services, LLC, as paying agent, whose address is: 85 Challenger Road, Ridgefield Park, New Jersey 07660.
The banks and brokers are merely custodians for their clients. By federal law (SEC), they cannot hold any assets in the customer's name. The assets must be held in the name of DTC's holding company, CEDE & Co. That's how DTC has more than $19 trillion dollars of assets in trust... or is it really in "trust" if the private Federal Reserve System is technically holding it in their "unknown" entity's name? Obviously, if stock and bond certificates you've purchased aren't in your name, then the "holder" (the Federal Reserve System) could theoretically refuse to surrender them back to you under a "national emergency" according to the Trading with the Enemy Act (as amended). Is this the collateral being held by the private Federal Reserve System to pay off the national debt owed to them by our federal government, first initiated by Lincoln's debt bonds of 1864?
According to Mr. McNeff, the DTC was a former member of the New York Stock Exchange (NYSE), and "Our sister company is the National Securities Clearing Corporation... the NSCC" (they have since merged). He was correct since we now know that the NYSE holds 35.1% of the "ownership" of the DTC on behalf of their NYSE members. Simply put, the Depository Trust Company absolutely controls every paper asset transaction in the United States as well as the majority of overseas transactions, and they now physically hold (as of April 1999) 99% of all stock and bond book-entries in their street name, not the actual owner's names. If you have stock or bond certificates in your name buried in your back yard or under your mattress, we suggest you keep them there. If not, it might be very wise to cancel your brokerage account and power of attorney status, re-register the stocks and bonds in your name (if you still can), and keep them hidden where only you know their location. Otherwise, you have absolutely no control over them (see Part II of our exclusive research report on the DTC for more information on beneficial ownership status). However, getting a stock or bond certificate these days is not so easy if possible at all:
"For the most part, issuers know little about the role of the Depository Trust Company (DTC). The DTC was created in 1973 as a user-owned cooperative for post-trade settlement. Our members are banks and broker/dealers, whom we refer to as participants. We handle listed and unlisted equities, including 51,000 equity issues and 170,000 corporate debt issues, equating to more than 78% of shares outstanding on the New York Stock Exchange (NYSE). We also have more than 95% of all municipals on deposit.
In the 1980s, the "Group of 30" [business leaders] recommended that stock certificates be eliminated, because physical certificates create risk. The Securities Exchange Commission (SEC) issued a concept release in 1994 to gradually decrease certificates, providing optional direct registration on the books of the issuer instead of a certificate.... this enhances the portability of shares between transfer agents and brokerage accounts. With the direct registration system, brokers transmit instructions to purchase through DTC, which the issuer or transfer agent then registers, so shares can be delivered electronically." -John D. Faith, Manager, Corporate Trust Services, The Depository Trust Company (1996)
Now we're about to reveal to you the most shocking discovery we came across during our research into this matter. Most of us remember a few years back the purported computerized selling of stocks that resulted in Wall Street's "Black Monday":
Dow Dives 508.32 Points in Panic on Wall Street
"The largest stock-market drop in Wall Street history occurred on "Black Monday" -- October 19, 1987 -- when the Dow Jones Industrial Average plunged 508.32 points, losing 22.6% of its total value. That fall far surpassed the one-day loss of 12.9% that began the great stock market crash of 1929 and foreshadowed the Great Depression. The Dow's 1987 fall also triggered panic selling and similar drops in stock markets worldwide" -Source: Facts on File World News CD ROM
The stock exchanges had dramatic record losses, and a record volume of shares were traded on that infamous Monday in October 1987. We all asked ourselves how computers could have done this by themselves without someone knowing about it. After all, someone has to program a computer to tell it what to do, what not to do, or even when to do or not do it.
During my telephone conversation, Mr. McNeff was trying to assure me that they [the DTC] have "never lost a certificate or made a mistake in a book ledger transaction". In attempting to give me an example of how trustworthy the DTC is when I asked him how he could back up such a statement, he replied "DTC's first controlled test was 4 or 5 years ago. Do you remember Black Monday? There were 535 million transactions on Monday, and 400 million transactions on Tuesday". He was very proud to inform me that "DTC cleared every transaction without a single glitch!". Read these quotes again: He stated that Black Monday was a controlled test. Black Monday was a deliberately manipulated disaster for many Americans at the whim of a controlled test by the DTC.
What was the purpose of this test? Common sense tells you that you test something before you intend to use it. It's quite obvious that the stock markets are going to 'crash and burn' at some future date and for some 'unknown' reason since the controlled test was so successful. Was this just one of the planned tests for a Y2K internationally planned worldwide economic meltdown? The Great Depression is about to be repeated, and it will be as deliberate and manipulated as the first one that began with the stock market crash of 1929. We are, without a doubt, on the brink of the Mother of all economic Depressions. As of May 3, 1999, the Dow Jones Industrial Average (DJIA) went above a record 11,000 points. Just prior to the 1929 stock market crash, Wall Street was posting record prices, record earnings, and record profits.... just like the scenario we are experiencing today. Will Y2K be a manipulated and deliberate a financial meltdown? Too many facts already support this probability.
On June 7, 1995, the federal government issued a new regulation requiring stock and bond certificate transfers to be cleared in three days instead of the previous five day time period. It coincided with the infamous Regulation CC that purportedly gave us faster three day availability of funds from deposited checks. This means that brokers and banks must get your stock or bond transaction into the street name (Cede & Co.) of the DTC within 3 working days. That's hard to do considering banks claim it takes 3 or more days to clear a check that you've submitted to pay for a stock purchase. But, there's a reason for this new regulation and it coincides with the introduction of the new FRS "dollars".
On February 22, 1996, "the DTC will flip the switch" according to Mr. McNeff. "What switch?", I asked. "This is the day that clearing house funds will no longer be accepted for stock or bond transactions" was my reply from Jim. "Instead, only Fed Funds will be accepted". Fed Funds, or a Fedwire, are electronic computer ledger debit transfers between Federal Reserve System member banks. No checks or drafts have been allowed from that day, just as Mr. McNeff accurately stated. This is more commonly called a 'cashless transaction'. I call it the reality of the mark of the beast. This is the manifestation of the new international god, the New World Order [I prefer the term 'New World DISorder' as a more accurate description].
Consider this my fellow Christian Americans: All pension funds and other institutional 'managed funds' are comprised of paper asset investments such as stocks, bonds, and mutual funds. These certificates are technically in the name of DTC's private holding company, CEDE and Company. The DTC is owned by the private Federal Reserve System owners (Click for a complete list of names). Congress has attempted, on no less than two occasions since 1995, to pass legislation allowing pension funds to be used by the government as purported 'loans'. All the Federal Reserve System has to do is hand it over. But, what happens to the people counting on those pension fund investments in order to feed themselves in their retirement? Too bad for them.... they're out of luck because for the 'good of the nation', they may be forced to share or relinquish their lifetime of hard-earned wealth. This can be done without the consent of Congress under an Executive Order based on the War and Emergency Powers Act and a state of National Emergency, just like we are already under (See further Executive Orders). Since the Federal Reserve System already holds our stocks and bonds in their fictitious DTC "street name", CEDE, then perhaps they'll cash them in for the federal government's failure to repay the loans that have become way overdue. Heck, some of Lincoln's gold backed bonds from 1864 have not been repaid yet.... and for a reason.
On March 6, 1933, all bullion gold and gold coins were forcibly taken from the hands of private citizens (see New York Times). Under the War Powers Act, President Roosevelt declared a national emergency touted as a "Banking Holiday". It was declared due to the deliberately calculated stock market crash that preceded the Great Depression. Where did this gold end up? Into the hands of the Federal Reserve System owners. The majority is stored in the impervious rock vaults they own beneath New York City. Is it any surprise that the DTC physically holds all the remaining non-book entry issued stock and bond certificates in the same place?
Technically, our entire nation is still under the Executive Order declaration of the War Powers Act and in a continual state of national emergency (See Clinton's 1994 Executive Order 12919). The President can enforce any new emergency at any time under Executive Order or Presidential Directive. In 1995, we [the former North Bridge News] published that we expected a new national "dollar" emergency to be declared within a year or two. Just like we thought at the time, they have now blamed it on the purported drug dealers who are allegedly destroying our currency by money laundering schemes.
Since late 1996, old U.S. $100 FRB notes issued by the Federal Reserve Bank are being exchanged for new $100 FRS issued by the Federal Reserve System. These new notes have scanable magnetic platinum encryption on the plastic strips embedded inside the bills. The U.S. Treasury claims this is for "the blind". Now, new $20 and $50 FRS's are replacing the older notes as well. What people don't realize is that very soon, the older FRB notes will no longer be 'legal' and there will be a penalty for hoarding them. This is what happened to those Americans holding gold and gold coins after 1933.
"We are most gratified with the successful introduction of the new $100 and $50 notes and look forward to the same success with the new $20s," Chairman Greenspan said. For the first time, a machine-readable capability has been incorporated for the blind. A new feature in the $20 will facilitate the development of convenient scanning devices that could identify the note as a $20. -U.S. Treasury, Office of Public Affairs, RR-2449 released May 20, 1998.
Why new paper 'money' and for what purpose? Because the new FRS notes in your pocket can be scanned and whoever scans them can know exactly how much money you have on you. The older FRB notes are not encoded to do this. This writer knows firsthand of at least one machine, manufactured by Diebold, Inc. (a/k/a InterBold) that scans the money in your pockets, wallet or purse no different in theory than a credit card scanner, but much more sophisticated. I participated in a 'test' of this machine at a U.S. international airport in 1998. To me, it looks much like the standard metal detector scanners you walk through at all airports. I was asked (by who I believe was a U.S. Treasury Agent, as he introduced himself and flashed his ID quickly in my face so I couldn't read it) if I had any of the new $100 or $50 bills in my pockets. I looked in my wallet and saw I had one new $100 FRS note. I told him "yes", then he said "Good, but don't tell me how much". After saying he would "really appreciate it" if I would help them with a test, he asked me to walk through what looked like a typical airport scanner. No beeps. No noise. No sound at all. He looked at a computer screen and said "Do you have a new $100 bill?". When I confirmed that was true, he thanked me and told me to please move on. I tried to ask him how the machine knew that, but he ignored my question. I took a good look at the scanning system and believe I have now spotted them at Kennedy, Atlanta, Miami and Los Angeles airports.
The odd part about this is that these machines seem to all be located in the customs areas where you enter the U.S. from a foreign country. Obviously, they want to know if someone is carrying more than $10,000 into the U.S. Common sense dictates that they should be more concerned about people leaving with more than $10,000 if they're really trying to thwart the drug dealers.... until you begin to realize that there must be some other hidden agenda: They are apparently going to stop money from entering the U.S. for a reason.
Will the President call for the confiscation of all gold bullion and bullion coins as Roosevelt did? Who will end up with it? The Federal Reserve System owners, just like before. Since June 1998, international gold supplies have been so low that some private Swiss Banks have been paying a premium above the market wholesale value for gold bullion. This was confirmed to us by a gold and diamond mining Chief Executive from Rex Mining in Guinea, West Africa, who supplies raw gold to a major Swiss Banking company smelter and processor. The spot gold market has been manipulated to keep the price low so that the Federal Reserve System owners can purchase all that is available through their various trusts and corporations. World gold availability on the open market is now at a record low and mining production of gold is also at a record low output.
What happened to 'supply and demand' with gold and silver? Normally, when supply is high the price decreases. When supply is low, precious metal prices increase. Perhaps the private FED will peg the new dollar to gold prices, as many experts have already speculated. What will stocks and bonds purchased with old dollars be worth then? Pennies to the dollar, so to speak. Who ends up being the only winner? The Federal Reserve System stockholders. They control the circulation amounts of paper money in the U.S. Combine that with the new scanner to stop large amounts from entering into the U.S., and the scenario amounts to a planned shortage of paper FRS notes, the banning of the older FRB notes, and the soon to be astronomical price of gold which most Americans will be forbidden to have or hoard, once again. The facts we've presented in this report all point to this.
People will be at the mercy of the federal government for daily food and for jobs. Checks are soon to be totally phased out. Banks issue ATM debit cards and tell you they must charge more for your account if you use a real live human teller instead of the machine. The switch is being turned on. This is not speculation. This is the truth of reality. It's already been tested, and their new system works. Just ask Jim McNeff of the DTC.
The day has come when you must decide to accept or reject the beast and the New World Disorder.
http://64.225.47.117/nbn/nbn14.html" target="_new">http://web.archive.org/web/20010216074832/http://64.225.47.117/nbn/nbn14.html
:=) Gary Swancey
The Indictment
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
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.
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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
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
Some of the insiders have accounts at Schwab ... not saying they are but it could just coincidence.
Gary
:=) Gary Swancey
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
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
BBX Listing Requirements
Listing Standards
Pending Securities and Exchange Commission (SEC) approval, the BBX will impose the following qualitative standards for all issuers wishing to list on the BBX:
Public Interest Standard
The BBX would impose public interest standards identical to those that are currently utilized for the Nasdaq National Market ® (NNM®) and the Nasdaq SmallCap Market SM. These rules will provide the BBX with the 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.
Public Float/Shareholder Requirement
The BBX listing standards will require issuers to demonstrate the existence of 100 round-lot shareholders and 200,000 shares in the public float, thus assuring that there is a minimum level of public ownership in these companies.
Corporate Governance Standards
The BBX will implement corporate governance standards that are consistent with those imposed by the NNM and SmallCap markets, with an adjustment to the independent director and audit committee requirements, in recognition of the burden on small companies. Through its extensive experience operating a listed market, Nasdaq® recognizes the essential nature of corporate governance in ensuring a minimum level of quality in its issuers. The standards are basic and attainable by all current OTC Bulletin Board ® (OTCBB) issuers. The standards are:
Annual Shareholder Meetings, Proxy Solicitations and Quorum: As a matter of state corporate law and SEC regulations, public companies are generally required to hold annual meetings of shareholders and to solicit proxies for such meetings. Adoption of these requirements would thus not create a significant new burden, and would be consistent with existing regulations for Nasdaq. Further, these requirements would be of great assistance to the staff in conducting their public interest reviews. The BBX will require that the annual meeting be held within 12 months of the end of the first fiscal year after the company becomes listed. It is also proposed that the Nasdaq quorum of at least one-third of all shareholders be adopted.
Independent Director: For NNM and SmallCap issues, Nasdaq requires the appointment of three independent directors for each issuer, or a majority of independent directors for SEC Small Business “SB” filers. In light of the difficulty in securing independent directors and the cost of insuring each director, this requirement might be burdensome for current OTCBB issuers. Accordingly, the BBX will require that companies listing on the BBX appoint at least one independent director. Issuers will also be given a grace period of 12 months upon launch of the new market to retain the independent director.
Audit Committees/Conflicts of Interest: Issuers will also be required to create an audit committee, a majority of which cannot be comprised of non-independent directors. This is a relaxed standard compared to Nasdaq, which requires that all of the members of the audit committee be independent directors, or, for SB filers, that a majority of the members be independent. Issuers will have twelve months to create the audit committee. As with Nasdaq, the issuer would use its audit committee to review related-party transactions. Additionally, the issuer would be required to adopt an audit committee charter.
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: The BBX will adopt the current Nasdaq rules requiring shareholder approval of transactions that involve: the grant of stock options to officers or directors; large, below-market issuances of stock; acquisitions; or changes of control. These rules will be made applicable upon listing.
Distribution of Annual Reports, Availability of Quarterly Reports: The BBX will adopt current Nasdaq rules, that require the issuer to distribute annual reports and make available quarterly reports upon request. The issuer’s 10K filing can be used as the annual report.
The BBX believes that these qualitative requirements will require substantial commitment and expenditures on the part of issuers. This commitment will elevate the quality of issuers attracted to listing on the BBX and provide benefits that will inure to all investors.
http://www.bbxchange.com/Listing_Information/reqs.stm
:=) Gary Swancey
See that is what does not make sense to me... I figured after the commission restructure and what not the NASD would want another NASDAQ for the OTCs with minimum requirements.
Still looking for more information ... going to search the federal registry.
:=) Gary Swancey
Hope all is well ...
:=) Gary Swancey
Real World ... No more cyber cash for cybergroceries.
:=) Gary Swancey
Hey Matt your thoughts on this ...
We plan to list our common stock on the new exchange to be sponsored by NASD in 2003. This new exchange will be known as Bulletin Board Exchange(SM) or BBX, a listed market place, with qualitative listing standards but with no minimum share price, income, or asset requirements therefore allowing entrance to a wide array of listings. According to NASD, companies trading on the BBX will be differentiated from those over-the-counter in that their market symbol will begin with a the letters "XB", and unlike the current OTCBB issuers will be allowed to choose their own three-letter market symbol. In addition the BBX will have an electronic trading system to allow order negotiation and automatic execution. The current OTCBB will be phased out in 2003 according to NASD, and in its place will be the BBX.
http://biz.yahoo.com/e/020401/meho.ob.html
:=) Gary Swancey
Yep went back to programming EMC (Energy Management Control) systems to control refrigeration equipment and RS232 Alarm networks. Tried to call but number disconnected.
Hope all is going great for you.
:=) Gary Swancey
Oh I had a few moments that I was not programming and decided to see what the old sites were doing. How you been Matt?
:=) Gary Swancey
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
Oh good grief the NASDAQ is the quote system of the NASD.
Unbelieveable!
Gary
:=) Gary Swancey