OT--? (or not?)
By Carol S. Remond
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Former hedge fund manager Jonathan Daws was sentenced
to three years probation and a $50,000 fine Wednesday for his part in a stock
scheme to depress the price of penny stocks.
Daws managed Dallas hedge fund Gryphon Partners LP until late 2002. He was
charged in June 2003 and pleaded guilty to conspiracy to commit securities
fraud in April 2005.
The U.S. government and Daws had agreed in his plea deal to imprisonment of
18 to 24 months. But Daws' lawyers argued in a sentencing memorandum in July
that prison was unwarranted and that a noncustodial sentence would be
appropriate in light of his exemplary family background and character, the
limited nature of his criminal conduct and certain compelling factors regarding
his family circumstances. The government didn't oppose Daws' request for
release based on his family circumstances.
"This was a colossal misjudgment on your part, but your family circumstances
are very compelling, " Judge Raymond Dearie told Daws in open court. "I'm not
going to send you to jail," Dearie told Daws, adding later "don't make a fool
out of me." Dearie also sentenced Daws to 500 hours of community service.
Daws was charged as part of a conspiracy to use public information
misappropriated from U.S. government databases to manipulate the stocks of
small companies. Other members of the conspiracy included short seller Anthony
Elgindy and former Federal Bureau of Investigation special agent Jeffrey Royer.
Both were both found guilty of racketeering conspiracy and securities fraud in
January 2005.
Elgindy was sentenced to more than 11 years in prison in June. He was also
ordered to forfeit $1.5 million. Royer is scheduled to be sentenced in
September. Meanwhile, Lynn Wingate, another former FBI special agent charged in
the case and Royer's former girlfriend, received probation for her role in the
affair.
Elgindy, Royer and others were charged in May 2002 in the U.S. District Court
for the Eastern District of New York with securities fraud, extortion and
obstruction of justice. Daws was charged later in a superseding indictment.
In his allocution to Judge Raymond Dearie in 2005, Daws said that, between
December 1999 and May 2002, he and others at Gryphon were members of Elgindy's
investing Web site. Daws said he and others at Gryphon received information
from Elgindy, which he knew was confidential. He and others traded on
information from the site, he said.
According to the sentencing memorandum filed by Daws, he first encountered
Elgindy over the Internet in 1998 and became a subscriber to his investing site
in 1999. Daws said that on two occasions in 2002 he became aware of law
enforcement information that he understood had been passed on by Royer. The
information concerned two companies, Optimum Source International Inc. (OSIN)
and Junum Inc.
Daws said in a short statement to Judge Dearie that he deeply regretted his
actions and should have known better. He accepted full responsibility for his
actions.
- By Carol S. Remond, Dow Jones Newswires; 201-938-2074;
carol.remond@dowjones.com
AI
