A Closet

[fung_derf]

* Much information about all the PCBM scammers. All in one place..


al., Div. No. 8:02-CV-822-T-EAJ
http://cmkmgrapevine.proboards.com/index.cgi?board=info&action=display&thread=1416

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SEC v. PCBM et al., Div. No. 8:02-CV-822-T-EAJ
Post by sandi66 on Jan 9, 2012, 8:11pm

PCBM : Jeffrey G. Turino
« Thread Started on Jun 22, 2009, 1:59pm »
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U.S. Securities and Exchange Commission

Litigation Release No. 21094 / June 22, 2009

Securities and Exchange Commission v. Pinnacle Business Management, Jeffrey G. Turino, et al., No. 8:02CV-822-T-17 (EAK) (M.D. Fl. June 16, 2009)

Recidivist Securities Law Violator Jeffrey G. Turino Held in Contempt; Ordered to Pay $9.95 Million; Permanently Banned From Participating In Penny Stock Offerings

The Securities and Exchange Commission today announced that, on June 16, 2009, the Honorable Elizabeth A. Kovachevich, United States District Judge for the Middle District of Florida, entered an order of civil contempt against defendant Jeffrey G. Turino. In addition to finding Turino in contempt, the Court ordered him to pay $9.6 million in disgorgement, plus $348,423.24 in prejudgment interest, and permanently banned him from participating in any penny stock offering.

In her ruling, Judge Kovachevich found that the Commission had demonstrated by clear and convincing evidence that Turino acted in flagrant and repeated contempt of the penny stock bar that she had imposed against him in December 2003 in connection with a previous Commission enforcement action brought against Turino in May 2002. In that action, the Commission had alleged that Turino, one of his associates, and the penny stock company they operated, Pinnacle Business Management, Inc., had committed securities fraud by making materially false and misleading statements about Pinnacle’s business operations. Turino settled this enforcement action by consenting to the entry of a permanent fraud injunction, a permanent officer and director bar, payment of a $60,000 civil penalty, and a five-year penny stock bar.

In its motion to hold Turino in contempt, the Commission outlined its evidence that Turino had violated the five-year penny stock bar by, first, spearheading the reverse merger in 2004 of a penny stock issuer and arranging the resulting penny stock offering and, second, by using two nominees, one a former exotic dancer whom he had been dating, and the other a former nightclub manager, to participate in penny stock offerings by four other issuers during 2006 through 2008. Turino gave detailed instructions to his nominees to create corporations, open bank and brokerage accounts, buy, sell, and transfer billions of shares of penny stock companies, and deposit, withdraw, and distribute millions of dollars worth of penny stock proceeds to his friends and family. Altogether, Turino improperly obtained at least 3.5 billion shares of penny stocks. He subsequently sold at least 1.8 billion of these shares into the U. S. securities markets, generating approximately $9.6 million in ill-gotten proceeds.

For additional information, see below:

Litigation Release No. 20830 (December 15, 2008) (filing of contempt proceeding against Turino)

Exchange Act Release No. 34-58271 (July 31, 2008) (suspension of trading in the securities of Global Diamond Exchange, Inc.)

Exchange Act Release No. 34-55420 (March 8, 2007) (suspension of Trading in the securities of Equitable Mining Corp.)

Litigation Release No. 18506 (December 15, 2003) (settlements with Turino, Lo Castro and Pinnacle Business Management, Inc.)

Litigation Release No. 17507 (May 8, 2002) (filing of enforcement action against Turino, Lo Castro, and Pinnacle Business Management, Inc.)


http://www.sec.gov/litigation/litreleases/2009/lr21094.htm



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Home | Previous Page Modified: 06/22/2009


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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 8:11pm

pantherj
Tuesday, October 26, 2010 11:48:30 AM
Re: None Post # of 3525


Here is a bit of relevant info on Houser from Turino: (My bold)



DECLERATION OF JEFFEREY GEORGE TURINO posted by defenderus on gbdx board

TURINO IS AWAITING EXTRADITION IN AMSTERDAM. But here's something to read before the trial starts.

DECLERATION OF JEFFEREY GEORGE TURINO

I, Jeffrey George Turino aver as follows, both in written documentation and a recorded video, on personal knowledge:
1. I am an adult individual currently residing in Bosnia. I am a businessman currently working in the restaurant night club/resort sector.
2. I have personal knowledge of certain events as they pertain to Nikolaj Vissokovsky, World Wide Cannery and Distribution and Global Diamond Exchange, Bruce Harlan, Keith Hauser and Biotech Medics.
3. I have read Bruce Harlan’s declaration dated November 24, 2008. Mr. Harlan was my attorney for several years prior.
4. I initially met Mr. Vissokovsky in September 2003 at the Bellagio Hotel and Casino during the gaming show. This was the first time I had ever met Mr. Vissokovsky. The 15 minute meeting was arranged at Mr. Harlan’s request on his behalf in reference to monies that were owed to Mr. Vissokovsky from Mr. Harlan’s Trust account.
5. I met Mr. Vissokovsky in Florida In September 2004 for the second time to attend a meeting in Delray Beach that Mr. Harlan could not attend. The purpose of the meeting was to try to resolve the monies due Mr. Vissokovsky & his associate Mr. Lallayan to sell King Crab in the United States. The client “Paqman” which Mr. Harlan supplied and guaranteed bounced checks totaling over $100,000 did not pay on the remaining $300,000 balance owed to Lallayan and Vissokovsky. Consequently I was asked to attend the meeting to work out an amicable plan since Mr. Harlan was responsible for these monies.
6. Mr. Harlan’s claim in his Declaration Dated November 24, 2008 item 15 “I introduced Vissokovsky to Turino in 2003, and they began doing business in the areas of corporate transactions and financing” is false and misleading. I had only met Mr. Vissokosvky one time in 2003 and at no time did I do ”corporate stock transactions and financing” with Mr. Vissokovsky. This is true to date.
7. The next time I met Mr. Vissokovsky was in spring 2005 for Dinner at the Hard Rock Hotel & Casino in Las Vegas, Nevada. The purpose of the meeting was to introduce
Mr. John Edwards to Mr. Vissokovsky. Mr. Edwards was interested in pursuing casino projects in Las Vegas as well as the casino business overseas.
8. Mr. Harlan was getting calls 2 to 4 times a week from Mr. Vissokovsky regarding the approximately $380,000 still owed by the seafood distributor out of Delray Beach. There was no possible way for Harlan to repay the monies. Harlan needs a vehicle to repay the $380,000 to Vissokovsky. Harlan knew Lallayan has a seafood factory in Prague that has assets, cash flow, some debt and bad management. Edwards has multiple shell companies looking for real business. Edwards proposes a sale/merger in order to raise capital pay off debt and Harlan would manage the factory to assure the repayment of the $380,000 to Vissokovsky. Harlan arranges a meeting with Lallayan and Vissokovsky in Moscow. Harlan had met Lallayan previously in Florida in the beginning of the King Crab importing business which was a private company with no public involvement so he had the basis of a relationship. Harlan wants to move to Europe and run the factory. He packs up his stuff in Las Vegas, put it in storage, and leaves for Europe.
9. I am in London with my girlfriend for her birthday in October 2005. Harlan and his girlfriend come to London and we proceed to Moscow. The meeting takes place outside Moscow in a coffee shop in some sort of sports complex. Attending the meet were Myself, Harlan, Vissokovsky, and Lallayan. This is the first time I had met Lallayan.
10. Harlan explains the public transaction to Lallayan. Harlan will move to Prague and run the factory to assure its success. I would follow in the spring as I was in the process of moving from the States to Europe for a fresh start. Lallayan explains the business operation, the past revenues, disclosed the current debt on a spread sheet, the long term debt and the cash that would be needed to bring the factory current. The short term was approximately $500,000 USD for the bank salaries, vendor monthly payments and interest payments until the end of the year. Lallayan commits’ to wire in the back salaries to make things current once Harlan gets there. There was also 900,000 Euros worth on inventory in the warehouse consisting of king Crab and caviar. The plan was to merge the factory that Lallayan owned, retain 74% interest, raise capital in the market, pay off the short term debt and have the new company assume the long term debt. The Seafood factory was operational gearing up for the new season and had all licenses. Edwards identified an available shell with former real estate tycoon Tommy Vu called VWay that was available. Lallayan and Vissokovsky were under the impression this was a listed or NYSE stock. They had no clue about stock, OTC, or Pinks.
11. Lallayan agreed to the plan with the caveat that Vissokovsky return to Las Vegas to meet Edwards and Vu to make sure they confirm the deal as Lallayan did not have a valid US visa.
12. I accompany Vissokovsky to Las Vegas in November 2005. Harlan stays in Moscow and awaits the results of the meeting. Vissokovsky and I meet Edwards, Tommy Vu, and Gordon Forgey at the Bellagio to go over the deal. Everything was as Harlan presented it, Edwards agrees and the documents were sent to Karen’s Attorney in the UK for signature. (Edwards philosophy was he could always sell paper to raise money if it took longer).
13. In December of 2005 Harlan arrives in Prague, he is provided the Seafood Factory corporate apartment, a corporate car, and a driver (manager Nikolay Nekrasov’s son) and is supposed to:
a. Get the back stuff caught up with the monies Lallayan had wired in, salaries, payments and interest.
b. Meet with the bank, sign to take over the debt
c. Do a complete inventory.
d. Start to sell the 900,000 Euro of Crab and Caviar to cover the January interest payment, the current portion of the short term debt and bring everything current for the next season.

14. What Harlan did:
a. Got the old salaries + interest wired in from Lallayan
b. Did the inventory and confirmed over 960,000 Euro of product
c. Did not sign the debt assignment paperwork
d. Met with the bank-Once! Harlan Missed 2 scheduled December Meetings with the Bank
e. Lets 900,000 Euro of crab and Caviar out the back door under his supervision along with major pieces of equipment.
15. In January Harlan and his girlfriend goes with me to Italy to hang out and tells me everything is fine.
16. The bank panics calls in a trustee to protect their assets since Harlan missed 2 scheduled December meetings with the Bank and did not sign the debt assignment paperwork. Worldwide missed the January 1 interest payment and Harlan also did not pay the December payment that Lallayan sent him to make things current.
17. I and Harlan meet with the “bank trustee” in January 2006 find out we have until June to get it cleared up. I ask Harlan to stall the bank until we can figure out what went wrong with the plan and inform Edwards. Payments start being paid to Linstragate as per the Funding contracts between Worldwide Cannery & Distribution, Mountain Passages and Austin Funding. Vissokovsky was not a party to these Funding contracts and had no knowledge the monies were being paid from stock sales.
18. In February 2006 I find out Harlan lets 900,000 Euro of crab and caviar out the back door along with all the computers and some equipment. He also missed newly scheduled multiple bank meetings and he is beginning to panic. Harlan Runs back to the States without telling anyone via London. I find out later Harlan’s current girlfriend was freaking out in Prague because Harlan met his ex girlfriend’s aunt who lives in Prague. The ex girlfriend was a crystal meth addict and thought Harlan was extremely wealthy (with multiple medical problems including ring worm which Harlan got a bad case of from the niece). She sets up a meeting/date with the aunt. Since the aunt thinks Harlan is a real estate mogul and she asks him to buy a building in Prague. Melody the new girlfriend wants out of Prague. Due to this and the missing 900K Euro in Crab & caviar Harlan in the middle of the night leaves Prague without any prior notification.
19. In February 2006 Linstragate the initial primary lender for the Seafood Factory finds out from the bank that things are going to hell. Linstragate issue a power of attorney to Vissokovsky and appoints him as paymaster to collect the funds since Harlan, Vissokovsky’s long time attorney screwed up the factory even worse.
20. In the beginning of March 2006 I return to Prague to meet with the Bank and I’m informed according to Czech law Worldwide needs 76% or an additional 2% ownership to discuss a settlement. Vissokovsky attends the meeting to try to get a handle on the company status for Linstragate as the Power of Attorney.
21. In Late March 2006 I return to Prague to meet with the minority owners of the Seafood Factory. Worldwide acquires the last 26% of the seafood factory. There are approximately 17 boxes of corporate records, sales and tax records, licenses, and building and machinery specifications that are turned over along with the remainder of the Seafood Factory stock certificates. I have as much material copied and sent to Edwards in Las Vegas. The contention from the government that the seafood factory never did any amount of business is false as proven by the tax and financial records filed with the Czech government.
22. After the acquisition of the 26% I go to the bank now with 100% of the Seafood Factory corporate stock. The banker informs me that Harlan missed several scheduled meetings. This problem could have been avoided if Harlan had made the meetings. This was confirmed by the trusts from the earlier complaints about Harlan
23. In April 2006 a reporter did a story on the Seafood Factory and after contacting him I find out he wants to purchase the property, plant and equipment for his father who is in the food processing business. This is one of several offers I pass on to Edwards. Worldwide is looking for suitors to buy the plant and the equipment Edwards has several offers.
24. In May Vissokovsky and I go back to Prague. He hires some large law firm ( Baker & McKenzie) to represent Linstragate with the bank and stopping the asset sale. Edwards wants Linstragate to back off for a payment plan. Prague is used as a container transfer point at this time and the factory is non operational at this point.
25. I meet Harlan and Vissokovsky at Starbucks in Clearwater Florida in May 2006. This is the last time I have seen Harlan. Harlan is ranting he wants Edwards to purchase a house for him valued at $500,000 and $1,000,000 toward his retirement or he will create problems for Edwards. Edwards does not take kindly to extortion and on a phone call with Harlan says no way he is paying Harlan. Harlan was paid and has earned substantial money along the way. Vissokovsky wanted to know what happened to the 900,000 Euros of crab plus some additional funds Harlan owed Vissokovsky out of Harlan’s trust account for a lot in Thurston Grove. Harlan did not have an answer other than the crab and caviar were sent out. Harlan was scared and visibly nervous at this meeting. After Harlan left I find out Vissokovsky is under the impression Harlan is giving him a lot in Thurston Grove and 60% of the construction cost to offset monies owed from Harlan’s trust account. This lot Harlan was promising Vissokovsky belonged to Edwards where $140,000 was paid by Edwards via wire either directly to Thurston or via Harlan’s trust account. The deal was Hall needed additional funds and Edwards put in the money in exchange for a lot. Additionally, Harlan told Vissokovsky I took the $400,000 of Vissokovsky’s money he wired into Harlan’s trust account for purchasing his daughters homes. This was not the case.
26. In June 2006 I fly back to Vegas to wrap up my affairs as I am Moving to Moscow to start construction on coffee shops/restaurants and Medical clinics. While I am in Vegas cleaning out my residence when I find documents from the Florida Bar. Harlan requested we stop using his trust account several years ago because he had a procedural complaint from the Florida Bar during an audit. The real reason we could not use his trust account anymore was the Florida Bar Complaint is for miss appropriation of over $700,000 in Clients funds. One of the companies listed was a company Vissokovsky had sent money in to the trust account for $400,000 to buy his daughters two homes which Harlan was trying to exchange for the Thurston lot and construction. This is why Harlan blamed me for the missing money from Vissokovsky funds.
27. In June 2006 Linstragate agrees to back off the law suit against Worldwide and Vissokovsky as the Power of Attorney for Linstragate executes a settlement in lei of a substantial payment and continued monthly payments. Edwards wants to come to Moscow to meet and discuss a new direction, Linstragate starts getting substantial payments via Vissokovsky as the paymaster.
28. July 2006 Edwards comes to Moscow for meetings with Vissokovsky. He tells Vissokovsky he just made 50 million on a diamond deal and he needs to change the direction of Worldwide. In a private conversation with Edward’s, he comments to me that he had taken so much money of the market with no diamonds think of what we could make with real diamonds. Could I talk Vissokovsky into introducing us to his diamond suppliers in Russia? Vissokovsky arranges a meeting at a diamond cutting facility in Moscow. I accompany Edwards and Vissokovsky to the facility with another Russian. We are told we are the first Americans to tour the facility. Edwards also wants in on the construction project in the Seychelles which Vissokovsky had and the medical clinics we are building. Vissokovsky is concerned Edwards does not have the cash and Edwards proves he sent 30 million dollars to his wife’s relatives in China. Edwards also said he was doing low income housing projects in North Carolina and bought a bunch of land in North Las Vegas. In August Edwards calls Vissokovsky while I am in the Office of Vissokovsky house. Edwards needs Vissokovsky to rent offices for a Diamond Company as no one will rent to them since they have no track record in the New York diamond district. Since Linstragate is getting paid, Edwards is to invest in the Seychelles project and the medical clinics Vissokovsky fly’s into New York and secures an office at a building where he knew the owners in the New York City diamond district. The office will not be available until November and Vissokovsky rents an office in Rockefeller center at Edwards request to accommodate Alex Livak, the US contact. Edwards wants to use Global in the name as it was good luck in his mind from the transfer agency he backed with Helen Bagley of 1st Global Stock transfer along with the same name of a Vissokovsky company from 15 years ago. A press release is put out by Livak on behalf of Global announcing the new office. Wright edited most of the releases and decides to use an angle of the company re-opening the offices at the same building after 20 years since it was the same building Vissokovsky’s Global was in years ago. Vissokovsky had no involvement or knowledge of this or any other press releases with any public company.
29. During October 2006, Linstragate keeps getting payments from Worldwide/Global as per the 504 funding agreements Worldwide/Global executed with various entities and which was filed with the SEC under file number 13822 which found in the Edgar Archives. Things are calm but the office building where the diamond company is located is being sold. Edwards wants Vissokovsky to return and sign a new lease and an Estoppels certificate on behalf of Global. Vissokovsky refuses as he only did it as a favour from the onset of the company, and has a document prepared and notarized (at a US Embassy by a vice council) stating he is not affiliated with Global Diamond in any manner and has to decline to rent the office from the new owner.
30. Edwards asks Vissokovsky to at least introduce Alex Livak to the building managers as the new contact and Edwards says will handle the new lease since Vissokovsky was not willing.
31. Edwards while in Seychelles committed to help fund the waterfront development project for 50 million dollars. The MOU with the Seychelles Government is signed in early January 2007. Edwards vaporizes and drops off the face of the earth. I now can only contact him through Helen Bagley in Vegas. The Seychelles project does not get completed due to Edwards lack of participation.
32. Since the payments to Linstragate stopped in late 2007 and several months had passed Lallayan wants to liquidate the trusts 74% ownership since the certificates are over 2 years old and the restriction can be lifted and recoup any money possible to pay the remainder of the Linstragate debt.
33. Spring 2008. Lallayan calls the transfer agent and finds out from Helen Bagley that the trusts shares have been cancelled without his authority. Lallayan comes to Vissokovsky’s house while I’m there with numerous officials and trust associates. The meeting was less then pleasant to say the least. The trusts and Linstragate wants Vissokovsky to go to Vegas to find out what happened and who authorized the fraudulent cancelling the trusts shares.
34. Spring 2008 Vissokovsky fly’s to Las Vegas to Meet with Bagley. Apparently Helen cancelled the stock, distributed shares to her son, her sons Girlfriend, Adam Barnett and Victoria Wright, Mountain Passages, Austin Holdings among others. Barnett and Wright never paid Worldwide a dime. They liquidated millions of shares and kept the money.
35. Subsequently, Vissokovsky called me to find Barnett for a meeting in South Florida. I called but could only find Wright: she assured me she and Barnett would both be at the meeting but only Barnett showed up. Barnett explained and confirmed at the meeting he had traded all the Stock in Austin and Mountain over the past years did the entire raising and all the promotion for the 504s. (Including the OMDA 504 as he was the Chairmen of the company and traded his own stock.) He went on to say he and Wright owed nothing to Worldwide/Global because he was the market and without him not a dime would have been raised. The crosses and other stock he promoted were none of Vissokovsky business. Since Vissokovsky did not believe Barnett, they called me for Vissokovsky to hear it from me, we all (meaning Mountain, Austin, Winding River and multiple other accounts) got booted from a brokerage because Barnett traded all the accounts at one IP.
36. In summary Vissokovsky was asked by Linstragate to act as a paymaster and subsequently sent to the U.S. on Linstragate behalf since the two trusts were supposed to own 74% of Worldwide/Global which were fraudulently canceled. The trusts were willing to sell their shares into the market to pay off the balance owed to Linstragate. Also Vissokovsky was asked to find out where the trust’s shares went. Vissokovsky has no knowledge of the stock market or the workings of how to raise capital and fund public companies. Vissokovsky was strictly the paymaster of Linstragate at their choosing and has had no involvement in the sales, trading, promotion, press releases, management of Worldwide/Global, Mountain Passages, Austin Funding, Winding River or any other multiple companies involved.
37. I moved from Russia in 2008 and have not seen Vissokovsky since nor have I done any business with him since 2008. All of the business I conducted with Vissokovsky was overseas and in the Private Sector. There were never any businesses involved in the public markets. I never received any cash or money from Vissokovsky. I am personally repaying the shortfall monies owed to the two Trusts who paid the balance owed Linstragate.
38. I am personally familiar with Keith Houser and Bio Tech merger with Corbel Holdings.
39. I am familiar with Keith Houser. I personally paid for multiple plane tickets for Mr. Houser and his attorney William Haseltine in an attempt to try to sell his Halo Laser and made trips on his behalf.
40. I have read Mr. Houser depositions. They are outright lies and fabrications especially in reference to Vissokovsky and my involvement. It was evident Mr. Houser was coached by Bruce Harlan and Ed Thompson as to what to say in the depositions. This is proven by Houser’s statement in his deposition to the SEC on August 16th 2007 on page 75 detailing a phone conversation he had with a Nekrasov in April 2006. It is obvious that Houser confused the name Nekrasov while listening to Harlan’s coaching. Nekrasov was the manager of the Seafood Factory in Prague who did not speak English. A conversation would have been impossible. The only person who knew the name Nekrasov was Harlan. Consequently, Houser was coached by Harlan on what to say in the deposition to elude to Vissokovsky making such a call since Harlan owed Vissokovsky money and wanted him out of the way. There is no other way Houser would have known the name Nekrasov. Additionally, Vissokovsky does not speak with a “Heavy Russian Accent” as stated in the deposition by Houser.
41. Vissokovsky had no knowledge of Bio tech Medics, Houser’s company. The merger was effective in December 2004 when I only met Vissokovsky a couple of occasions. I never discussed Bio Tech Medics or Keith Houser with Vissokovsky. Vissokovsky had No participation in any stock transaction, no shares issued to him, no receipt of monies of any kind whatsoever for or on behalf of Biotech Medics. Vissokovsky never met Houser. Vissokovsky never contacted Houser he had no reason, he did not know the individual or the company. Vissokovsky did not launder monies at any time for me or anyone else as suggested in the indictment. However, Barnett on the other hand was in major disagreement with Houser legally and on the message boards. If you check the court records for the Barnett/Houser litigation you can confirm this to be true. I declare under penalty of perjury the foregoing is true and correct. Executed this 19th day of June 2010.

Signed Jeffrey George Turino

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=55941604



ty Chas

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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 8:12pm

defenderus Share Tuesday, October 26, 2010 12:31:59 PM
Re: jarta post# 3490 Post # of 3529

THE CAN OF WORMS OPEN!! HARLAN, HOUSER, BARNETT, TURINO, EDWARDS, BAGLEY ARE ALL CROOKS & GOING DOWN FOR THE COUNT!! The truth will come out as says Te-ABSOLVO in his post below!!

It has been over a year since I read the DECLARATION OF BRUCE HARLAN which you posted. I remember that I was surprised that an attorney would make statements against his own client. Now it is becoming somewhat clear.
The information you posted from the DECLARATION OF BRUCE HARLAN the former attorney of NICKOLAJ VISSOKOVSKY. HARLAN was formally reprimanded for stealing over $435,000 USD out of his clients trust account. Funds wired to HARLAN’s client’s trust account from a Cyprus corporation which loaned these funds to no other than VISSOKOVSKY for use to purchase homes for his children. Harlan was then put on probation by the Florida bar (FACT): http://www.floridabar.org/divcom/jn/jnne....52572e500508f71!OpenDocument&Click=

Currently, BRUCE HARLAN is the subject of a mortgage fraud scheme as per this news paper article (FACT):

http://www.tampabay.com/news/business/re.... losure/1047538 .

Given his past track record of complaints, the misappropriation of funds from his trust account and current fraud problems he is hardly credible. But still appears as the governments star witness at least for now.
It is evident that BRUCE HARLAN has also betrayed his fiduciary responsibility & attorney client privilege. The evident fabrication during HARLAN's declaration which you posted appears to be intended to cast a shadow & draw attention away from HARLAN's illegal activities and Harlan’s witness manipulation. They clearly needed some spice for the bland story so it would sit better. So comes forth the Russian, English speaking so called Mafia Boss. Well played using a typical Hollywood script for the Grand Jury but will soon fall like a row of dominos.
You may ask what I base this conclusion on. Nothing less than one of several sworn declarations given on June 19, 2010 by JEFFEREY GEORGE TURINO himself given under oath now with the DOJ both in documentary and VIDEO format in which TURINO is disclaiming all of HARLAN's statements in reference to VISSOKOVSKY. Not only does TURINO disclaim Harlan and that of others making statements about VISSOKOVSKY but he does not attempt to deny or defend his own actions and affiliation. I will stop now before I get myself into a bind disclosing other information that may be used in an ongoing investigation.
Trust me when I caution all that the deeper we go into these woods the thicker the plot will become. One thing that appears evident. If this 180 degree turn around continues and it will!! Many more heads will roll and many may become liable for slander and false persecution as it appears that VISSOKOVSKY was never the CEO of Global Diamond Exchange GBDX, never laundered any money and had no involvement with Biotech Medics, CMKM Diamonds or any of the other companies involved in the indictment According to TURINO and other supplied information TURINO only met VISSOKOVSKY once then not again until late October 2005 when Harlan and TURINO traveled overseas to come to a settlement on the monies HARLAN owed VISSOKOVSKY as his real estate attorney.
In the US all are innocent until proven guilty and here more probably not a defendant but a witness who was scammed that may assist in putting the nails in many coffins.
The TRUTH always comes out, TE-ABSOLVO

DECLERATION OF JEFFEREY GEORGE TURINO
I, Jeffrey George Turino aver as follows, both in written documentation and a recorded video, on personal knowledge:
1. I am an adult individual currently residing in Bosnia. I am a businessman currently working in the restaurant night club/resort sector.
2. I have personal knowledge of certain events as they pertain to Nikolaj Vissokovsky, World Wide Cannery and Distribution and Global Diamond Exchange, Bruce Harlan, Keith Hauser and Biotech Medics.
3. I have read Bruce Harlan’s declaration dated November 24, 2008. Mr. Harlan was my attorney for several years prior.
4. I initially met Mr. Vissokovsky in September 2003 at the Bellagio Hotel and Casino during the gaming show. This was the first time I had ever met Mr. Vissokovsky. The 15 minute meeting was arranged at Mr. Harlan’s request on his behalf in reference to monies that were owed to Mr. Vissokovsky from Mr. Harlan’s Trust account.
5. I met Mr. Vissokovsky in Florida In September 2004 for the second time to attend a meeting in Delray Beach that Mr. Harlan could not attend. The purpose of the meeting was to try to resolve the monies due Mr. Vissokovsky & his associate Mr. Lallayan to sell King Crab in the United States. The client “Paqman” which Mr. Harlan supplied and guaranteed bounced checks totaling over $100,000 did not pay on the remaining $300,000 balance owed to Lallayan and Vissokovsky. Consequently I was asked to attend the meeting to work out an amicable plan since Mr. Harlan was responsible for these monies.
6. Mr. Harlan’s claim in his Declaration Dated November 24, 2008 item 15 “I introduced Vissokovsky to Turino in 2003, and they began doing business in the areas of corporate transactions and financing” is false and misleading. I had only met Mr. Vissokosvky one time in 2003 and at no time did I do ”corporate stock transactions and financing” with Mr. Vissokovsky. This is true to date.
7. The next time I met Mr. Vissokovsky was in spring 2005 for Dinner at the Hard Rock Hotel & Casino in Las Vegas, Nevada. The purpose of the meeting was to introduce
Mr. John Edwards to Mr. Vissokovsky. Mr. Edwards was interested in pursuing casino projects in Las Vegas as well as the casino business overseas.
8. Mr. Harlan was getting calls 2 to 4 times a week from Mr. Vissokovsky regarding the approximately $380,000 still owed by the seafood distributor out of Delray Beach. There was no possible way for Harlan to repay the monies. Harlan needs a vehicle to repay the $380,000 to Vissokovsky. Harlan knew Lallayan has a seafood factory in Prague that has assets, cash flow, some debt and bad management. Edwards has multiple shell companies looking for real business. Edwards proposes a sale/merger in order to raise capital pay off debt and Harlan would manage the factory to assure the repayment of the $380,000 to Vissokovsky. Harlan arranges a meeting with Lallayan and Vissokovsky in Moscow. Harlan had met Lallayan previously in Florida in the beginning of the King Crab importing business which was a private company with no public involvement so he had the basis of a relationship. Harlan wants to move to Europe and run the factory. He packs up his stuff in Las Vegas, put it in storage, and leaves for Europe.
9. I am in London with my girlfriend for her birthday in October 2005. Harlan and his girlfriend come to London and we proceed to Moscow. The meeting takes place outside Moscow in a coffee shop in some sort of sports complex. Attending the meet were Myself, Harlan, Vissokovsky, and Lallayan. This is the first time I had met Lallayan.
10. Harlan explains the public transaction to Lallayan. Harlan will move to Prague and run the factory to assure its success. I would follow in the spring as I was in the process of moving from the States to Europe for a fresh start. Lallayan explains the business operation, the past revenues, disclosed the current debt on a spread sheet, the long term debt and the cash that would be needed to bring the factory current. The short term was approximately $500,000 USD for the bank salaries, vendor monthly payments and interest payments until the end of the year. Lallayan commits’ to wire in the back salaries to make things current once Harlan gets there. There was also 900,000 Euros worth on inventory in the warehouse consisting of king Crab and caviar. The plan was to merge the factory that Lallayan owned, retain 74% interest, raise capital in the market, pay off the short term debt and have the new company assume the long term debt. The Seafood factory was operational gearing up for the new season and had all licenses. Edwards identified an available shell with former real estate tycoon Tommy Vu called VWay that was available. Lallayan and Vissokovsky were under the impression this was a listed or NYSE stock. They had no clue about stock, OTC, or Pinks.
11. Lallayan agreed to the plan with the caveat that Vissokovsky return to Las Vegas to meet Edwards and Vu to make sure they confirm the deal as Lallayan did not have a valid US visa.
12. I accompany Vissokovsky to Las Vegas in November 2005. Harlan stays in Moscow and awaits the results of the meeting. Vissokovsky and I meet Edwards, Tommy Vu, and Gordon Forgey at the Bellagio to go over the deal. Everything was as Harlan presented it, Edwards agrees and the documents were sent to Karen’s Attorney in the UK for signature. (Edwards philosophy was he could always sell paper to raise money if it took longer).
13. In December of 2005 Harlan arrives in Prague, he is provided the Seafood Factory corporate apartment, a corporate car, and a driver (manager Nikolay Nekrasov’s son) and is supposed to:
a. Get the back stuff caught up with the monies Lallayan had wired in, salaries, payments and interest.
b. Meet with the bank, sign to take over the debt
c. Do a complete inventory.
d. Start to sell the 900,000 Euro of Crab and Caviar to cover the January interest payment, the current portion of the short term debt and bring everything current for the next season.

14. What Harlan did:
a. Got the old salaries + interest wired in from Lallayan
b. Did the inventory and confirmed over 960,000 Euro of product
c. Did not sign the debt assignment paperwork
d. Met with the bank-Once! Harlan Missed 2 scheduled December Meetings with the Bank
e. Lets 900,000 Euro of crab and Caviar out the back door under his supervision along with major pieces of equipment.
15. In January Harlan and his girlfriend goes with me to Italy to hang out and tells me everything is fine.
16. The bank panics calls in a trustee to protect their assets since Harlan missed 2 scheduled December meetings with the Bank and did not sign the debt assignment paperwork. Worldwide missed the January 1 interest payment and Harlan also did not pay the December payment that Lallayan sent him to make things current.
17. I and Harlan meet with the “bank trustee” in January 2006 find out we have until June to get it cleared up. I ask Harlan to stall the bank until we can figure out what went wrong with the plan and inform Edwards. Payments start being paid to Linstragate as per the Funding contracts between Worldwide Cannery & Distribution, Mountain Passages and Austin Funding. Vissokovsky was not a party to these Funding contracts and had no knowledge the monies were being paid from stock sales.
18. In February 2006 I find out Harlan lets 900,000 Euro of crab and caviar out the back door along with all the computers and some equipment. He also missed newly scheduled multiple bank meetings and he is beginning to panic. Harlan Runs back to the States without telling anyone via London. I find out later Harlan’s current girlfriend was freaking out in Prague because Harlan met his ex girlfriend’s aunt who lives in Prague. The ex girlfriend was a crystal meth addict and thought Harlan was extremely wealthy (with multiple medical problems including ring worm which Harlan got a bad case of from the niece). She sets up a meeting/date with the aunt. Since the aunt thinks Harlan is a real estate mogul and she asks him to buy a building in Prague. Melody the new girlfriend wants out of Prague. Due to this and the missing 900K Euro in Crab & caviar Harlan in the middle of the night leaves Prague without any prior notification.
19. In February 2006 Linstragate the initial primary lender for the Seafood Factory finds out from the bank that things are going to hell. Linstragate issue a power of attorney to Vissokovsky and appoints him as paymaster to collect the funds since Harlan, Vissokovsky’s long time attorney screwed up the factory even worse.
20. In the beginning of March 2006 I return to Prague to meet with the Bank and I’m informed according to Czech law Worldwide needs 76% or an additional 2% ownership to discuss a settlement. Vissokovsky attends the meeting to try to get a handle on the company status for Linstragate as the Power of Attorney.
21. In Late March 2006 I return to Prague to meet with the minority owners of the Seafood Factory. Worldwide acquires the last 26% of the seafood factory. There are approximately 17 boxes of corporate records, sales and tax records, licenses, and building and machinery specifications that are turned over along with the remainder of the Seafood Factory stock certificates. I have as much material copied and sent to Edwards in Las Vegas. The contention from the government that the seafood factory never did any amount of business is false as proven by the tax and financial records filed with the Czech government.
22. After the acquisition of the 26% I go to the bank now with 100% of the Seafood Factory corporate stock. The banker informs me that Harlan missed several scheduled meetings. This problem could have been avoided if Harlan had made the meetings. This was confirmed by the trusts from the earlier complaints about Harlan
23. In April 2006 a reporter did a story on the Seafood Factory and after contacting him I find out he wants to purchase the property, plant and equipment for his father who is in the food processing business. This is one of several offers I pass on to Edwards. Worldwide is looking for suitors to buy the plant and the equipment Edwards has several offers.
24. In May Vissokovsky and I go back to Prague. He hires some large law firm ( Baker & McKenzie) to represent Linstragate with the bank and stopping the asset sale. Edwards wants Linstragate to back off for a payment plan. Prague is used as a container transfer point at this time and the factory is non operational at this point.
25. I meet Harlan and Vissokovsky at Starbucks in Clearwater Florida in May 2006. This is the last time I have seen Harlan. Harlan is ranting he wants Edwards to purchase a house for him valued at $500,000 and $1,000,000 toward his retirement or he will create problems for Edwards. Edwards does not take kindly to extortion and on a phone call with Harlan says no way he is paying Harlan. Harlan was paid and has earned substantial money along the way. Vissokovsky wanted to know what happened to the 900,000 Euros of crab plus some additional funds Harlan owed Vissokovsky out of Harlan’s trust account for a lot in Thurston Grove. Harlan did not have an answer other than the crab and caviar were sent out. Harlan was scared and visibly nervous at this meeting. After Harlan left I find out Vissokovsky is under the impression Harlan is giving him a lot in Thurston Grove and 60% of the construction cost to offset monies owed from Harlan’s trust account. This lot Harlan was promising Vissokovsky belonged to Edwards where $140,000 was paid by Edwards via wire either directly to Thurston or via Harlan’s trust account. The deal was Hall needed additional funds and Edwards put in the money in exchange for a lot. Additionally, Harlan told Vissokovsky I took the $400,000 of Vissokovsky’s money he wired into Harlan’s trust account for purchasing his daughters homes. This was not the case.
26. In June 2006 I fly back to Vegas to wrap up my affairs as I am Moving to Moscow to start construction on coffee shops/restaurants and Medical clinics. While I am in Vegas cleaning out my residence when I find documents from the Florida Bar. Harlan requested we stop using his trust account several years ago because he had a procedural complaint from the Florida Bar during an audit. The real reason we could not use his trust account anymore was the Florida Bar Complaint is for miss appropriation of over $700,000 in Clients funds. One of the companies listed was a company Vissokovsky had sent money in to the trust account for $400,000 to buy his daughters two homes which Harlan was trying to exchange for the Thurston lot and construction. This is why Harlan blamed me for the missing money from Vissokovsky funds.
27. In June 2006 Linstragate agrees to back off the law suit against Worldwide and Vissokovsky as the Power of Attorney for Linstragate executes a settlement in lei of a substantial payment and continued monthly payments. Edwards wants to come to Moscow to meet and discuss a new direction, Linstragate starts getting substantial payments via Vissokovsky as the paymaster.
28. July 2006 Edwards comes to Moscow for meetings with Vissokovsky. He tells Vissokovsky he just made 50 million on a diamond deal and he needs to change the direction of Worldwide. In a private conversation with Edward’s, he comments to me that he had taken so much money of the market with no diamonds think of what we could make with real diamonds. Could I talk Vissokovsky into introducing us to his diamond suppliers in Russia? Vissokovsky arranges a meeting at a diamond cutting facility in Moscow. I accompany Edwards and Vissokovsky to the facility with another Russian. We are told we are the first Americans to tour the facility. Edwards also wants in on the construction project in the Seychelles which Vissokovsky had and the medical clinics we are building. Vissokovsky is concerned Edwards does not have the cash and Edwards proves he sent 30 million dollars to his wife’s relatives in China. Edwards also said he was doing low income housing projects in North Carolina and bought a bunch of land in North Las Vegas. In August Edwards calls Vissokovsky while I am in the Office of Vissokovsky house. Edwards needs Vissokovsky to rent offices for a Diamond Company as no one will rent to them since they have no track record in the New York diamond district. Since Linstragate is getting paid, Edwards is to invest in the Seychelles project and the medical clinics Vissokovsky fly’s into New York and secures an office at a building where he knew the owners in the New York City diamond district. The office will not be available until November and Vissokovsky rents an office in Rockefeller center at Edwards request to accommodate Alex Livak, the US contact. Edwards wants to use Global in the name as it was good luck in his mind from the transfer agency he backed with Helen Bagley of 1st Global Stock transfer along with the same name of a Vissokovsky company from 15 years ago. A press release is put out by Livak on behalf of Global announcing the new office. Wright edited most of the releases and decides to use an angle of the company re-opening the offices at the same building after 20 years since it was the same building Vissokovsky’s Global was in years ago. Vissokovsky had no involvement or knowledge of this or any other press releases with any public company.
29. During October 2006, Linstragate keeps getting payments from Worldwide/Global as per the 504 funding agreements Worldwide/Global executed with various entities and which was filed with the SEC under file number 13822 which found in the Edgar Archives. Things are calm but the office building where the diamond company is located is being sold. Edwards wants Vissokovsky to return and sign a new lease and an Estoppels certificate on behalf of Global. Vissokovsky refuses as he only did it as a favour from the onset of the company, and has a document prepared and notarized (at a US Embassy by a vice council) stating he is not affiliated with Global Diamond in any manner and has to decline to rent the office from the new owner.
30. Edwards asks Vissokovsky to at least introduce Alex Livak to the building managers as the new contact and Edwards says will handle the new lease since Vissokovsky was not willing.
31. Edwards while in Seychelles committed to help fund the waterfront development project for 50 million dollars. The MOU with the Seychelles Government is signed in early January 2007. Edwards vaporizes and drops off the face of the earth. I now can only contact him through Helen Bagley in Vegas. The Seychelles project does not get completed due to Edwards lack of participation.
32. Since the payments to Linstragate stopped in late 2007 and several months had passed Lallayan wants to liquidate the trusts 74% ownership since the certificates are over 2 years old and the restriction can be lifted and recoup any money possible to pay the remainder of the Linstragate debt.
33. Spring 2008. Lallayan calls the transfer agent and finds out from Helen Bagley that the trusts shares have been cancelled without his authority. Lallayan comes to Vissokovsky’s house while I’m there with numerous officials and trust associates. The meeting was less then pleasant to say the least. The trusts and Linstragate wants Vissokovsky to go to Vegas to find out what happened and who authorized the fraudulent cancelling the trusts shares.
34. Spring 2008 Vissokovsky fly’s to Las Vegas to Meet with Bagley. Apparently Helen cancelled the stock, distributed shares to her son, her sons Girlfriend, Adam Barnett and Victoria Wright, Mountain Passages, Austin Holdings among others. Barnett and Wright never paid Worldwide a dime. They liquidated millions of shares and kept the money.
35. Subsequently, Vissokovsky called me to find Barnett for a meeting in South Florida. I called but could only find Wright: she assured me she and Barnett would both be at the meeting but only Barnett showed up. Barnett explained and confirmed at the meeting he had traded all the Stock in Austin and Mountain over the past years did the entire raising and all the promotion for the 504s. (Including the OMDA 504 as he was the Chairmen of the company and traded his own stock.) He went on to say he and Wright owed nothing to Worldwide/Global because he was the market and without him not a dime would have been raised. The crosses and other stock he promoted were none of Vissokovsky business. Since Vissokovsky did not believe Barnett, they called me for Vissokovsky to hear it from me, we all (meaning Mountain, Austin, Winding River and multiple other accounts) got booted from a brokerage because Barnett traded all the accounts at one IP.
36. In summary Vissokovsky was asked by Linstragate to act as a paymaster and subsequently sent to the U.S. on Linstragate behalf since the two trusts were supposed to own 74% of Worldwide/Global which were fraudulently canceled. The trusts were willing to sell their shares into the market to pay off the balance owed to Linstragate. Also Vissokovsky was asked to find out where the trust’s shares went. Vissokovsky has no knowledge of the stock market or the workings of how to raise capital and fund public companies. Vissokovsky was strictly the paymaster of Linstragate at their choosing and has had no involvement in the sales, trading, promotion, press releases, management of Worldwide/Global, Mountain Passages, Austin Funding, Winding River or any other multiple companies involved.
37. I moved from Russia in 2008 and have not seen Vissokovsky since nor have I done any business with him since 2008. All of the business I conducted with Vissokovsky was overseas and in the Private Sector. There were never any businesses involved in the public markets. I never received any cash or money from Vissokovsky. I am personally repaying the shortfall monies owed to the two Trusts who paid the balance owed Linstragate.
38. I am personally familiar with Keith Houser and Bio Tech merger with Corbel Holdings.
39. I am familiar with Keith Houser. I personally paid for multiple plane tickets for Mr. Houser and his attorney William Haseltine in an attempt to try to sell his Halo Laser and made trips on his behalf.
40. I have read Mr. Houser depositions. They are outright lies and fabrications especially in reference to Vissokovsky and my involvement. It was evident Mr. Houser was coached by Bruce Harlan and Ed Thompson as to what to say in the depositions. This is proven by Houser’s statement in his deposition to the SEC on August 16th 2007 on page 75 detailing a phone conversation he had with a Nekrasov in April 2006. It is obvious that Houser confused the name Nekrasov while listening to Harlan’s coaching. Nekrasov was the manager of the Seafood Factory in Prague who did not speak English. A conversation would have been impossible. The only person who knew the name Nekrasov was Harlan. Consequently, Houser was coached by Harlan on what to say in the deposition to elude to Vissokovsky making such a call since Harlan owed Vissokovsky money and wanted him out of the way. There is no other way Houser would have known the name Nekrasov. Additionally, Vissokovsky does not speak with a “Heavy Russian Accent” as stated in the deposition by Houser.
41. Vissokovsky had no knowledge of Bio tech Medics, Houser’s company. The merger was effective in December 2004 when I only met Vissokovsky a couple of occasions. I never discussed Bio Tech Medics or Keith Houser with Vissokovsky. Vissokovsky had No participation in any stock transaction, no shares issued to him, no receipt of monies of any kind whatsoever for or on behalf of Biotech Medics. Vissokovsky never met Houser. Vissokovsky never contacted Houser he had no reason, he did not know the individual or the company. Vissokovsky did not launder monies at any time for me or anyone else as suggested in the indictment. However, Barnett on the other hand was in major disagreement with Houser legally and on the message boards. If you check the court records for the Barnett/Houser litigation you can confirm this to be true.

I declare under penalty of perjury the foregoing is true and correct. Executed this 19th day of June 2010.

Signed Jeffrey George Turino

THE VIDEO VERSION IS NEXT THEN CONFESSION DECLARTIONS

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=55944424


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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 8:13pm

By: ezaltheladiespa
02 Nov 2010, 02:16 PM EDT
Rating: Rate this post: Msg. 968069 of 968069

Jump to msg. #
The same MR. ROY LERMAN who took PCBM/SRCI down:

Balaton inks alliance with Roy Lerman for AMEX listing

BOISE, ID, April 8 /PRNewswire-FirstCall/ - Balaton Power Inc. (OTC BB -
BPWRF): Balaton Power Inc. is pleased to announce that the Company has
retained Mr. Roy Lerman, former Chairman of the Board Of Capital Suisse Sec.,
an international brokerage firm, to assist in securing its application for
listing on the American Stock Exchange (AMEX) and to provide Balaton with an
enhanced profile on Wall Street and international financial markets.
Mr. Lerman is also Director of numerous public companies and advisor to a
number of other companies and organizations such as The New York Institute of
Finance and Republic Financial Group. He is also senior partner of Pro-ex
Services, one of the largest execution companies on the AMEX, a partner of
R.I.P. Consultants, Senior Floor Broker on the AMEX and owner of the web-site
"Ask Roy.com".
Rod Smith, President and CEO of Balaton states "We are very fortunate to
have established an alliance with someone of Mr. Lerman's stature and
experience. Management and shareholders alike will reap many positive benefits
from his guidance and expertise and we look forward to his active
participation in furthering Balaton's goal of becoming a leader in the field
of low impact hydroelectric power generation."
As noted by Mr. Lerman, "The phrase 'timing is everything' couldn't be
more appropriate regarding Balaton Power Inc. and I am very pleased with this
new association. Balaton can offer solutions to meet the growing demand for
domestic energy self-sufficiency and provide unique technologies that focus on
the preservation and enhancement of this nation's environment. Truly,
Balaton's time has come."

Balaton Power Inc. is in the business of providing low impact, run-of-
river hydroelectric power production systems which incorporate a unique,
patent-pending, fish protective water inlet system called the "Pisces" which
is also adaptable to the irrigation and industrial cooling water intake market
sectors.

CONTACT:

Robert W. Stewart
Vice President
Balaton Power Inc.
1197 Main Street
Boise, Idaho 83702
Toll free: 877-864-8880
eMail: [e-mail]
Web site: http://:www.balatonpower.com

http://www.prnewswire.com/news-releases/....g-76849207.html



REGULATION-S.COM ANNOUNCES NEW PRESIDENT

January 13, 2006

January 13th, 2006 - Regulation-S.com chair, Mr. Michael Randles announced today that Mr. Roy N. Lerman, an internationally recognized Stock Exchange and clearing professional, has been appointed as President of Regulation-S.Com, S.A. Mr. Lerman will be assuming his duties as president of the company in full force and effect as of January 15th, 2006.

“Mr. Lerman will bring exceptional industry and leadership experience to his new position as our President”, said Mr. Randles. "Regulation-S.Com will thrive as an outstanding organization with the highest standards of excellence under his fine stewardship and his knowledge, experience and demonstrated integrity will guide and shape the company as it establishes itself within the international investment community."
As President and CEO, Mr. Lerman will direct Regulation-S.com’s planning, operations, and strategic direction as the world’s first Regulation S Exchange and Marketplace, providing both primary and secondary market trading systems to U.S. public companies, international institutions, and individual NON US investors.

Mr. Lerman brings to the company almost 40 years of proven experience in the clearing, brokerage and Stock Exchange industries. Mr. Lerman began his career on Wall Street as a teenager, working in a brokerage firm. After completing his college education, Roy returned to Wall Street. Mr. Lerman was one of the first brokers to execute option spreads on an exchange, and was one of the original "Young Turks" who lobbied Washington to have options listed on an exchange. Mr. Lerman maintains a website named "Ask Roy" (www.askroy.com)

The President advises and reports to Regulation-S.com’s Board of Directors and liaises with state, national, and international financial communities and regulators in support of a balanced, long-term program of growth and regulatory compliance.
About Regulation-S.Com

Incorporated in 2003, Regulation-S.com has recently launched the first phase of its Regulation S Exchange and Marketplace at www.regulation-s.net, providing both primary and secondary market trading systems to U.S. public companies and NON US individual investors and institutions. Regulation-S.com is currently focused on institutional placement with its funding sources in Europe as well as developing its secondary market and retail operations worldwide, with an eye towards providing services to investors in all jurisdictions, all major languages, and in all major currencies, providing a truly organized and international marketplace for Regulation S securities issuers and market participants.

For further information or inquiries, Regulation-S.com can be contacted at [e-mail]
Contact Information Media Services
Regulation-S.com, S.A.
506 290 8973
Email Regulation-S.com, S.A.
About This News Release

If you have any questions regarding information in these press releases please contact the organization listed in the press release. Issuers of press releases and not PR Leap are solely responsible for the accuracy of the content.
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http://www.prleap.com/pr/23570/


================================

IN THE
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION


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UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
450 Fifth St., N.W.
Washington, D.C. 20549,




Plaintiff,

Civil Action No.

v.

PINNACLE BUSINESS MANAGEMENT, INC.,
VINCENT A. LO CASTRO, JEFFREY G. TURINO

Defendant.


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No. 8:02CV-822-T-17-EAJ


COMPLAINT SEEKING INJUNCTIVE AND OTHER RELIEF

Plaintiff United States Securities and Exchange Commission (the "Commission") alleges:

NATURE OF THE ACTION

1. This action concerns false and materially misleading statements made by Pinnacle Business Management Inc. ("Pinnacle") and two of its principal officers, Vincent A. Lo Castro ("Lo Castro") and Jeffrey G. Turino ("Turino"). On April 2, 2002, Pinnacle announced in a press release that it will be spinning off a wholly-owned subsidiary known as All Pro, and that soon thereafter All Pro will apply for a listing on the American Stock Exchange ("AMEX"). Pinnacle materially overstated All Pro's chances of achieving an AMEX listing, and touted an endorsement of its plan by an AMEX floor broker that was falsely procured and materially misleading. By projecting a $4.00 per share price for All Pro, Pinnacle further misled investors into purchasing Pinnacle shares based on the presumption of an 800% windfall in the form of the All Pro dividend. Lo Castro and Turino knew or recklessly disregarded the material facts that there was no reasonable basis for the AMEX listing projections and that they misquoted the AMEX floor broker.

2. By virtue of the acts alleged herein, defendants, among other things, violated, or aided and abetted violations of, statutes and rules prohibiting fraud in the securities markets.


JURISDICTION

3. This Court has jurisdiction pursuant to Section 22(a) of the Securities Act of 1933 (the "Securities Act") [15 U.S.C. §77v(a)] and Sections 21(d)(3), 21(e) and 27 of the Securities Exchange Act of 1934 (the "Exchange Act") [15 U.S.C. §§ 78u(d)(3)(A), 78u(e) and 78aa].

4. The defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, or of the mails, or the facilities of a national securities exchange in connection with the acts, practices and courses of business alleged herein.

5. The defendants will, unless enjoined, continue to engage in the acts, practices or course of business alleged herein, or in transactions, acts, practices and courses of business of similar purport and object. The Commission seeks a judgment permanently enjoining defendants from future violations pursuant to Section 20(b) of the Securities Act [15 U.S.C. §77t(b)] and Section 21(d) and (e) of the Exchange Act [15 U.S.C. §78u(d) and (e)]. The Commission also brings this action for an award of civil penalties against Pinnacle, Lo Castro and Turino pursuant to Section 20(d) of the Securities Act [15 U.S.C. §77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. §78t(d)]. Finally, the Commission also seeks an order pursuant to Section 20(e) of the Securities Act [15 U.S.C. §77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. §78t(d)(2)] barring Lo Castro and Turino from serving as officers or directors of public companies in the future.


DEFENDANTS

6. Pinnacle is a Nevada corporation with a principal place of business at 2963 Gulf to Bay Boulevard in Clearwater, Florida. It operates mainly through All Pro, a wholly owned subsidiary formally known as Lo Castro & Associates. All Pro operates a used car dealership and a wireless telephone sales center in suburban Pittsburgh, Pennsylvania. Pinnacle's common stock was briefly listed on the OTC Bulletin Board in 2000, when it acquired a public shell company and began making Commission filings. Pinnacle's common stock is currently listed on the pink sheets under the symbol "PCBM," after having been removed from the OTC Bulletin Board in December 2000. Pinnacle is one of the most actively traded pink sheet stocks, with tens of millions of shares trading every day. Between April 2001 and the present, Pinnacle's average share price was $0.02. As of May 2, 2002, Pinnacle shares were priced at seven-tenths of one penny ($0.007).

7. Jeffrey G. Turino resides at 3140 Masters Drive in Clearwater, Florida, and has been Pinnacle's Chief Executive Officer and a Director since 1997. According to Pinnacle's most recent Commission filing, Turino is the beneficial owner of 39,502,000 shares of Pinnacle common stock, or approximately 2% of the company.

8. Vincent A. Lo Castro resides in Canonsburg, Pennsylvania, and has been Pinnacle's Chief Operating Officer since 2001. Mr. Lo Castro is also President and former owner of All Pro. According to Pinnacle's most recent Commission filing, Lo Castro and his wife are the beneficial owners of 83,300,000 shares of Pinnacle common stock, or approximately 4% of the company.


BACKGROUND FACTS

9. Pinnacle has not made an annual or quarterly Commission filing since it filed a Form 10-Q on August 20, 2001, reflecting the company's results for the quarter ended June 30, 2001. In that Commission filing, Pinnacle announced that the company had 635,707,064 shares of common stock outstanding.

10. Since August 2001, Pinnacle has not publicly disclosed the number of its issued and outstanding shares of common stock. Pinnacle has never disclosed the number of shares it considered to be in the float of publicly tradable stock.

11. According to Pinnacle's transfer agent records, as of May 1, 2002, Pinnacle had approximately two billion (1,999,707,364) shares of common stock outstanding. Consequently, between Pinnacle's last public statement regarding its share structure in August 2001 and May 2002, Pinnacle's outstanding shares have more than tripled in number, representing a substantial dilution of shareholder value by Pinnacle's management.

12. According to Pinnacle's transfer agent records, as of May 1, 2002, there were 1,401,855,430 common stock shares registered in the name of Cede & Company, indicating a publicly tradable float of at least 1.4 billion shares.


PINNACLE'S MISLEADING PRESS RELEASE

13. On or about April 2, 2002, Pinnacle issued a press release announcing that its board of directors had approved a spin off of All Pro by issuing "a non-cash dividend to eligible PCBM stockholders of record as of the close of market May 31, 2002." (A copy of the press release is attached hereto as Exhibit 1.) According to the release, the dividend will consist of one share of All Pro stock for every fifty shares of Pinnacle stock held by Pinnacle shareholders on the dividend date. The release also stated that Lo Castro and his wife will be issued additional shares "as consideration for deferring principal payments" on a $6 million promissory note that Pinnacle issued to purchase All Pro from Lo Castro.

14. The April 2 press release also stated that Pinnacle had entered into a contract with Roy Lerman, who is identified as a "senior floor broker on the American Stock Exchange" and as a partner and director of SDO Securities. Lerman is quoted in the release, as follows:


I feel very confident that All Pro will be a success and will be accepted for trading on the exchange. . . . All Pro's authorized shares will be initially priced at $4 per share, which is above the minimum price established by the American Stock Exchange guidelines.

15. Mr. Lo Castro is also quoted in the release, as follows:


We are now beginning the process to fill out necessary applications and provide requested information and documentation to the American Stock Exchange. I believe that with the expertise of Mr. Roy Lerman and R.I.P. Consultants we should be able to accomplish this task and be trading sometime in June 2002.

16. The April 2 press release is false and materially misleading because, contrary to what it states, there is no basis for pricing All Pro shares at $4.00. On April 2, Pinnacle had approximately 1.7 billion shares of common stock outstanding, which would equate to a dividend of approximately 34 million All Pro shares (exclusive of the additional shares to be provided to Lo Castro and his wife as described in the release). The press release thus contemplated an initial All Pro market capitalization of at least $130 million, as of April 2. Since the date of the release, Pinnacle has issued nearly 300 million more shares, which would create approximately 40 million shares of All Pro with an initial market capitalization of $160 million, not including additional Lo Castro shares. The press release thus contemplates a minimum All Pro market capitalization of between $130 and $160 million when All Pro begins trading on the AMEX. Given that Lo Castro sold All Pro to Pinnacle in December 2000 for approximately $8 million, and All Pro has not disclosed any news indicating 2000% growth in its value over the past year, the $4.00 initial price per share projection is baseless.

17. Moreover, Pinnacle failed to disclose that All Pro's financial condition does not meet the AMEX's "Regular Financial Guidelines" for listing. Those guidelines require, among other things, a minimum pre-tax income of $750,000 in the latest fiscal year or two of the most recent three fiscal years.

18. Similarly, Pinnacle failed to disclose that All Pro would not likely meet AMEX's "Alternative Financial Guidelines." Those guidelines require, among other things, a $3.00 price per share, which would amount to an All Pro market capitalization of at least $120 million. As noted above, there is no reasonable basis to conclude that All Pro has achieved the type of growth needed to support that value.

19. Finally, the press release's purported endorsement by AMEX floor broker Roy Lerman is materially misleading because it omits information that would call that conclusion into question. Specifically, Pinnacle failed to disclose that Lerman is not the source of the $4.00 share price projection. Lo Castro simply told Lerman that All Pro could trade at $4.00. Pinnacle failed to disclose that Lerman's "confidence" in All Pro's ability to become listed on the AMEX was conditioned on All Pro first meeting the AMEX's listing standards. Pinnacle also failed to disclose that it never even gave the basis for the $4.00 share price projection to Lerman so that he could form his own conclusion. The implication that a senior AMEX floor broker endorsed All Pro's chances for success on the AMEX was concocted by Lo Castro, and is false and materially misleading. [See Exhibit 2 hereto, Declaration of Roy Lerman, which is filed contemporaneously with this Complaint.]

20. The April 2 press release was drafted and approved by Lo Castro and Turino.


FIRST CLAIM


Violations of Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]

21. Paragraphs 1 through 20 are realleged and incorporated herein by reference.

22. Section 17(a) of the Securities Act prohibits the making of materially false or misleading statements or omissions in connection with the offer or sale of any security. A person violates this provision by intentionally or recklessly making material misstatements or omissions in Commission filings, press releases, or in other statements disseminated to investors.

23. By reason of the foregoing, defendants violated Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].

SECOND CLAIM

Violations of Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] Promulgated Thereunder

24. Paragraphs 1 through 23 are realleged and incorporated herein by reference.

25. Section 10(b) of the Exchange Act and Rule 10b-5 thereunder prohibit the making of materially false or misleading statements or omissions in connection with the purchase or sale of any security. A person violates these provisions by intentionally or recklessly making material misstatements or omissions in Commission filings, press releases, or in other statements disseminated to investors.

26. By reason of the foregoing, defendants violated Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] promulgated thereunder.


PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that this Court enter a judgment:

(a) permanently enjoining defendants Pinnacle, Lo Castro and Turino from directly or indirectly violating Section 17(a)(1), (2) and (3) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder;

(b) ordering defendants Pinnacle, Lo Castro and Turino to pay civil penalties pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act;

(c) barring Lo Castro and Turino from acting as an officer or director of any issuer required to file reports under Sections 12(b), 12(g) or 15(d) of the Exchange Act, pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act; and

(d) granting such other relief as this Court may deem just and proper.

Respectfully submitted,

___________________
Treazure R. Johnson, Trial Counsel
Scott W. Friestad
Howard A. Scheck
Lawrence C. Renbaum

Attorneys for Plaintiff
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0708
[phone] (Johnson)
[phone]

Dated: May 7, 2002



http://www.sec.gov/litigation/complaints/complr17507.htm

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http://ragingbull.quote.com/mboard/boards.cgi?board=CMKI&read=968069
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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 8:13pm

By: klonopin2mg
02 Nov 2010, 02:30 PM EDT
Rating: Rate this post: Msg. 968072 of 968073
(Reply to 968069 by ezaltheladiespa)

Jump to msg. #
thanks ezaltheladiespa' quiet the resume'

the same Lerman who made this gem of a statement:

14. The April 2 press release also stated that Pinnacle had entered into a contract with Roy Lerman, who is identified as a "senior floor broker on the American Stock Exchange" and as a partner and director of SDO Securities. Lerman is quoted in the release, as follows:


"I feel very confident that All Pro will be a success and will be accepted for trading on the exchange. . . . All Pro's authorized shares will be initially priced at $4 per share, which is above the minimum price established by the American Stock Exchange

http://ragingbull.quote.com/mboard/boards.cgi?board=CMKI&read=968072

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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 8:16pm

Old DD

Coincidence? I think not. For any of you who listened to guruII back in the pcbm days, he predicted this before most of you even heard of cmkx. He called it the double hammer. The idea being that to take these scumbags out, we would have to hit 'em hard, then hit 'em again. And again and again.

I forget his name now, but Roger Glenn's mentor was also pcbm's attorney. He also happened to have written a paper on busting a naked short. In his learned opinion, the only way to truly rectify a short is to trade out of it and cover.

Now, if GuruII was right about cmkx and pcbm merging back when for a month or so both companies coincidentally (?) had 22 billion shares at the same time, the proverbial schitt is about to hit the fan.


GuruII is so certain of his DD (he spend $40k of his own money following the principals of the company around the country to find out what happened to his rather large investment in pcbm) that he never bought cmkx.

He believes it all comes down to this one single statement, "Less than three hundred shareholders of record." That ultimately, what will need to happen is to trade away the cmkx naked short only to find out that OMG, there is a PCBM naked short to resolve before we are free from the vice grip.

I have very few cmkx shares But, my few million PCBM certified shares are a lot bigger piece of 22 billion than my cmkx shares are of 633 billion.

It's also possible that pcbm is cim. In which case, the documented short in CIM which has never traded will have to be covered and oh, BTW, there is the documented short in PCBM, too.

The PCBM short was documented with the Corbell Dividend. The Corbell dividend was a shares dividend in a spin-off that eventually became BMCS. Now, where have I heard that before??? Oh gee, they just won a lawsuit recently... what a concept...

Life is about to get interesting for a lot of people. I'm just glad I'm holding certs instead of IOUs... LOL

Ain't Life Grand!

Brigantine
I do believe that comes under the heading of "Extract Maximum Value."


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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 8:17pm

By: ezaltheladiespa
04 Aug 2010, 11:12 AM EDT
Rating: Rate this post: Msg. 1184732 of 1184739

Jump to msg. #
Partial response from the SEC..after 8 years something was concluded this year:

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
STATION PLACE
100 FSTREET,NE
WASHINGTON, DC 20549-2736
Office of Freedom of Information
x. privacy Act opE!ratlons
July 30, 2010
FE: Fr~edom of Information Act (FOIA), 5 D.S.C. § 552
Request No. XXXXXX-FOIA
Dear XXXXX.
Further reference is made to your request for
information concerning Pinnacle Business Management aka
Serac Holdings (Pinnacle).
Initially,.:we have identified a closed Commission matter
conducted. between January 2002 and January 2010, in which
Pinnacle is listed.

http://ragingbull.quote.com/mboard/boards.cgi?board=SRCI&read=1184732
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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 8:19pm

Personal news of a PCBMer we all respected

What do you say to a man that just lost his son?

By Andy | June 1, 2010 - 12:12 pm -

I just ran into a good friend of the site, Milton Jenkins, and he shared with me the news of the death of his son, Jeremiah Jenkins, in a car crash this past weekend. Jeremiah was killed when his car skidded on the wet streets over on Yanceyville Road late night Friday, early Saturday morning…..

Jeremiah was just 22 years old and I told his dad, Mr. Milton Jenkins, that you just hate to lose a kid at that young age….We expect the parents to pass on before the children, but in this case, we have lost Jeremiah Jenkins way too soon…

Jeremiah was the 2-A Conference basketball Player-of-the-Year as a senior at Eastern Guilford and his sister, Miranda Jenkins, a very accomplished basketball player in her own right, will be a senior at Eastern in 2010/2011….

What do you say to a man that just lost his son? His eldest child is gone, never to return…..

Mr. Milton Jenkins, we will keep you in our thoughts and prayers and this goes out to his entire family….His wife, daughter Miranda and Jeremiah’s cousin Tasha Huntley, who also was a basketball standout at Eastern Guilford….

Jeremiah Jenkins, gone way too soon and this is what we saying were about Jeremiah here at the site all the way back on April 11, 2006:

Jeremiah Jenkins a senior basketball player from Eastern Guilford has been selected to the Burlington Times All-Regional team that was in last Sunday’s edition of the BT. Jenkins is looking to attend Rockingham Community College with hopes of transferring to a Division I school. There has been some interest expressed in JJ by Tennessee Tech, Western Carolina, and possibly N.C. A&T.

After he puts on a few more pounds and hits the weights this 2-A Conference Player of the Year and All-Guilford selection Jeremiah Jenkins may be ready to explode. Jenkins averaged right at 20 points per game this past season and on several occasions he hit the mid and upper 20’s to lead his Wildcat team. JJ connected on 72 three pointers to rank number 6 in the state and with all this success we say GO JEREMIAH JENKINS.

Again, all of us in the sports family and the basketball family, need to keep the Jenkins Family in our thoughts and prayers…..

What do you say to man that just lost his son? Be strong and we will all try to help keep you lifted up in this time of grief…..

The News and Record account at www.news-record.com from Saturday May 29:

GREENSBORO — A single-car accident left the driver dead last night. Milton Jeremiah Jenkins, 22, of Greensboro, lost control of his 1994 Volvo sedan while heading south on Yanceyville Street around 3:15 a.m. Saturday, according to a police report. Jenkins dropped off the right side of the road and hit a utility pole.

Jenkins was pronounced dead at the scene, according to the report. Three passengers were treated for injuries and released.

http://www.greensborosports.com/2010/06/....comment-page-1/




One of our very deal CMKX shareholder's experienced major loss of son, due to an automobile accident. mquietstorm3 is known by many anywhere from ECNC, PCBM and CMKX stocks, that I'm aware of... I'm sure he's known in many other circles.

Condolences to Milton's family over the loss of their son.

Milton Jeremiah Jenkins


GREENSBORO — Mr. Milton Jeremiah Jenkins, died on May 29, 2010.

Funeral will be Sunday, June 6, 2010 at United Institutional Baptist Church at 2:30 p.m. Visitation 2 p.m. Burial Guilford Memorial Park.

Funeral arrangements entrusted to Perry J. Brown Funeral Home.

Published in News Record on June 5, 2010


http://obituaries.news-record.com/obitua....s&pid=143326885
ty mccurdydon


Also, special thanks to spiderman for building this website...

http://www.memorialsonline.com/mem_site/....JeremiahJenkins

Please sign...

ty spidey


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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 8:24pm

By: ezaltheladiespa
15 Apr 2010, 12:29 PM EDT
Rating: Rate this post: Msg. 1184378 of 1184379

Jump to msg. #
I'm pretty sure these guys hit PCBM/SRCI AND CMKX very hard:


http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46979242

which reads:

Posted by: fourkids_9pets Date: Tuesday, February 23, 2010 1:26:05 PM
In reply to: None Post # of 664

SIMPLY STUNNING ..

read and digest .. all info sent onto
the 5 commissioners at the sec via their
assts .. a national newspaper .. and a
few AG's and a DA .. how this has been
allowed to go on for years *unchecked*
just defies logic ~

--

Commissioners Terms expire June 5
Mary L. Schapiro, Chairman [phone] 2014
Kathleen L. Casey [phone] 2011
Elisse B. Walter [phone] 2012
Luis A. Aguilar [phone] 2010
Troy A. Paredes [phone] 2013

contact info ..
schapiro .. email her asst *female* at [e-mail] casey ..... email her asst *female* at [e-mail]
walter .... email her asst *female* at [e-mail] aguilar ... email his asst *male* at [e-mail]
paredes ... email his asst *female* at [e-mail]

---
Posted by: ThePennyGuru Date: Tuesday, February 23, 2010 1:13:11 PM

In reply to: None Post # of 355

The shorting of OTCBB/OTC stocks due diligence:

The OTCBB/OTC markets do not allow US Citizens to short these stocks: That leaves only Market Makers and off shore Hedge funds the ability to short these stocks.

Link for checking daily short volumes on Finra's regsho tracking site:

http://regsho.finra.org/regsho-Index.html

This data first became available to the public last Thursday as best I can tell.

Link for tracking monthly Market Maker volume for each stock:

http://www.otcbb.com/dynamic/tradeact.htm


Link to the OTCBB Bi- Monthly short interest report:

http://www.otcbb.com/asp/OTCE_Short_Interest.asp

Based on daily shorts volume, you would think that many short positions will last for an extended time. By looking at the Bi-weekly report, you see that most of the shorts have covered. This tells us that the short and covering is done every day. This is called shorting and covering for profit.

Link for tracking Knight Securities(NITE) monthly volume on every stock:

http://www.otcbb.com/asp/tradeact_mv.asp....11&IMAGE1.y=1 0

As you can see Knight Securities(NITE) owns 80% of the OTCBB/OTC market
They traded 102 billion shares in the month of December.

Knight Securities (NITE) most recent 10k-

http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?dcn=0001193125-09-042277

Excerpts from Knight’s(NITE) 10k:

The majority of our Global Markets revenue is derived from trade executions, making markets and providing market access services in U.S. equities. Generally, market-makers display the prices at which they are willing to bid, meaning buy, or offer, meaning sell, securities and adjust their bid and offer prices in response to the forces of supply and demand for each security. As a market-maker operating in Nasdaq, the over-the-counter (“OTC”) market for New York Stock Exchange (“NYSE”), NYSE Alternext and NYSE Arca listed securities, the OTC Bulletin Board, and the Pink Sheets, we provide trade executions by offering to buy securities from, or sell securities to, institutions and broker-dealers. When acting as principal, we commit our own capital and derive revenues from the difference between the price paid when securities are bought and the price received when those securities are sold. We conduct the vast majority of market making activity as principal, through the use of automated quantitative models. Our traders offer execution services for complex trades and a variety of order types. We also provide trade executions for institutions on an agency or riskless principal basis, generating commissions or commission equivalents, respectively. Also, our trading strategy employs the use of high velocity algorithmic trading models which interact with street flow.

Net trading revenue 43.2 %


Net trading revenue (millions) 446.7



As you can see Knight Securities(NITE) derives 43.2% of their net revenue or 446 million dollars trading stock.

There has been continued scrutiny of market-makers, specialists and hedge funds by the regulatory and legislative authorities. New legislation or modifications to existing regulations and rules could occur in the future and could materially impact the Company’s revenues and profitability. For example, in November 2008, FINRA enacted rules regarding the OTC Bulletin Board markets which required that all non-Nasdaq securities be subject to limit order protection. Also, further amendments to Regulation SHO and related short sale rules, could make it much more difficult for market makers to sell securities short.


Knight Securities(NITE) trading as a principal and not as a market maker would have to physically locate the shares of over 2500 companies that they short daily. That would require over half their manpower daily on the phones making calls to borrow shares. There is no way this is being done



Employees

At December 31, 2008, our headcount was 1,045 full-time employees, compared to 868 full-time employees at December 31, 2007. The increase in headcount is primarily related to the acquisitions of Knight Libertas and EdgeTrade, as well as the overall expansion of our Global Markets offerings in 2008. Of our 1,045 full-time employees at December 31, 2008, 924 were employed in the U.S. and 121

I would venture to say that Knight(NITE) is using their Market Maker exemption and lack of need to locate shares and are actually naked shorting and covering daily to make money and a lot of it.

A check of Knight Securities(NITE) from Finra’s site:

http://brokercheck.finra.org/Support/ReportViewer.aspx?FirmCRD=38599

As anyone can see, there are numerous violations for illegal trading practices.

In summation- Knight Securites has used it's market maker exemption to illegally short the entire OTCBB/OTC market for profit. They have destroyed 1000"s of startup companies for profit. In a time when 10% of the US is unemployed how can we let this happen?

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46978308

---
4kids
all jmo


http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46979242


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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 8:25pm

By: MARCELINO04
20 Apr 2008, 11:23 AM EDT
Rating: Rate this post: Msg. 709270 of 917349
(Reply to 709137 by hanssolong)

Jump to msg. #
hassolong

I requested my CIM cert thru schwab. The porcess took approx. 2 weeks and were sent from the DTCC Office on 4/16/08 and delivered on 4/18/08.

The Cert request fee was waived (all free of charge).

GOT CMKX?
GOT CIM?

http://ragingbull.quote.com/mboard/boards.cgi?board=CMKI&read=709270

**************************************



By: MARCELINO04
25 Apr 2008, 04:07 PM EDT
Rating: Rate this post: Msg. 711763 of 917348
(Reply to 709067 by MARCELINO04)

Jump to msg. #
Repost...CIM Cert delivery from DTCC Office on April 19,2008.

My CIM cert was delivered out from the DTCC Office located at:

DTCC
55 water street
Custody Full Service, 2SL
New York, NY 10041

The CIM RESTRICTED cert was signed by Urban Casavant(President) & Carolyn Casavant(Secretary).

The certificate came stapled with two receipts 1. Depository Trust Company Custody Withdrawal Ticket 2.Custody Vault Transfer Receipt.

My CIM cert withdrawal request was made thru schwab.

GOT CMKX?

http://ragingbull.quote.com/mboard/boards.cgi?board=CMKI&read=711763


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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 8:36pm

U.S. Securities and Exchange Commission

Litigation Release No. 21094 / June 22, 2009

Securities and Exchange Commission v. Pinnacle Business Management, Jeffrey G. Turino, et al., No. 8:02CV-822-T-17 (EAK) (M.D. Fl. June 16, 2009)

Recidivist Securities Law Violator Jeffrey G. Turino Held in Contempt; Ordered to Pay $9.95 Million; Permanently Banned From Participating In Penny Stock Offerings

The Securities and Exchange Commission today announced that, on June 16, 2009, the Honorable Elizabeth A. Kovachevich, United States District Judge for the Middle District of Florida, entered an order of civil contempt against defendant Jeffrey G. Turino. In addition to finding Turino in contempt, the Court ordered him to pay $9.6 million in disgorgement, plus $348,423.24 in prejudgment interest, and permanently banned him from participating in any penny stock offering.

In her ruling, Judge Kovachevich found that the Commission had demonstrated by clear and convincing evidence that Turino acted in flagrant and repeated contempt of the penny stock bar that she had imposed against him in December 2003 in connection with a previous Commission enforcement action brought against Turino in May 2002. In that action, the Commission had alleged that Turino, one of his associates, and the penny stock company they operated, Pinnacle Business Management, Inc., had committed securities fraud by making materially false and misleading statements about Pinnacle’s business operations. Turino settled this enforcement action by consenting to the entry of a permanent fraud injunction, a permanent officer and director bar, payment of a $60,000 civil penalty, and a five-year penny stock bar.

In its motion to hold Turino in contempt, the Commission outlined its evidence that Turino had violated the five-year penny stock bar by, first, spearheading the reverse merger in 2004 of a penny stock issuer and arranging the resulting penny stock offering and, second, by using two nominees, one a former exotic dancer whom he had been dating, and the other a former nightclub manager, to participate in penny stock offerings by four other issuers during 2006 through 2008. Turino gave detailed instructions to his nominees to create corporations, open bank and brokerage accounts, buy, sell, and transfer billions of shares of penny stock companies, and deposit, withdraw, and distribute millions of dollars worth of penny stock proceeds to his friends and family. Altogether, Turino improperly obtained at least 3.5 billion shares of penny stocks. He subsequently sold at least 1.8 billion of these shares into the U. S. securities markets, generating approximately $9.6 million in ill-gotten proceeds.

For additional information, see below:

Litigation Release No. 20830 (December 15, 2008) (filing of contempt proceeding against Turino)

Exchange Act Release No. 34-58271 (July 31, 2008) (suspension of trading in the securities of Global Diamond Exchange, Inc.)

Exchange Act Release No. 34-55420 (March 8, 2007) (suspension of Trading in the securities of Equitable Mining Corp.)

Litigation Release No. 18506 (December 15, 2003) (settlements with Turino, Lo Castro and Pinnacle Business Management, Inc.)

Litigation Release No. 17507 (May 8, 2002) (filing of enforcement action against Turino, Lo Castro, and Pinnacle Business Management, Inc.)


http://www.sec.gov/litigation/litreleases/2009/lr21094.htm



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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 8:44pm

Archived post

By: silverbulletny1
23 Dec 2008, 09:55 PM EST
Msg. 789247 of 789329
Jump to msg. #

Peter Madoff defendent in Elgindy trial connected to Hillary Rodham Clinton LOL this is toooooooooo good

Peter Madoff, 63, brother of Bernard.

Hillary Rodham Clinton and Peter Madoff,

http://www.newsmeat.com/fec/bystate_detail.php?last=MADOFF&first=Peter

To go against the dominant thinking of your friends, of most of the people you see every day, is perhaps the most difficult act of heroism you can perform.

HELLOOOOOOO ELGINDY TRIAL PCBM AMONG MANY OTHER PENNYSTOCKS NOW THE CREME IS RISING TO THE TOP AYHHHHH SHORTSTERS?

http://ragingbull.quote.com/mboard/boards.cgi?board=SRCI&read=1182080

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SEC v. PCBM et al., Div. No. 8:02-CV-822-T-EAJ
Post by sandi66 on Jan 9, 2012, 8:55pm

SEC v. PCBM et al., Div. No. 8:02-CV-822-T-EAJ

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20830 / December 15, 2008
SEC v. Pinnacle Business Management, Inc. et al., Civ. No. 8:02-CV-822-T-EAJ (M.D. Fla.)

SEC Seeks Contempt Against Jeffrey G. Turino for Violating Penny Stock Bar and Obtains Ex Parte Asset Freeze and Extension of Penny Stock Bar

The Commission announced today that, following an ex parte hearing held on December 4, 2008, Judge Elizabeth A. Kovachevich of the U.S. District Court for the Middle District of Florida issued an order directing Jeffrey G. Turino to show cause why the Court should not hold him in contempt for violating a five-year penny stock bar entered against him on December 5, 2003, as part of a settlement of an earlier Commission enforcement action. The penny stock bar prohibited Turino from participating in any penny stock offering. In the December 4th order, the Court finds that the Commission had made a sufficient and proper showing that Turino had violated this bar by participating in penny stock offerings of Biotech Medics, Inc., Equitable Mining Corp., Global Diamond Exchange, Inc., Grand Entertainment and Music, Inc. and OMDA Oil and Gas, Inc. The Commission had previously issued orders temporarily suspending the trading in the securities of two of these companies, Equitable Mining Corp. and Global Diamond Exchange.

The order directs Turino to show cause why the Court should not hold him in contempt, should not require him to disgorge the unlawful proceeds from selling shares obtained in penny stock offerings, and should not make him subject to a permanent penny stock bar. Further, the order freezes certain bank and brokerage accounts held or controlled by, or in the name of Melissa Sthingyer, Robert Leslie, Mountain Passages, Inc., Austin Funding, LLC and CRL Holdings, Inc. Finally, the order extends the penny stock bar against Turino pending a final hearing on the show cause order.

The penny stock bar against Turino resulted from the Commission's May 8, 2002, enforcement action against Turino, Vincent Lo Castro, and a company they controlled, Pinnacle Business Management, Inc. SEC v. Pinnacle Business Management, Inc. et al., Civ. No. 8:02-CV-822-T-EAK (M.D. Fla.) The Commission's complaint alleged that Turino and the other defendants had made materially false and misleading statements in connection with a proposed spin-off of a Pinnacle business division, and charged them with violating the antifraud provisions of the federal securities laws (Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder). On December 5, 2003, Turino consented to the entry of a final judgment that permanently enjoined him from further violations of these provisions and imposed a $60,000 civil penalty, a permanent officer and director bar, and a five-year penny stock bar.

For additional information, see below:

Litigation Release No. 17507 (May 8, 2002) (Filing of Enforcement Action Against Turino, Lo Castro, and Pinnacle Business Management, Inc.) http://www.sec.gov/litigation/litreleases/lr17507.htm

Litigation Release No. 18506 (December 15, 2003) (Settlements with Turino, Lo Castro and Pinnacle Business Management, Inc.)
http://www.sec.gov/litigation/litreleases/lr18506.htm

Exchange Act Release No. 34-58271 (July 31, 2008) (Suspension of Trading in the Securities of Global Diamond Exchange, Inc.)
http://www.sec.gov/litigation/suspensions/2008/34-58271.pdf

Exchange Act Release No. 34-55420 (March 8, 2007) (Suspension of Trading in the Securities of Equitable Mining Corp.)
http://www.sec.gov/litigation/suspensions/2007/34-55420.pdf

http://www.sec.gov/litigation/litreleases/2008/lr20830.htm



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Re: PCBM : Jeffrey G. Turino
Post by sandi66 on Jan 9, 2012, 9:08pm

MAS is a shell waiting for a marriage.


Here's the MAS filings link: http://www.secinfo.com/$/SEC/Registrant.asp?CIK=1093989

by noahtl



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Re: SEC v. PCBM et al., Div. No. 8:02-CV-822-T-EAJ
Post by sandi66 on Jan 9, 2012, 9:10pm

SERAC HOLDINGS INC.
Corporation Information

Status: Active on 5/6/2005 File Date: 5/9/1997
Type: NRS78 - Domestic Corporation Corp Number: C10008-1997
Qualifying State: NV List of Officers Due: 5/31/2006
Managed By: Expiration Date:
Foreign Name: On Admin Hold: False


Resident Agent Information

Name: CORPORATE SERVICES OF NEVADA Address 1: 502 N. DIVISION STREET
Address 2: City: CARSON CITY
State: NV Zip: 89703
Phone: Fax:
Email: Mailing Address 1:
Mailing Address 2: Mailing City:
Mailing State: Mailing Zip:



Financial Information

No Par Share Count: 0 Capital Amount: $ 25,000,000.00
Par Share Count: 25,000,000,000.00 Par Share Value: $ 0.001


Officers Include Inactive Officers

President - M BRUCE HALL
Address 1: 502 N. DIVISION STREET Address 2:
City: CARSON CITY State: NV
Zip: 89703 Country:
Status: Active Email:

Secretary - M BRUCE HALL
Address 1: 502 N. DIVISION STREET Address 2:
City: CARSON CITY State: NV
Zip: 89703 Country:
Status: Active Email:

Treasurer - M BRUCE HALL
Address 1: 502 N. DIVISION STREET Address 2:
City: CARSON CITY State: NV
Zip: 89703 Country:
Status: Active Email:



Actions\Amendments

Action Type: Articles of Incorporation
Document Number: C10008-1997-001 # of Pages: 10
File Date: 05/09/1997 Effective Date:
(No Notes for this action)

Action Type: Resident Agent Change
Document Number: C10008-1997-004 # of Pages: 1
File Date: 12/08/1997 Effective Date:
BRUCE THOMPSON
128 FORTUNE DR. DAYTON NV 89403 MJM

Action Type: Amendment
Document Number: C10008-1997-005 # of Pages: 1
File Date: 03/05/1998 Effective Date:
CAPITAL STOCK WAS 25,000,000 @ .001 = $25,000 MMR
(1)PG. MMR

Action Type: Amendment
Document Number: C10008-1997-006 # of Pages: 1
File Date: 03/01/1999 Effective Date:
CAPITAL STOCK WAS 30,000,000 @ .001 = 30,000 MMR
(1)PG. MMR

Action Type: Amendment
Document Number: C10008-1997-007 # of Pages: 1
File Date: 06/01/1999 Effective Date:
CAPITAL STOCK WAS 100,000,000 @ .001 = 100,000 MMR
(1)PG. MMR

Action Type: Amendment
Document Number: C10008-1997-008 # of Pages: 1
File Date: 02/22/2000 Effective Date:
CAPITAL STOCK WAS 150,000,000 @ .001 = $150,000 MMR
(1)PG. MMR

Action Type: Amendment
Document Number: C10008-1997-009 # of Pages: 1
File Date: 06/13/2000 Effective Date:
CAPITAL STOCK WAS 250,000,000 @ .001 = $250,000 MMR
(1)PG. (FILING FEE: $75.00) MMR

Action Type: Amendment
Document Number: C10008-1997-010 # of Pages: 1
File Date: 02/12/2001 Effective Date:
CAPITAL STOCK WAS 350,000,000 @ .001 = $350,000. DMF
(1)PG. (FILING FEE: $100) DMF

Action Type: Amendment
Document Number: C10008-1997-011 # of Pages: 1
File Date: 03/14/2001 Effective Date:
CAPITAL STOCK WAS 550,000,000 @ .001 = $550,000. DMF
(1)PG. (FILING FEE: $75) DMF

Action Type: Amendment
Document Number: C10008-1997-012 # of Pages: 1
File Date: 02/06/2003 Effective Date:
CAPITAL STOCK WAS 750,000,000 SHARES @ .001 PAR VALUE = 750,000 CAPITAL AJW
(1PG)($10,800.00) AJW

Action Type: Amendment
Document Number: C10008-1997-013 # of Pages: 1
File Date: 02/10/2003 Effective Date:
CERTIFICATE OF AMENDMENT FILED AMENDING THE FOURTH ARTICLE. THE STOCK SHALL BE
24,900,000,000 OF COMMON SHARES @ .001 AND 100,000,000 OF PREFERRED SHARES @
.001. (1PG)($150) AJW

Action Type: Annual List
Document Number: C10008-1997-002 # of Pages: 1
File Date: 09/25/2003 Effective Date:
List of Officers for 2003 to 2004

Action Type: Amended List
Document Number: C10008-1997-003 # of Pages: 1
File Date: 09/25/2003 Effective Date:
(No Notes for this action)

Action Type: Amendment
Document Number: C10008-1997-014 # of Pages: 1
File Date: 04/01/2004 Effective Date:
1 PG. KAB
PINNACLE BUSINESS MANAGEMENT INC. KABBP S{ 00001

Action Type: Annual List
Document Number: 20050169280-63 # of Pages: 1
File Date: 05/06/2005 Effective Date:
(No Notes for this action)

Action Type: Annual List
Document Number: 20050169281-74 # of Pages: 1
File Date: 05/06/2005 Effective Date:
(No Notes for this action)


https://esos.state.nv.us/SOSServices/Ano....x?CorpID=279999


Bruce Harlan was the guy in FL to whom Haseltine sent his SGGM resignation letter. Among other things said to Harlan was "Your clients are hard to contact" or statement to that effect.

by Bo

http://cmkxgroup.proboards49.com/index.c....play&thread=552

--------------------------------------------------------------------------------
Re: SEC v. PCBM et al., Div. No. 8:02-CV-822-T-EAJ
Post by sandi66 on Jan 9, 2012, 9:10pm

Very Interesting SRCI/CMKX story, IMO
« Thread Started on Oct 11, 2005, 5:51pm »

--------------------------------------------------------------------------------
This was sent to me by an SRCI investor. The material has been posted before by that investor, and by others. I have not seen this detail before and thought it worthy of reposting. Hope others find it intersting ,too.
-----------------------------------------------------------------------

We got into cmkx via our association with pcbm. When RG joined the team, I was convinced it was for real. Before that, I had my doubts. We originally bought into pcbm, because we thought LoCastro was for real and was doing his best to "bust the shorts." We still think that about both companies and believe they are working in concert on this.

But back to pcbm. What leverage does a little old multi millionaire have against a multi billionaire hedge fund? Much less an entrenched and smoothly operating criminal conspiracy as outlined in Bob Obrien's latest missive?

So, late 2002, early 2003 not sure of the date, pcbm is suddenly rumored to be under consideration for a buy-out by cmkx. We go looking into cmkx and mention it on one of the cmkx rb boards where we are soundly trounced as scammers looking for a way out of our misery.

Then, Urban has a shareholders meeting in which he announces his intention to buy another pink sheet company and do a spin-off. That announcement however never seemed to come to fruition and just got ignored as time passed. Much like many of the announcements Urban has made over the years that just sort of never seemed to get followed up on... But what if they were followed up on???

Between the time when the rumor hit pcbm, up until and even after the shareholders meeting, we have confirmed numerous trips by pcbm principals to LasVegas, at least two of them confirmed meetings with Urban.

After pcbm got in trouble with sec, our OS was suddenly 24 billion shares, when it had been 2 billion and we had been told the principals were "retiring shares." We were a bit pissed. But, disparate and unknown to each other elements calling the principals when querying directly about the additional shares were told in no uncertain terms: "The shares are in safe hands." Do you hold them? "No, but trust me, they are in safe hands." But, no one we considered safe, seemed to hold them...

This was the standard line given to both folks who had an ongoing dialog with the principals and those who called and identified themselves as shareholders with questions. A line given by 3 of the 4 principals. The fourth making no comment whatsoever.

Over the years, there have been several indications of cmkx and srci continuing to be vaguely connected. Not the least of which was the 2004 renaming of pcbm to Serac, a pinnacle of ice in a glacier... Not too coincidental... this happened about the same time RG's presence was announced at cmkx.

So. After that introduction, read this link. It is a most excellent summation of the rest of the events and what I think is happening. I don't know the person who wrote this, but apparently he and I were saying so closely the same things that a friend of his who posts on 49, contacted me to see if I could add anything to their collective DD.

http://forums.christiantraders.com/viewthread.php?tid=4077

After you read the above link, go to the PEDRO posted shareholders lists. Look for the names Locastro (Vince, Kim, Associates and Trusts) Bruce Hall and Bruce Harlan and associated trusts.

hundreds of millions of shares were issued to these guys over the years and returned... to what purpose, do you think?

Anyway, I've seen enough to believe they are connected and their soon to be announced combined rollup of SRCI and the JVs And CMKX into MAS IX (pcbm owned empty and fully reporting shell) will knock the hedge funds, brokers and mms and their conspiracy to fleece america on their collective asses.

Or, it might be the method to take cim public. Either way, they will roll it up into pcbm and go public with a massive and proven already short in the IPO vehicle. Not to even mention the massive and existing short in the companies being rolled into it...

Do you think that might be what ELO meant by explosive?


cheers.

by hermannmaier0

also big ty to brigantine, for her info provided into the above.

http://cmkxgroup.proboards49.com/index.c....play&thread=552


--------------------------------------------------------------------------------
Re: SEC v. PCBM et al., Div. No. 8:02-CV-822-T-EAJ
Post by sandi66 on Jan 9, 2012, 9:12pm

AMR I. ELGINDY for those with PCBM or others
« Result #53 on Aug 8, 2008, 9:02pm »
--------------------------------------------------------------------------------
JAN
F.#2002R01303
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - X
UNITED STATES OF AMERICA
-against- 02 CR 589 (S-2) (RJD)
04 CR 652 (RJD)
AMR I. ELGINDY,
Defendant.
- - - - - - - - - - - - - - - - X
GOVERNMENT’S SENTENCING MEMORANDUM
ROSLYNN R. MAUSKOPF
UNITED STATES ATTORNEY
Eastern District of New York
One Pierrepont Plaza
Brooklyn, New York 11201
JOHN A. NATHANSON
Assistant United States Attorney
(Of Counsel)
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 1 of 88

2
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - X
UNITED STATES OF AMERICA
-against- 02 CR 589 (S-1) (RJD)
04 CR 652 (RJD)
AMR I. ELGINDY,
Defendant.
- - - - - - - - - - - - - - - - X
PRELIMINARY STATEMENT
The defendant contends that he should be sentenced as
if this case were about nothing more than his personal trading in
four stocks. Over more than one hundred pages, the defendant
barely acknowledges that he was convicted of racketeering through
the eponymous Elgindy Enterprise. He barely acknowledges that he
was convicted of conspiring with others to commit a securities
fraud that went far, far beyond those four stocks. He denies
that he played any significant role in the Elgindy Enterprise,
despite the fact that he was its leader. He glosses over the
fact that, after being released on bail in this case, he
committed yet another crime by lying to federal officials in an
attempt to flee.
Perhaps most importantly, the defendant, in his desire
to divert this Court’s attention, eschews any mention of the
extraordinary scope of the corruption of governmental functions
that lies at the heart of this case. By seizing on the capacity
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 2 of 88

3
of his co-defendant, Jeffrey Royer, to misappropriate law
enforcement information and by promising him lucrative
employment, the defendant induced Royer to steal information
about dozens of FBI and SEC investigations. Those investigations
involved undercover agents and cooperating witnesses, some of
them involved in organized crime and terrorism cases. When Royer
left the FBI, the defendant ensured that a successor, Lynn
Wingate, replaced him. Together, Royer and Wingate performed
hundreds and hundreds of illicit searches in the FBI’s
confidential databases. In essence, numerous sensitive
investigations were compromised for the sake of the defendant’s
and his co-conspirators’ greed. Even had this defendant failed
to earn a single dollar through his criminal enterprise, his role
in this extraordinary breach of the public trust would warrant a
lengthy sentence.
Below, without attempting to reprise all the facts
adduced over a twelve-week trial or to reargue years of legal
wrangling, the government (relatively) briefly sets out the
relevant factual and legal settings that we submit should guide
this Court’s sentencing determination. Applying what the
government believes to be the appropriate guidelines analysis,
the guidelines imprisonment range for this defendant is life.
The government respectfully submits that, in keeping with the
true nature of the defendant’s crime, this Court should sentence
him to a very substantial term of imprisonment.
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 3 of 88

4
I. THE NATURE AND CIRCUMSTANCES OF THE OFFENSE
The defendant was convicted of racketeering conspiracy
through his leadership of the criminal Elgindy Enterprise, an
organization composed of the defendant, Derrick Cleveland,
Jeffrey Royer and various others, including members of the
defendant’s AnthonyPacific.com website (the “AP site”). The
Elgindy Enterprise operated through the AP site and another of
the defendant’s corrupt entities, Pacific Equity Investigations.
In connection with the defendant’s leadership of the
Elgindy Enterprise, he was convicted of the following
racketeering acts, as well as the corresponding substantive
crimes: conspiring to commit securities fraud; four securities
frauds associated with Seaview (“SEVU”), Optimum Source (“OSIN”),
Polymedica (“PLMD”) and Junum (“JUNM”); conspiring to commit
extortion; extortion of Paul Brown and his company, Nuclear
Solutions (“NSOL”); defrauding AP site members by frontrunning
the defendant’s trading call on Vital Living Products (“VLPI”);
and defrauding AP site members by trading against the advice the
defendant gave them on Innovative Software Technologies (“INIV”)
and VLPI. The defendant, however, would like this Court to
ignore the convictions for racketeering and conspiracy and
sentence the defendant as if the jury’s verdict were limited to
the substantive acts of securities fraud and extortion. But the
racketeering and securities conspiracies go far, far beyond those
individual acts. Rather, the defendant led an enterprise that
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 4 of 88

1 Transcript references are to the electronic transcript,
which varies at certain points from the hard-copy transcript.
5
obtained and traded on confidential law enforcement information
in dozens of stocks. The defendant, through the AP site and his
InsideTruth stock reports, manipulated the market in dozens of
stocks through deceptive trading, timed release of information,
exaggerated claims of influence over market prices and other
misrepresentations. The entire scope of the defendant’s criminal
conduct - not an isolated sliver - is the proper subject of
sentencing.
A. An Introduction to the Defendant’s Criminal Enterprise
Derrick Cleveland met Jeffrey Royer - an FBI agent then
working in Oklahoma City - in early 2000 when Royer appeared at
Cleveland’s office. (Tr. 172).1 Shortly after that initial
encounter, Royer appeared again and Cleveland showed him the AP
site, (Tr. 174), whose primary purpose was to recommend shorting
certain stocks. (Tr. 191).
Royer first provided confidential law enforcement
information to Cleveland in March 2000 regarding Broadband
Wireless (“BBAN”). (Tr. 214; GX-JL-1). Cleveland immediately
conveyed the information to the defendant, because he “knew that
the information was information you couldn’t get anywhere else.
It was the best information that a person could get a hold of in
my opinion . . . .” (Tr. 217). In fact, the defendant traded on
the information. (GX-2582). Cleveland told the defendant that
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 5 of 88

2 While the defendant claims that certain information
provided by Royer was available elsewhere, the defendant ignores
witnesses’ testimony that similar information is more valuable
when the source is the FBI. (Tr. 3839).
6
he learned the information from an FBI agent. (Tr. 219). The
defendant suggested a three-way call, in which the defendant did
not announce his presence, so that the defendant could assure
himself that Cleveland had described the information and its
source correctly. (Tr. 219). During his very first contact with
Royer, the defendant urged Cleveland to get more specific
confidential law enforcement information from Royer. (Tr. 221).
Shortly after Royer provided Cleveland and the
defendant confidential law enforcement information on BBAN, Royer
provided Cleveland additional misappropriated information about
other companies. (Tr. 226). Cleveland suggested to Royer that
they could make a lot of money trading in these and other
companies’ stocks based on Royer’s information, and that they
could give the information to the defendant so that, through the
defendant’s website, they could “crush” the stocks. (Tr. 228).
The defendant was incarcerated from June through
September 2000 following his conviction for insurance fraud.
Once the defendant was released from jail in early October 2000,
Cleveland started feeding the defendant confidential law
enforcement information,2 initially on Seaview Underwater
Research, Inc. (“SEVU”). (Tr. 266-67). If there was any doubt
as to the source of this information, Cleveland told the
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 6 of 88

7
defendant when first passing information on SEVU that he received
it from “Jeff,” “my FBI friend.” (Tr. 270). Included in the
information Cleveland passed the defendant was a reference to an
“undercover” SEC operative at SEVU. (Tr. 278). The defendant
released some, but not all, of the SEVU confidential law
enforcement information on AP through chat and audio. (Tr. 287).
The defendant specifically instructed AP members that they should
use the information for trading purposes but should not release
the information. (Tr. 320). When the defendant asked Cleveland
why Royer was providing this information, Cleveland told him “as
far as money goes, I’m taking care” of Royer. (Tr. 322).
After the SEVU insider trading, the defendant continued
to obtain confidential law enforcement information from Royer
through Cleveland. Most of the time, the information was passed
to the defendant. In late 2000, the defendant asked to speak,
and did speak, with Royer directly. (Tr. 323). From that point
forward, while most information still flowed through Cleveland,
the defendant and Royer also communicated directly with one
another. (Tr. 324). On some occasions, the defendant initiated
discussions with Royer, or asked Cleveland to initiate
discussions with Royer, to obtain misappropriated information
with respect to particular stocks. (Tr. 482-83; 596). The
defendant insisted to Cleveland that he be the first to receive
confidential law enforcement information and that he be the
person who determined whether to disseminate it to AP site
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 7 of 88

8
members, in part to avoid exposing the unlawful conduct. (Tr.
528, 610, 761-62).
The defendant had Royer, whom the defendant called “my
personal FBI agent,” appear on the AP site, under the name AP
Cork, so that Royer could verify to AP site members that the
information they received did indeed originate with the FBI.
(Tr. 441; 450). In addition to placing confidential law
enforcement information on the AP site and encouraging his
members to trade on the information, the defendant actively
worked with Royer to pry information from SEC personnel. (Tr.
329). He simultaneously ridiculed them - “I need a public
servant to wipe my boots.” (Tr. 421).
At the same time that the defendant was engaging in the
controlled dissemination of confidential law enforcement
information provided by his personal FBI agent, he routinely
sought to conceal his criminal conduct by purging chat logs that
contained such information. (Tr. 407; 452 (“Erase the log
Hansen”); 2488 “Be sure to purge the logs”; 2542 (ordering Hansen
to purge chat mistakenly placed on AP site concerning Nuclear
Solutions ("NSOL")).
B. The Devolution of the Defendant’s AP Site
The defendant’s racketeering enterprise revolved around
and depended on his AP site. Between December 1999 and April
2002, AP site members paid between $200 and $600 per month to
subscribe to the AP site. During that period, site fees totaled
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 8 of 88

9
$2,705,213.33. (GX-3002). While Robert Hansen, the AP site
administrator, believed that the AP site started as a “bona fide
research site,” its nature and purpose changed in late 2001,
starting with the dissemination of SEVU confidential law
enforcement information. (Tr. 2498). Kent Terrell testified
that, after the defendant was released from jail in October 2000,
the AP site began to focus on “scam stocks.” (Tr. 3813). While
the defendant cites Jeffrey Rubenstein’s testimony concerning the
emphasis of the AP site, Rubenstein testified that “he didn’t pay
close attention” to the specifics of the stocks about which
confidential law enforcement information was provided to AP site
members because he generally did not trade them. (Tr. 5880).
Rubenstein also conceded that InsideTruth - an integral part of
the defendant’s manipulative scheme - focused on “scam stocks.”
(Tr. 5932). The defendant himself stated in chat that the FBI
information was “what the site is all about. Fidelity and
bravery and insider selling.” (Tr. 584).
Further, while the defendant falsely told site members
that all site fees went to the maintenance of the site, in fact
the defendant paid Hansen only a small percentage of the fees for
Hansen’s services and site maintenance. (Tr. 2469, 2635). That
percentage started at 15%, but was reduced to 9% in early 2001.
(Tr. 2469, 2635, 2645).
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 9 of 88

10
C. The Defendant’s Personal FBI Agent
While the defendant would like this Court to focus its
attention on the relationship between Royer and Cleveland, the
evidence makes clear that the defendant, once involved in the
enterprise, made it his own. He did this, in part, by actively
cultivating his relationship with Royer. In February 2001, the
defendant invited Royer and Cleveland to the defendant’s house in
San Diego. (Tr. 552). While there, Royer told the defendant how
FBI investigations worked (Tr. 560); the defendant told Royer how
much money he had made from certain information provided by Royer
(Tr. 561); the defendant proposed to Royer that Royer work for
the defendant, and Royer accepted (Tr. 568-69); and Royer asked
whether the defendant could loan him money. (Tr. 569). On May
23, 2001, the defendant told the AP site that he was hiring a
“current FBI agent” to act as an investigator (which the
defendant conceded was a “conflict of interest” while Royer
remained with the FBI). (Tr. 621; GX-3311 “I’m hiring another
FBI Agent . . . he’ll have to leave the FBI at the time. . . . .
I’ve put a very lucrative deal in front of him”). On June 27,
2000, Royer, e-mailing the defendant about his prospective job,
wrote, “i want to make a million dollars a year . . . if you want
to make 20 million, then i will make 2.” (GX-2222).
In fact, it’s clear that Royer essentially worked for
the defendant well before he left the FBI at the end of December
2001. For example, on July 12, 2001, Royer e-mailed the
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 10 of 88

11
defendant, “Laughed my ass off at GAHI today. What a shit
company. Take care of Derrick on this one. He got some good
info in my opinion. Solomon Grey could potentially keep us in
business for a long time. Meanwhile, we can drive them crazy by
driving their dick in the dirt on all their turd deals.” (GX-
2093).
In the Summer of 2001, the defendant organized a trip
to Las Vegas with various AP site members - not including
Cleveland (Tr. 617) - and Royer joined them and stayed with the
defendant in his hotel room. (Tr. 616). Among other things,
during the trip Royer provided the defendant with confidential
law enforcement information concerning JUNM and further discussed
with the defendant Royer’s employment. (Tr. 617, 620). As part
of the Las Vegas festivities, the defendant and several AP site
members were photographed with Royer’s business card plastered to
their foreheads. (Tr. 617). After promising to pay Royer for
his trip expenses, the defendant eventually partially reimbursed
him. (Tr. 616, 620). Also during the Summer of 2001, and later,
the defendant and Cleveland discussed Royer’s ability to continue
obtaining confidential law enforcement information after he left
the FBI through Royer's girlfriend Lynn Wingate and another law
enforcement officer. (Tr. 800, 803).
Royer was sufficiently in the defendant’s pocket that
Royer wrote a letter to the defendant’s probation officer,
recommending early probation-termination, in which Royer falsely
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 11 of 88

12
claimed he was still an FBI agent. (Tr. 812). As is clear from
discussions about this letter, the defendant wanted to use
Royer’s position as an FBI agent in any way that satisfied the
defendant’s ends and Royer was willing to do anything to curry
the defendant’s favor. Thus, on August 14, 2001, the defendant
told Royer he would “need a letter saying how valuable I am to
the U.S. government . . . .” (GX-2104). Royer replied,
Can I start with something like Tony is so
cool he shits ice cubes or Tony is as
valuable to the U.S. Government as two-ply is
to toilet paper. Both of these statements
are true to the best of my knowledge. I know
I have to write a recommendation for you, but
when, where and how. It would be great if I
didn't have to due to some flunky finding out
about it later and holding it against us, but
whatever works, I know you don't want me to
leave the bureau before it is written, all I
want to know is if that will be in October,
April or next October.” (GX-2104).
Finally, in January 2002, both Royer and Cleveland
officially started working in the defendant’s office in San
Diego. (Tr. 837). The defendant even paid a portion of Royer
and Cleveland’s San Diego apartment rent. (Tr. 943).
D. The Scope of the Defendant’s Insider Trading Scheme
Royer provided Cleveland confidential law enforcement
information - not all of it associated with computer searches -
with respect to more than fifty companies. (Tr. 489). With
respect to the computer searches alone, between March 30, 2000
(BBAN) and March 4, 2002 (IMCL), Royer and Lynn Wingate
misappropriated and passed confidential law enforcement
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 12 of 88

3 Royer and Cleveland passed confidential law enforcement
information to the defendant, who then passed the information to
AP members, concerning the following stocks: Seaview (“SEVU);
Freedom Surf (“FRSH”) (Tr. 495); SoftQuad (“SXML”) (Tr. 508);
BioPulse (“BIOP”) (Tr. 529); GenesisIntermedia (“GENI”) (Tr. 538,
3874); Optimum Source (“OSIN”) (Tr. 579); Polymedica (“PLMD”)
(Tr. 595); Hercules (“HDBG”); Junum (“JUNM”) (Tr. 629, 3859);
Global Asset Holdings (“GAHI”) (Tr. 637); Flor Decor (“FLOR”)
(Tr. 735); Trident (“TDNT”) (Tr. 762); TTR Technologies (“TTRE”)
(Tr. 3870); Real Time Cars (“RTCI”) (Tr. 783, 3863); Hypermedia
(“NMNW”) (Tr. 788); Vital Living (“VLPI”) (Tr. 814); Eagle
Building (“EGBT”) (Tr. 3873); Nuclear Solutions (“NSOL”); BGI
Industries (“BGII”) (Tr. 906, 2542); Medi-Hut (“MHUT”); and
(“IVSO”) (Tr. 917). Royer and Cleveland passed confidential law
enforcement information to the defendant and Terrell concerning
the following stocks: (“BYTE”) (Tr. 516) and Jaguar (“JGUR”) (Tr.
646). Terrell put the BYTE and JGUR information on the AP site.
(Tr. 524, 646). Royer and Cleveland passed confidential law
enforcement information to the defendant regarding Sulphco
(“SLPH”), after which the defendant made an AP site trading call
on that stock. (Tr. 656-58, 672). As noted, the defendant also
received confidential law enforcement information regarding
Broadband Wireless (“BBAN”). By reviewing FBI records, Special
Agent Jack Liao was able to determine that Royer misappropriated
confidential law enforcement information for at least 37 stocks,
including all of the stocks mentioned in this footnote. (GX-JL-
1).
13
information on dozens of companies and individuals.3 On numerous
occasions, the defendant published some or all of this
information on the AP site. With respect to additional stocks,
the defendant’s co-conspirator, Kent Terrell, published
confidential law enforcement information on the AP site. On
other occasions, the defendant received confidential law
enforcement information but did not place it on the site.
After receiving confidential law enforcement
information from the FBI, the defendant himself traded in at
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 13 of 88

4 See Gov’t Sentencing Mem., Attachment 1. This
attachment shows trading by the defendant and his co-conspirators
in 32 of the at least 37 stocks for which confidential law
enforcement information was accessed by Royer and/or Wingate (the
government did not perform a trading analysis with respect to the
remaining 5 stocks).
14
least 23 stocks.4 The defendant actively encouraged AP site
members to do the same, in part to put downward price pressure on
the stocks and thereby increase the value of the defendant’s
short positions. As Cleveland described, AP was a short-selling
site where people were trading in the same way, causing downward
momentum in a stock. (Tr. 201). As the defendant expected of
them, members did, in fact, frequently follow the defendant’s
trading calls. (Tr. 2496, 2576, 3817 (members were “expected to
take – you know, the same positions that were the same as” the
defendant’s)). The defendant even told his co-conspirator
Terrell where to set up a trading account so that Terrell could
short sell stocks discussed on the AP site. (Tr. 3808).
Even the defendant’s trial witness, Peter Michaelson,
admitted that he knew that he has received and traded on material
confidential law enforcement information from FBI and SEC sources
on the AP site. (Tr. 5391, 5450, 5564). Michaelson further
stated that he believed others on the AP site traded on this
information as well. (Tr. 5878). Michaelson also testified that
he thought the defendant “lied all the time. Exaggerated,
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5 In fact, Michaelson’s testimony was riddled with
inconsistencies. When asked on cross-examination about his
direct testimony, Michaelson stated “I don't affirm or I don't
know what I said yesterday, I was really tired.” (Tr. 5478).
Q. So, are you saying that we should just disregard
your testimony from yesterday altogether?
A. I wish you would. (Tr. 5478).
15
enhanced. Made himself look good.” (Tr. 5476).5 Rubenstein
himself traded PLMD while in possession of confidential law
enforcement information. (Tr. 5868).
E. The Defendant’s Manipulation Scheme
In conjunction with his insider trading scheme, the
defendant actively engaged in manipulating share price in certain
stocks in order to enhance his profits. For example, the
defendant instructed AP site members to stop “hitting” SEVU stock
because he wanted to maintain the price at around $7/share and
threatened to cut off inside information if they did not obey.
(Tr. 340; 419-20; 424). With respect to SLPH, the defendant told
AP site members, “I want SULPH in the fives,” i.e., in the five
dollar range, so that he could get a cheap block of stock to
cover short positions. (Tr. 690, 694). In connection with with
his extortion of A. J. Nassar and FLOR, the defendant instructed
his site members on how and when to trade in order to
artificially set FLOR’s price. (GX-DC-163). Indeed, one of the
defendant’s goals was to use the SEC to halt trading in a stock,
a boon to short sellers. (Tr. 421).
The defendant sought to impose control on the flow of
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6 The defendant espoused this same view of the investing
public in an article entitled The Dumbass, The Daytrader, and the
New Democracy. (Def.’s Sentencing Mem., Exh. 5 (“‘The public is
there for one reason and one reason only,’ Anthony told me when I
got him on the phone. ‘To absorb the risk.’”)).
16

[continue] to be a thorn in everyone’s side I will pluck you
out”).
The defendant used his InsideTruth reports to further
his manipulative scheme. Rather than being a genuine research
tool, InsideTruth’s true purpose was to put out negative reports
on stocks that the defendant, his co-conspirators and site
members were shorting in order to cause those stocks to fall.
(Tr. 344, 726, 851 (purpose was “to do as much damage as we
possibly could”); 2578 (InsideTruth became “a trading vehicle”);
2588; 3819 (purpose of InsideTruth was “to put pressure on the
stock”)). The defendant also sent the reports to market makers
so that they would “back away” from the reported stocks. (Tr.
358). The defendant intended that InsideTruth garner a
reputation for “exposing a stock and causing the stock to
plummet.” (Tr. 2581).
InsideTruth sometimes included false publication dates
in order to persuade the public of InsideTruth’s importance, thus
exaggerating the potential impact of the defendant’s future
trading calls and reports. (Tr. 2591 (false dates as to BIOP,
GENI and EGBT reports); GX-3012, GX-3016, GX-3017, GX-3022, GX-
3022, GX-3024). In an InsideTruth report on GENI, the defendant
disseminated false information via InsideTruth regarding a
supposed relationship between Osama Bin-Laden and Adnan Kashoggi.
(Tr. 801; GX-3012 (InsideTruth initiated coverage on GENI “with
an immediate sell and a terrorist warning”)). In connection with
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18
GENI, prior to the publication of the InsideTruth report,
defendant told AP site members that “[w]e just raped the sheep.”
(Tr. 802). The defendant also disseminated false information
about Paul Brown’s criminal history, claiming that Brown - the
CEO of Nuclear Solutions (“NSOL”) - had three felony convictions
whereas he had only one conviction which had been expunged.
From the commencement of the prosecution of this case,
the defendant has argued that the mere dissemination of accurate,
negative information is insufficient to prove manipulation. He
has also argued that group trading, standing alone, is
insufficient to prove manipulation. This Court’s jury
instructions were consistent with those arguments. (Jury Charge,
Tr. 8845).
As summarized above, however, the government proved
much more than that. The defendant disseminated misappropriated
information to his site members, then instructed them on how to
use that information in their trading. He reprimanded members
when they disobeyed him. As the SEVU and SLPH examples noted
above illustrate, the defendant did this for the purpose of
achieving a particular stock price. The defendant engaged in
similar conduct with respect to FLOR. (GX-DC-163 (“GET the hell
off the bid on FLOR at 2.50 & leave the 2.45 bid. . . . you are
screwing up everything for everyone.”)). The defendant also
intentionally exaggerated the significance of his research
reports, in part through backdating them. The defendant lied to
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7 See Santa Fe Indus. v. Green, 430 U.S. 462 (1977)
(“Congress meant to prohibit the full range of ingenious devices
that might be used to manipulate securities prices.”); Gurary v.
Winehouse, 190 F.3d 37, 45 (2d Cir. 1999) (“gravamen of
manipulation is deception of investors into believing that prices
at which they purchase and sell securities are determined by the
natural interplay of supply and demand.”); United States v.
Mulheren, 938 F.2d 364, 368 (2d Cir. 1991) (expressing discomfort
with finding manipulation based on one trader’s intention to
benefit another, but noting that evidence of an agreement between
the parties would have made the case “much less troubling”);
Nanopierce Technologies v. Southridge Capital Management LLC,
2002 WL 31819207 (S.D.N.Y. Oct. 10, 2002) (combination of
manipulative intent and other indicia of manipulation, such as
trading timing and market domination, sufficient to state market
manipulation claim). Cf. GFL Advantage Fund, Ltd. v. Colkitt,
272 F.3d 189, 204 (3d Cir. 2001) (while short selling itself is
insufficient to show manipulation, intentional injection of
“inaccurate information” into market or creation of “false
impression” that prices are set by natural interplay of supply
and demand is sufficient).
19
his site members about the use of the site fees, again to give
the impression that he was a selfless “crusader,” thus further
exaggerating his influence. As Michaelson testified, the
defendant “lied all the time. Exaggerated, enhanced. Made
himself look good.” (Tr. 5476). As noted, he outright lied with
respect to GENI and Paul Brown. All of these deceptions served
to intentionally enhance the defendant’s ability to influence
trading and prices.
Taken together, the defendant’s actions artificially
impacted the market prices of the shares of companies he
targeted, putting the defendant’s actions squarely within the
definition of manipulative conduct.7
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20

explained that I’d have to cover Elgindy’s . . . shorts.”; GX-
3925 (the defendant to Brown, “I already made my deal. We’re
gonna exit . . . and I’m going to leave you alone because you’re
friends with Troy.”)).
Peters described to Brown that he and the defendant had
made the same sort of deal with A. J. Nassar at Flor Decor. (GX-
3915 (“Tony was shorting Floor Decor. And I, and I went through
the same gymnastics as as as we’re going through now. . . . So I
had Floor Decor sign an investment banking agreement with my
brokerage firm.”)). The defendant, through his co-conspirators,
told Brown to call Nassar to give Brown comfort that paying off
the defendant would make him go away. (GX-3911 (Nassar told
Brown, “Actually, [Elgindy] had been beating up a couple things I
was involved in and putting, you know crap out and uh, Troy
actually made it go away. . . . [Elgindy] is gonna lie, cheat,
steal and do whatever he can to drive your stock down)).
For that purpose, the defendant solicited from site
members an accounting of their NSOL short positions. (Tr. 889,
891, 2542 (“I am being offered a block of [NSOL] stock at $1.50.
Working on a better price. We either do it all together or we
don’t do it at all. . . . Oh shit. Hansen, erase this log”)).
The defendant then caused Brown to sign an agreement with Peters
in which Peters’s company, Valhalla Capital, would allegedly
provide investment banking services to NSOL in exchange for
unrestricted stock. (Tr. 3510). In fact, no such services were
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22
contemplated or provided. (Tr. 3530). Because Brown did not
provide the block of stock rapidly enough for the defendant’s
liking, he recommenced his short-selling campaign. (Tr. 3900
(“Dr. Brown will be my pregnant dog.”); GX-3923 (Peters told Brown, “I
just want you to know at this particular juncture . . . if [this
deal] doesn’t go down these guys are gonna declare war.”))
Finally, after NSOL provided the discounted block of stock to the
defendant, the defendant terminated coverage of NSOL. (Tr. 3901-
02 (“we are pulling out of NSOL”)). On April 8, 2002, having
learned that Brown had died in a car accident, the defendant
wrote, “yeah i must have killed him . . . thats how badlky i need
to make a buck . . . NSOL<—no longer banned.” (GX-DC-331). On
May 15, 2002, the defendant reminded his site members that NSOL
was back in play: “NSOLE<–short 15% @1.15. Don’t forget he CEO
Is no worm food . . . .” (GX-DC-341).
As the defendant agrees, the FLOR extortion scheme -
which occurred prior to the NSOL extortion - was very similar.
The defendant put extremely negative, confidential law
enforcement information about Nassar on the AP site. (Tr. 735,
739; GX-3463 (“najjar [sic] is under investigation for terrorism
links and rico”)). Based on that information, the defendant and
AP site members, at his direction, heavily shorted FLOR stock,
causing significant downward movement. Nassar believed that the
information posted by the defendant on the AP site caused FLOR’s
stock to drop and created a severe, potentially bankrupting
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23
problem for the company. (Tr. 3690). Nassar, therefore,
contacted David Slavney, who put Nassar in touch with Peters.
(Tr. 3692). Nassar asked Peters how to get rid of the defendant,
and Peters told Nassar he should offer the defendant a belowmarket
block of stock. (Tr. 3694). Nassar then signed an
investment banking agreement with Valhalla Capital that served no
purpose other than to transfer FLOR stock to the defendant to get
rid of him. (Tr. 3695-98; GX-1890). Later, the defendant
solicited from site members an accounting of their FLOR short
positions so that he could extort an appropriately-sized block of
stock from Nassar. (Tr. 739-41, 2537). The defendant exhorted
site members not to offer to purchase FLOR stock for a higher
price than the one he wanted for the block. (Tr. 743). After
negotiating that price, the defendant told site members to cover
their short positions at the arranged price, despite the fact
that some members thought the price would drop further. (Tr.
745, 755). The defendant agreed to “go away” if Nassar gave him
the block. (Tr. 756). When Nassar gave him the block, the
defendant terminated coverage. (Tr. 759).
G. The Defendant Functioned as an Investment Adviser
While the defendant denies that he acted as an
“investment adviser,” the defendant, as detailed above,
essentially told AP members what stocks to trade and when to
trade them. (Tr. 939). As Hansen testified, the AP “site
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24
basically offered stock advice. It offered trading advice.”
(Tr. 2472).
The Supreme Court's decision in Lowe v. Securities and
Exchange Comm'n, 472 U.S. 181 (1985) supports finding that the
defendant was an investment advisor. There, Lowe published three
newsletters that the Court held were "bona fide" publications
specifically excluded from the Investment Advisers Act because,
though they discussed buying and selling securities, they were
"completely disinterested, and [ ] were offered to the general
public on a regular schedule . . . ." Lowe, 472 U.S. at 206.
The Court explicitly differentiated the newsletters published by
Lowe from those that "were designed to tout any security in which
petitioners had an interest" or that were "timed to specific
market activity" because these type of publications were prone to
the "dangers of fraud, deception and overreaching that motivated
the enactment of the statute . . . ." Id. at 209-10.
Here, the defendant's trading calls on the AP site were
not offered to the public on a regular basis, were timed to
specific market activity - including the defendant's acquisition
of misappropriated information - and were anything but
disinterested. Moreover, unlike Lowe, the defendant responded
directly to the AP site members comments about particular
securities, hardly the "entirely impersonal" type of
communication the Court found excluded from the Act. Id. at 210.
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8 This figure was calculated as follows. The average
price for all sales occurring on the same day, but only after,
the defendant “front ran” or “traded against advice” was
calculated. The difference between that price and the price the
defendant obtained for his sales was then determined. That
difference was multiplied by the total number of shares sold by
the defendant to derive the profit realized by the defendant
25
H. The Defendant Front Ran and Traded Against Advice
AP members were told that the defendant did not trade
in front of trading calls and that the defendant always traded
consistently with his advice. (Tr. 194, 197, 2623). In fact,
Hansen came to believe that the defendant was doing both. (Tr.
2596). A comparison of the defendant’s trading calls and his
trading records demonstrates, as Hansen stated, that the
defendant regularly traded ahead of AP site broadcasts on
particular stocks. (Attachment 2; Tr. 4546; GX-DB-2; GX-2582;
GX-3001).
While the defendant demeans the jury’s guilty verdicts
with respect to the certain frontrunning and trading against
advice charges in connection with VLPI and INIV - he calls them
“‘gotcha’-type add-on charges” (Def.’s Sentencing Mem., p. 59) -
it remains that the jury did find the defendant committed those
crimes on at least some occasions.
The defendant also states that there were no profits
from these crimes. In fact, as shown in Attachment 3, on just
those instances where the jury convicted him of frontrunning and
trading against advice, the defendant made $31,877.80.8
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through frontrunning or trading against advice.
This figure, of course, greatly understates the
defendant’s profits from frontrunning and trading against advice
as it only accounts for the counts of conviction. Because these
profits are included in the defendant’s insider trading profits
and therefore do not increase the defendant’s gains for
sentencing purposes, however, the government has not calculated
the gain to the defendant for frontrunning and trading against
advice with respect to the other stocks in the indictment.
26
I. The Defendant’s Obstruction of Justice
The defendant wrote in chat, with respect to one of his
insider trading stocks, “[o]bstruction of justice very serious
stuff. Wouldn’t want to jeopardize safety of agent or anything.”
(Tr. 2504). Nonetheless, the defendant did not hesitate to
obstruct justice with respect to the FBI’s investigation of him.
Because the defendant understood that he was routinely
committing crimes and because Royer could and did provide
information to the defendant about criminal investigations of
others, the defendant had an obvious interest in keeping tabs on
whether he himself was under investigation. On several occasions
prior to September 2001, the defendant asked Cleveland to
determine from Royer whether the defendant was under
investigation (which Royer informed the defendant he was not).
(Tr. 483-84, 775). On various other occasions, the defendant
made this request directly of Royer. (Tr. 487).
In September 2001, Royer told Cleveland that the
defendant was under investigation for a serious matter
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27
independent of securities fraud. (Tr. 805). Royer and Cleveland
spoke about the matter many times, both before and after Royer
left the FBI in December 2001. (Tr. 806, 946). Royer told
Cleveland that the defendant had been reported to the FBI by two
individuals, Matthew Tyson and John Liviakis. (Tr. 807). Royer
also mentioned that FBI reports indicated that the defendant had
contributed to a Middle Eastern charity called “Mercy
International.” (Tr. 809). Royer similarly told Michael
Mitchell that the defendant was being investigated in connection
with money given to a Middle Eastern charity. (Tr. 3129).
At least some of this information was passed on to the
defendant. After Royer and Cleveland had moved to San Diego to
work with the defendant, Royer told Cleveland that he had given
some information to the defendant about the investigation, though
Royer had not provided specifics to the defendant. (Tr. 947).
That the defendant did possess knowledge about the investigation
was demonstrated when he spontaneously told Special Agent David
Sutherland in a post-arrest interview that he did not contribute
to Middle Eastern charities. (Tr. 4456).
Moreover, the defendant acted like someone who
understood he was being investigated by the FBI in connection
with a serious matter. While in San Diego working at the
defendant’s office in 2002, Cleveland saw the defendant handling
large sums of cash and witnessed him wiring money to Lebanon.
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9 The defendant argues that, because he told AP site
members that he was going to Lebanon, he was clearly not planning
to flee. (Def.’s Sentencing Mem., p. 100). The defendant,
however, frequently broadcast his criminal activities to site
members, then attempted to control further dissemination.
Additionally, he never told site members about the details of his
activities in Lebanon. Most significantly, as detailed, he kept
the matter secret from his probation officer. The defendant,
while he did eventually tell the probation officer that he had
been in Lebanon, did not do so until she had discovered the fact
from an FBI agent and directly asked the defendant where he had
been. (Tr. 3489).
28
(Tr. 957). Cleveland also witnessed a conversation between Royer
and the defendant in which the defendant asked Royer what would
happen if the defendant - without his supervising probation
officer’s permission - “fled” to Lebanon. (Tr. 959). The
defendant told Cleveland that Lebanon had “the best bank secrecy
laws in the world.” (Tr. 961). During Spring 2002, the
defendant asked Hansen to start wiring site fees to a bank in
Lebanon. (Tr. 2604; GX-3449).
In fact, the defendant, without permission from his
supervising probation officer, traveled to Lebanon in November
2001.9 (Tr. 3429-30; GX-3700, p. 20). During this period, the
defendant arranged for the purchase of an apartment in Beirut,
(GX-4617), which he did not communicate to the probation officer.
(Tr. 3501). Nor did the defendant disclose to her that he had
transferred $124,995 to a Lebanese bank account on one occasion,
(GX-1058; Tr. 3501), or $225,000 on a second occasion. (GX-371;
GX-3743; Tr. 3502-03). In addition, in October 2001, the
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10 That the defendant knew of the investigation and took
steps to alter his behavior is supported by an e-mail Royer wrote
the defendant on February 7, 2002, in which Royer stated “[w]e
definitely need some breathing room . . . I need to get a feel
for what the bureau is doing in regard to this whole ordeal. We
are so close, no need to screw things up.” (GX-2499). In that
same e-mail, Royer told the defendant, “Get some good facetime
with Derrick as he has lots on his mind.” (GX-2499). As
Cleveland testified, what was primarily on his mind in February
2002 was the FBI’s investigation into the defendant.
29
defendant opened a trading account in which he described himself
as a resident of Lebanon, and, in April 2002, arranged for the
transfer of significant assets to that account. (GX-1054; GX-
1055; GX-1058; GX-4011). Meanwhile, in February 2002, the
defendant requested that his supervising probation officer grant
him permission to travel to Lebanon for a second time, shortly
after which he told her he was quitting the “whistleblowing”
business. (Tr. 3498; GX-3700).
In order to further free himself from the scrutiny of
his probation officer, the defendant had Royer write a letter to
the District Court Judge in the Northern District of Texas
recommending the defendant for early supervised release
termination. (Tr. 3487; GX-3738). In the undated letter,
submitted to the court on January 11, 2002, Royer claimed to
write in his “capacity as a Special Agent with the Federal Bureau
of Investigation,” despite the fact that he had left the FBI the
prior December and was employed by the defendant, a fact he
conveniently omitted.10
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11 The defendant specifically (and falsely) informed his
pre-trial services supervising officer that he would travel to
San Diego on April 19, 2004, just two days later. (Tr. 4222-23).
30

August 2003 (GX-3815); a Sam’s Club card in the name of “Herbert
Velasco” of “Velasco Export” issued August 2003 (GX-3814); air
flight coupons issued in a number of different names; and
cellular phones subscribed in the name of Joseph Torelli and
Hisham Sadek (Tr. 3454).
Upon arrest, the defendant falsely maintained that his
name was Manny Velasco and that he was a jewelry dealer. (GX-
3800; GX-3801). When asked the identity of Amr Elgindy, whose
name appeared on various documents and prescriptions in the
defendant’s possession, the defendant claimed Elgindy was his
lawyer. (GX-3801). It was not until officials discovered a
California driver’s license bearing the defendant’s photograph
that he belatedly admitted his true identity.
II. THE HISTORY AND CHARACTERISTICS OF THE DEFENDANT
A. The Defendant’s Employment History and Cooperation with
Authorities
The defendant boasted to Royer and others that he had
been employed by boiler rooms and chop shops - including the
notorious Blinder, Robinson & Co. (“Blinder”) - promoting
overvalued penny stocks.12 (Tr. 2629, 5554, 7796). The
defendant met Troy Peters, who assisted the defendant in his
extortions of Paul Brown and A.J. Nassar, while working at
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32
Blinder. The defendant later worked at Thomas James &
Associates, again with Peters and David Slavney, another
participant in the extortion schemes. In 1991, Thomas James
terminated the defendant, later stating that he had violated
“investment-related statutes” and “rules of industry standards
and conduct.” (GX-3455, p. 74). In 1997, the defendant was
censured and suspended by the NASD, and ordered to pay a $30,000
fine, in connection with his entry of “non-bona-fide” trading
orders in 1995 while at AMR Securities. (GX-3455, p. 31). The
NASD revoked the defendant’s NASD registration when the defendant
refused to comply with its orders in connection with that matter.
(GX-3455, p. 35). Also in 1997, the State of Ohio refused to
license the defendant as a broker, concluding that he was of “not
of good business repute.” (GX-3455, p. 40). Additionally,
before his broker license was revoked, the defendant had a
history of customer complaints while at various brokerage firms,
including one brought by the defendant’s mother that he settled
for $30,000. (GX-3455, pp. 23-79).
On at least two additional occasions - with respect to
Alco International Group Inc. (“Alco”) and Conectisys Corp.
(“Conectisys”) - the defendant was an active participant in
securities fraud conspiracies. Moreover, while the defendant
touted at trial, and continues to tout, his role as a “crusader
for propriety in the marketplace,” (Def.’s Sentencing Mem., p.
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13 While the defendant also touts his relationship with
Brent Baker, (Def.’s Sentencing Mem. at 51-52), particularly as
regards the investigation of Sulphco, Baker’s testimony was in no
way consistent with the defendant’s characterization. When asked
on direct examination whether the Reno, Nevada FBI office was
investigating Sulphco based on information provided by the
defendant, Baker testified “I remember specifically to the
contrary.” (Tr. 5930).
While the defendant now attempts to gain credit for his
involvement in the NECO investigation, (Def.’s Sentencing Mem.,
p. 53, n. 18), SEC attorney Patrick Hunnius testified that the
defendant’s information did not assist the SEC in bringing a
securities fraud case with respect to NECO. (Tr. 6358). While
the defendant also attempted to gain credit for halting trading
in EGBT and NECO, he was not the reason trading was halted in
either of those stocks. (Tr. 6085, 6368).
With respect to OSIN, while the defendant claims credit
for providing information to SEC attorney Robert Tercero, Tercero
stated that he had already been looking at the company and that
the defendant’s information was not the reason Tercero opened a
formal Matter Under Investigation. (Tr. 6418). In any case, the
OSIN matter went nowhere. (Tr. 6418).
33
54), the details of his involvement with Alco and Connectisys
make abundantly clear that he was, in fact, forced to help
authorities to avoid prosecution himself.13
In May 1995, the defendant signed a cooperation
agreement in which he agreed to provide testimony against
individuals in connection with a fraudulent 1993 scheme to
promote Alco stock. (GX-4006; Tr. 7808; GXC-4001, p. 431 (FBI
report referencing the defendant’s cooperation in exchange for
immunity from prosecution)). In January 1997, the Assistant
United States Attorney handling the Alco case wrote to her
counterpart in Texas - where the defendant was being investigated
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14 In an ABC 20/20 piece broadcast on May 2, 1997, the
defendant, though he was not asked about taking cash bribes
himself, proudly stated that many of the brokers working at
Armstrong McKinley were receiving cash bribes from Richards to
pump up Alco. (Def.’s Sentencing Mem., Exh. 4). The defendant
went so far as to acknowledge that he saw the cash delivered to
the brokers for whom he - as an owner of the firm - was
responsible.
15 In a July 29, 1996 article in Forbes, appropriately
titled One Day Soon the Music’s Going to Stop, the author
recounted another incident in which yet another of the
defendant’s brokerages, Key West Securities, manipulated the
share price of WellCare Management Group. (Def.’s Sentencing
Mem., Exh. 3).
34
for insurance fraud - that the defendant, as co-owner of
Armstrong, McKinley & Co., “accepted bribes from Melvin Lloyd
Richards and Allen Stout to sell securities, that Richards and
Stout were promoting, to the firm’s customers.”14 (GX-4007).
On the second occasion, with respect to Conectisys, the
defendant was a member of a “daisy chain” manipulation in which a
number of traders sold short positions, one to another, creating
artificial downward pressure on the stock. (Tr. 6267). More
particularly, in 1996 an individual named Mike Zaman dictated bid
and offer prices to the defendant, who acted as a market maker,
and the defendant set the bid and offer at the dictated prices
despite the fact that they did not result from market forces.
(Tr. 6557-59). In fact, the SEC viewed the defendant as an
“accomplice” who “knowingly participat[ed] in transactions and
[took] actions that were in furtherance of a manipulation.” (Tr.
6277, 6559, 6561, 6567, 7269).15 The defendant himself, in
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35
testimony he gave during the SEC’s case against Zaman,
acknowledged that Zaman had told the defendant that Zaman’s firm
was pushing the stock to the firm’s retail customers. (DX-12169,
p. 370). The defendant admitted that Zaman told the defendant
what bid and offer prices to set, and further told the defendant
to move the prices up without regard for demand for the stock.
(DX-12169, p. 372).
In fact, when authorities did use the defendant to
assist them, they did so with justifiable caution. For instance,
FBI Special Agent Michael Gaeta used the defendant as a
confidential informant in December 1996 for only five days before
he shut him down due to his “questionable reliability.” (Tr.
4821, 6507). With respect to more recent “cooperation,” the
defendant, of course, never revealed to authorities with whom he
claims he was “working” that certain of the information he passed
them was illicitly obtained from his personal rogue FBI agent.
(Tr. 6083).
B. The Defendant’s Criminal History
As detailed in the Pre-Sentence Investigation Report
(“PSR”), the defendant committed insurance fraud in 1994 by
accepting disability payments when, in fact, he was actively
employed. (PSR, ¶ 154; GX-3702). Through his conduct, the
defendant defrauded the insurer of $55,366. (GX-3702). The
defendant pled guilty to mail fraud and was sentenced on May 15,
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16 The defendant was arrested on at least four additional
occasions and charged with crimes including “Grand Theft Auto,”
“Assault with a Deadly Weapon,” “Driving While Intoxicated” and
“False Report to a Peace Officer” between 1985 and 1997. On each
of these occasions, the defendant was not prosecuted. (PSR, ¶¶
162-169).
17 The PSR also noted that, while the defendant was
diagnosed with Major Depression in 1994, at least one
psychologist concluded “that the defendant was very likely
exaggerating or fabricating his depressed mental condition
. . . .” (PSR, ¶ 185).
36
2000. He was sentenced to four months’ incarceration and three
years’ supervised release. (PSR, ¶ 154).16
C. The Defendant’s History of Bipolar Disorder
The defendant relies heavily on his diagnosis of
bipolar disorder as a mitigating sentencing factor. (Def.’s
Sentencing Mem., pp. 6, 27-29, 112 (listing the defendant’s
disorder as one of the “most relevant factors” supporting a
sentence of five years or less)). The defendant, however, has
done little to mitigate the alleged effects of his disorder on
himself and his family members.
The defendant was initially diagnosed with bipolar
disorder in June 1993.17 (PSR, ¶ 184). According to his
sentencing submission, at that time the defendant “finally began
therapy and started to learn how to deal with the severity of
[his] mood swings.” (Def.’s Sentencing Mem., p. 28). Despite
his stated concern for his family, surely addressed by his
treatment, the defendant stopped seeing a therapist in 1995.
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18 In his sentencing memorandum, the defendant also writes
at length about his good works on behalf of Kosovar refugees.
(Def.’s Sentencing Mem., pp. 21-27). These same good works -
together with his son’s condition - formed the basis for the
downward departure motion made by the defendant at his 2000
sentencing. After hearing from several witnesses, some of whom
vigorously disputed the defendant’s narrative concerning his
beneficence, the sentencing judge rejected the downward departure
motion and pronounced the evidence regarding the defendant’s
37
(Def.’s Sentencing Mem., p. 28). He did not recommence therapy
until after he was arrested in the instant case, seven years
after he had ceased treatment, even though his disorder was
addressed in connection with his sentencing on the insurance
fraud conviction in 2000. (Def.’s Sentencing Mem., p. 28).
Meanwhile, the defendant - rather than seeking help for
his acknowledged problems - was apparently engaged in destructive
behavior. (Def.’s Sentencing Mem., Exh. 16 (“By his own
admission - online and in interviews - he drank too much, partied
too much, and cheated on his wife.” “In 1996, Mrs. Elgindy filed
for divorce.”) Moreover, the defendant states that one of his
sons, who suffers from Tourette’s Syndrome and Attention Deficit
Hyperactivity Disorder, has been particularly (and
understandably) impacted by the defendant’s incarceration and the
possibility of a lengthy jail term. (Def.’s Sentencing Mem., p.
30-31). The defendant, however, emphasized his son’s disorders
in asking for a downward departure in connection with the 2000
insurance fraud sentencing, attaching some of the same reports he
now offers for this Court’s consideration.18 (Def.’s Sentencing
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humanitarian efforts “murky.” (See Attachment 4 (May 15, 2000
Minutes of Sentencing Proceeding), p. 117-18). The judge also
stated, “[t]here is a reason why you have these people willing to
come here and testify against you as they have. I don’t see that
very often, especially in sentencing.” (Attachment 4, p. 124).
38
Mem., Exh’s 7, 14). Despite his stated concern for his son and
his other family members, immediately upon his release from jail
in October 2000, the defendant - rather than mending his ways for
their sake - became the leader of a criminal enterprise.
D. The Defendant’s Lack of Remorse
Despite being convicted for racketeering, conspiracy to
commit securities fraud, extortion and other crimes, the
defendant accepts no responsibility for his conduct. Instead, he
has smeared prosecutors and proclaimed his innocence on one of
the very websites, Silicon Investor, where he found fame as an
allegedly former - but obviously unreconstructed - criminal.
For at least the period between November 2, 2005
through January 14, 2006, the defendant has caused e-mails he has
written to be posted on the “Dear Anthony” thread he started on
the Silicon Investor website. Those e-mails are attached hereto
as Attachment 5. Following is a handful of excerpts:
• “The trial had nothing to do with the truth . . .
Witnesses were intimidated from day one. The search
for justice took a back seat to a prosecutor’s
ambition, rabid zeal and refusal to concede the truth.”
(Attachment 5A, 11/2/05, p. 37).
• “The prosecution was more interested in destroying my
character than presenting evidence.” (Attachment 5C,
12/2/05).
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19 The government refers this Court to sealed records
submitted during pre-trial litigation.
39
• “I lost to hatred, prejudice and a ‘convict at all
cost’ methodology . . . .” (Attachment 5C, 12/2/05).
• “I have publicly made allegations of serious misconduct
by former AUSA Ken Breen and Seth Levine.” (Attachment
5D, 12/11/05).
• “[M]y Insidetruth report, ‘The trial crimes of
Cleveland and Breen’ will be released first to the US
Attorney General’s Office, the US Attorney’s Office in
Brooklyn, and to the Honorable Raymond Dearie.”
(Attachment 5D, 12/11/05).
• Referring to Cleveland and suggesting that prosecutors
suborned perjury, “It is my firm belief that not only
myself, but you, Breen and Levine all know what you did
. . . .” (Attachment 5D, 12/11/05).
• Referring to former Assistant United States Attorney,
Kenneth Breen: “The real terrorist is out there,
walking free, having used my life as a spring-board
into the private sector, doing exactly what he found so
distasteful by Royer.” (Attachment 5E, 12/23/05).
• “Isn’t this all being done so they can finally lynch
the nasty Arab guy?” (Attachment 5F, 1/14/06).
As this Court knows, the government was extremely restrained in
its presentation of evidence touching on certain aspects of this
defendant’s conduct.19 For this defendant, who finds it
impossible to mind his own store, to lash out by impugning the
government’s integrity is unjust and irresponsible. It is,
however, sadly consistent with the defendant’s need to wrongly
castigate others while minimizing his own misdeeds, a theme that
runs through his sentencing submission.
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40

--------------------------------------------------------------------------------
Re: SEC v. PCBM et al., Div. No. 8:02-CV-822-T-EAJ
Post by sandi66 on Jan 9, 2012, 9:13pm

AMR I. ELGINDY - Page Two

in the case of a jointly undertaken criminal activity
(a plan, scheme, endeavor, or other enterprise
undertaken by the defendant in concert with others,
whether or not charged as a conspiracy), all reasonably
foreseeable acts and omissions of others in furtherance
of the jointly undertaken criminal activity.
The defendant here stands convicted of being a member of a
racketeering conspiracy - indeed, he was its leader - and of a
securities fraud conspiracy spanning the period March 2000
through April 2002. As detailed above, that conspiracy involved
the defendant’s dissemination of an enormous volume of
misappropriated, confidential law enforcement information upon
which the defendant traded and upon which he instructed others to
trade. While the defendant was convicted of fraud with respect
to only four individual stocks - putting aside his convictions
for frontrunning and trading against advice - the record
demonstrates that the defendant and his co-conspirators traded
on, disseminated information regarding, and manipulated the price
of dozens of stocks. Moreover, the defendant caused, indeed
commanded, his site members, wittingly or not, to trade on the
basis of confidential law enforcement information.
As the enterprise’s leader, the defendant was
intimately involved in trading, disseminating information on, and
manipulating most of those stocks. On some occasions, however,
the defendant was made aware of confidential law enforcement
information on which he did not trade. On other occasions, while
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42
co-conspirators received and traded on confidential law
enforcement information, the defendant was not made privy to it.
But it is fundamental to both the “relevant conduct” standard
cited above and the law of conspiracy that a conspirator may be
held responsible for the acts of his co-conspirators, whether or
not he was aware of, or caused, each of those acts. That is all
the more appropriate here, where the defendant was the
conspiracy’s leader. Any claim that the defendant did not
foresee that others would trade on or disseminate misappropriated
information other than in the instances in which he himself did
so is meritless.
A. Use of Acquitted Conduct and The Standard of Proof for
Relevant Conduct
The defendant contends that, in sentencing him, i) this
Court should disregard acquitted conduct; and ii) this Court
should rely only on conduct proven beyond a reasonable doubt.
The defendant is wrong on both counts.
Initially, the defendant - in keeping with his desire
for this Court to ignore the big picture - maintains that his
sentence depends solely on his convictions for trading in four
stocks. The defendant, however, was convicted of racketeering
and securities conspiracies whose object was to steal law
enforcement information, trade on it, disseminate it and
otherwise use it for corrupt ends. The object of those
conspiracies was to steal information not about four stocks, but,
over more than two years, about dozens of stocks. The jury
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43
convicted the defendant of that conduct. That the jury acquitted
the defendant of substantive securities fraud counts as to two
stocks - putting aside the separate counts of frontrunning and
trading against advice - does not impugn the jury’s verdict as to
the broad activity of which it found the defendant guilty. In
sum, the scope of the “acquitted conduct” about which the
defendant concerns himself is highly circumscribed.
Even as to the acquitted conduct, in United States v.
Vaughn, 430 F.3d 518 (2d Cir. 2005), the Second Circuit held
that, just as in the pre-Booker world, a sentencing court could
consider such conduct when sentencing a defendant. Vaughn, 430
F.3d at 526-27 (noting that, in doing so, the Second Circuit was
joining the Seventh, Tenth and Eleventh Circuits). The Court
reasoned that the Supreme Court’s decision in United States v.
Watts, 519 U.S. 148 (1997), holding permissible the use of
acquitted conduct for sentencing, survived Booker. Id. at 526.
Because district courts may make factual findings for sentencing
purposes by a preponderance of the evidence, conduct need not be
disregarded because a jury did not find the defendant guilty of
that conduct beyond a reasonable doubt. Id. Although the Second
Circuit noted that use of acquitted conduct for sentencing
purposes was not mandatory, it did not suggest that such conduct
could be rejected out of hand. Id. at 527. Rather, the Court
stated that the fact of acquittal may be relevant in assessing
the “weight and quality” of evidence presented. Id.
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20 The defendant argues that this is a so-called
“pipeline” case in which a defendant should receive the benefits
of Booker but not be burdened with the retroactive application of
Booker’s remedial opinion. (Def.’s Sentencing Mem., p. 64, n.
21). As the defendant concedes, in Vaughn, 430 F.3d at 524-25,
the Second Circuit addressed this matter squarely and held that
retroactive application of the remedial opinion did not violate
due process.
44
In Vaughn, the Second Circuit also reaffirmed that the
proper standard of proof for determining relevant conduct was a
preponderance of the evidence. Id. at 525. The Court stated
that, before Booker, the preponderance standard was consistent
with due process. Id. The Court then succinctly held that
“[n]othing in Booker or its predecessors undermines our binding
precedent.”20 Id.
The defendant cites United States v. Cordoba-Murgas,
233 F.3d 704 (2d Cir. 2000), to support his position that a
standard more rigorous than preponderance of the evidence should
apply if uncharged or acquitted relevant conduct has a
significant influence on the guidelines calculation. (Def.’s
Sentencing Mem., p. 65). In fact, Cordoba-Murgas reaffirmed that
a sentencing court is “required to employ the preponderance of
the evidence standard” to determine relevant conduct and remanded
the case because the district court, in a case in which the
defendants were subject to life imprisonment under the
guidelines, had not done so. Id. at 709 (the Court held that the
remedy, if the defendant could show an “extraordinary combination
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21 The defendant’s argument is relevant only if this Court
chooses to employ Section 2B1.1 to calculate the defendant’s
sentence. Should the Court disagree with the government's and
probation's analyses that Section 2B1.1 applies, and instead uses
Section 2B1.4, the 2001 and 2004 Guidelines Manuals produce the
same result.
22 Guidelines Section 1B1.11(b)(3) and associated
commentary state that if a defendant commits multiple crimes, the
Guidelines manual in effect at the time the later crimes were
committed is applicable. This is the so-called “one-book rule,”
and it has been approved by the Second Circuit. See United
States v. Keller, 58 F.3d 884, 890 (2d Cir. 1995); United States
v. Stephenson, 921 F.2d 438, 441 (2d Cir. 1990) (“Applying
various provisions taken from different versions of the
Guidelines would upset the coherency and balance the Commission
achieved in promulgating the Guidelines.”). But see United
States v. Johnson, 1999 WL 395381 (N.D.N.Y. June 4, 1999), aff’d,
221 F.3d 83 (2d Cir. 2000) (the Second Circuit did not address
the Ex Post Facto issue); United States v. Santopietro, 166 F.3d
88, 95 (2d Cir. 1999) (the Second Circuit raised, but did not
answer, the Ex Post Facto issue with respect to multiple-count
convictions).
This provision is found in both the 2001 and 2004
Guidelines Manuals, and it placed the defendant on notice at the
45
of circumstances,” was for the sentencing court to depart
downward).
B. The One-Book Rule
The defendant contends that the probation officer erred
in calculating the defendant’s sentence based on the November
2004 Guidelines.21 (Def.’s Sentencing Mem., pp. 88-92).
Instead, the defendant argues, he should be sentenced for the
racketeering and conspiracy charges based on the November 2001
Guidelines, and for the false statements charges based on the
November 2004 Guidelines. For the reasons set forth in the
margin, the defendant is wrong.22
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time of his earlier crimes that commission of future crimes could
negatively impact his guidelines sentence as to all his crimes.
That the defendant’s crimes committed prior to May 2002 and those
committed after May 2002 may not be “groupable” - in other words,
may not be part of a common scheme or plan (see Guidelines
Section 3D1.2) - is made specifically irrelevant under Section
1B1.11. See Guidelines Section 1B1.11, Application Note 2 (the
“one-book rule” “should be followed regardless of whether the
offenses of conviction are the type in which the conduct is
grouped,” as the Ex Post Facto Clause “does not distinguish
between groupable and nongroupable offenses”); United States v.
Butler, 429 F.3d 140, 153 (5th Cir. 2005) (in rejecting
defendant’s Ex Post Facto argument based on application of a
later Guidelines manual to “two sets of discrete charges,” the
Court cited Application Note 2's commentary on “groupable” and
“nongroupable” offenses). Because the key to the Ex Post Facto
Clause is notice, the defendant’s Ex Post Facto arguments fail.
See, e.g., United States v. Sullivan, 255 F.3d 1256, 1262 (10th
Cir. 2001) (in discussing Section 1B1.11(b)(3), Court noted that
“the central concern of the Ex Post Facto Clause is fair notice
to a defendant”).
46
C. Guidelines Calculation for Securities and Wire Fraud Charges
As detailed above, the government proved at trial that
the defendant manipulated the market in the stock of numerous
securities. The government believes, therefore, that the
probation department properly applied Section 2B1.1 of the
Sentencing Guidelines in calculating the defendant’s Guidelines
sentence. (PSR, ¶ 110).
Consistent with the PSR, the government submits that
Racketeering Acts 1 through 7, Counts 2 through 6, and Counts 21,
29 and 32 - the securities and wire fraud charges - should be
considered together. (PSR, ¶ 109). See Guidelines Manual, §
3D1.2(d). As noted above, the “relevant conduct” associated with
these charges for sentencing purposes includes acts counseled,
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47
aided or caused by the defendant, and all reasonably foreseeable
acts in furtherance of jointly undertaken activity. The
Guidelines Manual states that the “court must first determine the
scope of the criminal activity the particular defendant agreed to
jointly undertake.” See Guidelines Manual (2004), Application
Note 2. Here, the defendant was convicted of being a member of
the Elgindy Enterprise, whose members, from March 2000 through
May 2002, conspired to profit from insider trading, manipulation
and extortion. The defendant was the epicenter of this
enterprise. When Cleveland first obtained misappropriated
information from Royer, he passed it to the defendant. Cleveland
did so because he knew that the defendant could make the scheme
profitable by using the power of his AP site.
The defendant did just that. He actively solicited
misappropriated information from Cleveland and Royer. He fed
that information to his members and instructed them to trade on
it. He recruited Royer to work with him, enticing Royer with the
promise of millions of dollars. He manipulated the market for
stocks by, among other means, controlling his members’ trading
activities and by publishing reports timed to place artificial
pressure on stock prices and to exaggerate his own influence. As
Michaelson, the defendant’s own witness, testified the defendant
“lied all the time. Exaggerated, enhanced. Made himself look
good.” (Tr. 5476). The defendant also used the misappropriated
information to extort shares from Paul Brown and A. J. Nassar.
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23 The government believes that, as part of the overall
scheme, gains attributable to frontrunning/trading against advice
should be aggregated with these other gains attributable to the
defendant’s securities fraud conduct. The defendant made
$31,877.80 through his frontrunning/trading against advice just
in those stocks with respect to which he was convicted for this
48
In short, the defendant was the leader of the Elgindy
Enterprise. While most of the trading on inside information was
a result of the defendant’s direct participation in the
enterprise - by obtaining that information from Royer and
Cleveland, trading on it, and passing it to his members - there
were occasions on which he was not made privy to the information.
Given the scope of the defendant’s participation, however, it was
certainly foreseeable to the defendant that others would trade on
misappropriated information obtained from Royer or Cleveland as
part of the enterprise. While the defendant attempted to make
sure that he was always the first recipient of all the
misappropriated information, the defendant knew that Cleveland
sometimes passed it to others first. In some cases, that
information was published on the AP site. Thus, under the
“relevant conduct” provisions of the Guidelines manual, the
defendant is responsible for both his own insider trading and
that of all those individuals who traded on the misappropriated
information.
For purposes of calculating the defendant’s gains in
connection with his enterprise, the government looks to two
sources:23 1) trading in stocks for which he and his co-
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activity. (Attachment 3). Because these stocks are among the 32
stocks used to calculate the insider trading gains, however, they
are reflected in the defendant’s trading gains.
49
conspirators had confidential law enforcement information and 2)
revenue from AP site fees. See Guidelines Manual (2004), §
2B1.1, Application Note 3(B) (defining gains broadly as those
"that resulted from the offense").
1. Trading Gains
The defendant effectively contends that, because the
government did not charge dozens of separate substantive
securities fraud charges, this Court is now required to ignore
the real nature and scope of the defendant’s crimes and limit the
“loss” calculation to the defendant’s personal trading in SEVU,
OSIN, JUNM and PLMD. (Def.’s Sentencing Mem., p. 74). The facts
established at trial belie that contention.
a. The Relevant Stocks
Royer provided Cleveland confidential law enforcement
information - not all of it associated with computer searches -
with respect to more than fifty companies. (Tr. 489). Royer
misappropriated computerized confidential law enforcement
information with respect to more than dozens of companies and
individuals, as verified by the FBI computer audit. (GX-JL-1).
With respect to at least 23 of these companies, the defendant
himself traded in their stocks after receiving misappropriated
information. (See note 3, infra). With respect to numerous
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24 With respect to at least five additional stocks - CPFS,
CTI, PCBM, SMTV and WEWW - Royer ran searches and provided
information to Cleveland. (GX-JL-1). Any trading in those
stocks is not included in the calculation.
50
companies, the defendant knowingly passed misappropriated
information to AP site members. (See note 2, supra). With
respect to several additional companies, the defendant obtained
misappropriated information but chose not to disseminate it on
the AP site. (See id.).
Because the government has not performed a trading
analysis on each of the stocks about which Royer misappropriated
and disseminated confidential law enforcement information, the
government has limited its “gain” calculation to the 32 stocks
listed on Attachment 1.24 The government proved at trial, beyond
a reasonable doubt but at least by a preponderance of the
evidence, that Royer and/or Wingate misappropriated and
disseminated confidential law enforcement information to the
defendant and others pertaining to each of these 32 stocks.
(Jury Charge, Tr. 8838; see note 2, supra; GX-JL-1).
Additionally, lest it be forgotten, the jury convicted the
defendant of being a member of a racketeering enterprise and a
securities fraud conspiracy - covering the period in which the
information on these 32 stocks was misappropriated - whose very
purposes were to manipulate stock prices and to disseminate and
trade on misappropriated information.
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51
The government also proved, beyond a reasonable doubt
but at least by a preponderance of the evidence, that the
confidential law enforcement information about the 32 stocks was
material. (Jury Charge, Tr. 8839-40). Cleveland described the
misappropriated information obtained from Royer as the “best
information that a person could get a hold of.” (Tr. 217). The
defendant himself stated that the misappropriated FBI information
was “what the site is all about. Fidelity and bravery and
insider selling.” (Tr. 583). Because of the source of the
misappropriated information, the fact that some of it, in some
form, was available in the public domain did not diminish its
materiality. (Tr. 3839). That the defendant and his coconspirators,
on many, many occasions, traded in stocks after
procuring misappropriated information itself supports a finding
of that information’s materiality.
b. The Relevant Traders
The defendant contends, however, that, even if the
government can prove the dissemination of material, non-public
information as to these 32 stocks, the government cannot show
that the defendant or others traded “on the basis of” that
information except as to SEVU, OSIN, PLMD and JUNM. (Def.’s
Sentencing Mem., p. 75).
This Court instructed the jury that a trade made “on
the basis of” non-public information means a trade made when the
trader “was aware of the material non-public information” and
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52
“the information in some way informed the investment decision.”
(Jury Charge, Tr. 8841-42). In fact, as this Court noted, that
charge was generous to the defendant, given the Second Circuit’s
approval of “knowing possession” of misappropriated information
as sufficient to establish the connection between that
information and the purchase or sale of securities. See United
States v. Teicher, 987 F.2d 112, 120 (2d Cir. 1993) (citing
several reasons why a “knowing possession” standard is
appropriate for insider trading cases); (Colloquy, Tr. 7709 (“I'm
going further than I might go, as the Second Circuit states,
Teicher”)); 17 C.F.R. §10b5-1(b) (as of October 23, 2000, the SEC
had adopted the Teicher rule as part of its rules-promulgating
function: “Definition of ‘on the basis of.’ Subject to the
affirmative defenses in paragraph (c) of this section, a purchase
or sale of a security of an issuer is ‘on the basis of’ material
nonpublic information about that security or issuer if the person
making the purchase or sale was aware of the material nonpublic
information when the person made the purchase or sale”).
The defendant himself traded in 23 of the 32 stocks
after confidential law enforcement information was obtained by
Royer. Cleveland traded in many of those stocks as well. While
the defendant suggests that he should not be responsible for
these “upstream tippers,” (Def.’s Sentencing Mem., p. 77), the
Application Note to the insider trading guideline clearly states
that “gain” means “the total increase in value realized through
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53
trading in securities by the defendant and persons acting in
concert with the defendant or to whom the defendant provided
insider information. . . .” See Guidelines Manual (2004),
Section 2B1.4, Application Note (emphasis added). Here, the
defendant was convicted of being a member of a racketeering
enterprise and a securities conspiracy whose membership included,
among others, Royer, Wingate and Cleveland. The defendant,
however, reads the guidelines’ “acting in concert” language as if
this case involved a discrete series of unconnected frauds rather
than the racketeering and conspiracy for which the defendant was
convicted. See also Section 1B1.3(a)(1)(B) (defining “relevant
conduct”). On most occasions, the defendant was a direct
participant in the acquisition and dissemination of
misappropriated information. On some occasions, the acquisition
and dissemination of that information occurred without his direct
participation. Nonetheless, particularly given the scope of the
defendant’s involvement in the criminal enterprise, he is
responsible for Royer’s, Wingate’s and Cleveland’s trading.
The defendant also seeks to deny responsibility for his
“downstream tippees.” Again, the guidelines - both Section
2B1.4's Application Note and Section 1B1.3's definition of
relevant conduct - demonstrate that the defendant is responsible
for the trading of, at a minimum, Hansen, Terrell, Jonathan Daws,
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25 See also Securities and Exchange Commission v. Tome,
638 F. Supp. 638, 639 (S.D.N.Y. 1986). In Tome, the defendant
contended that he should not be responsible for trades made by
his “tippees” because he “did not benefit financially from the
tippees’ transactions.” Id. The court rejected the contention
that a financial benefit to the tipper is necessary to hold him
liable for the tippees’ trades. Id. To the extent some benefit
is required to hold a tipper liable for the tippees’ trades, here
the defendant was handsomely benefitted by the AP site fees paid
by his tippees. (GX-3002).
26 Cleveland communicated confidential law enforcement
information to Jonathan Daws while the defendant was incarcerated
in 2000. (Tr. 254). Daws (AP site member handle “Archer”) spoke
with Royer while Royer and Cleveland were staying with the
defendant in San Diego. (Tr. 575). The defendant arranged for
Royer to speak with Daws about OSIN. (Tr. 580). Cleveland
believed it would be useful to involve Daws in the sharing of
confidential law enforcement information because Daws was “one of
the big guys” on the AP site. (Tr. 581). Daws has admitted to
conspiring to commit securities fraud and, in particular, to
trading on inside information he knew to be misappropriated from
the FBI. (Def.’s Sentencing Mem., Exh. 1, pp. 21-22). Royer
told Cleveland that Daws had asked Royer to gather confidential
law enforcement information on Imclone (“IMCL”). (Tr. 925).
Royer then asked Wingate to run computer searches related to
IMCL. (Tr. 926). Royer also tried to pry confidential
information from FBI Special Agent Catherine Farmer regarding
Imclone. (Tr. 2901).
54
Kendall McGreggor, David Slotnick and Jeffrey Thorpe.25 As the
defendant concedes, Daws,26 Hansen and Terrell have admitted to
trading on the basis of misappropriated information received and
disseminated by the defendant. (Def.’s Sentencing Mem., pp. 76-
79). While, on occasion, Daws, Hansen and Terrell may have
obtained misappropriated information outside the usual pattern -
Royer to Cleveland or the defendant to AP site members - the
defendant is nonetheless responsible for all their trading as the
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27 When Terrell obtained misappropriated information
directly from Cleveland - a practice the defendant, who wanted
the information first, actively discouraged - Terrell put the
information on the AP site. The defendant’s maintenance of the
corrupt site, and its emphasis on the dissemination of
misappropriated information, thus made Terrell’s actions
possible.
28 McGreggor did not join the AP site until several months
before the defendant's arrest. However, as early as September
14, 2000, Daws ("Trebuchet" or "Archer" on RC) told McGreggor
("Leto" on RC), David Slotnick ("Hemo" on RC) and others on the
RC chat room that Daws had an FBI contact, "a friend of a
friend." On March 1, 2001, Daws told RC site members, including
McGreggor, that he had spoken with the FBI agent regarding OSIN.
(Daws noted, "Insider trading is illegal.") The following day,
McGreggor asked Daws for additional information about the FBI's
interest in OSIN. Daws responded, "FBI agent is the one AP does
a lot with," and gave his name as "Jeff Rory," information which
McGreggor stated was "great to know." On March 16, 2001, Daws
identified "Derrick" as an "AP guy" with "the FBI friend" who
"feeds Derrick info on scam company investigations." Daws told
McGreggor, Slotnick and others that he had asked Derrick to have
"Jeff the FBI guy" look at SLPH. On April 9, 2001, McGreggor
asked Daws whether information on HDVG was coming "from your ap
site friend with an FBI friend," and Daws offered to check. On
May 22, 2001, McGreggor, Slotnick and others discuss JUNM
information from the AP site, which "AP claim[s] he got . . .
from 'US.Gov't.'" On this occasion, McGreggor asked Daws to
follow-up with the defendant, and Daws told McGreggor "I am going
to call you about JUNM." After that, Daws gave information to
the RC site about his conversation with the defendant concerning
FBI information on JUNM. On May 24, 2001, Slotnick posted to RC
members, including McGreggor, that REFR "is supposedly under some
sort of FBI investigation." On April 23, 2002, Daws told RC
members, including McGreggor, that "Jeff [Royer] is the one who
gave us the Ft. Worth SEC contact for BGII." Finally, on May 22,
2002, after the defendant was arrested, McGreggor asked his
fellow RC members, "do you think i have any liability for being a
subscriber for the last few months on the ap site?" (All
referenced RC chat logs are gathered as Attachment 6).
29 David Slotnick (AP site member handle “Ectopy”)
actively engaged in discussions on the AP website concerning
55
leader of the Elgindy Enterprise.27
As to McGreggor,28 Slotnick29 and Thorpe,30 they were
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stocks about which confidential law enforcement information was
disseminated, including BGII (Tr. 4085), NSOL (Tr. 4052), SEVU
(Tr. 1250, 1446) and EGBT (Tr. 1619, 4037, 4047). Slotnick was
Cleveland’s “best friend” on the AP website, (Tr. 3924), and he
understood that information posted on the site was obtained from
the FBI. (Tr. 2514 (Slotnick wrote on the AP site, “[a]m I the
only one here without a personal FBI agent.”); GX-RH-9 (Slotnick
on chat logs while Royer is in “AP Cork” persona as disclosed FBI
agent)). Slotnick, Terrell and Cleveland were privy to
confidential law enforcement information from Royer regarding
REFR, but that information was not passed to the defendant. (Tr.
648-50, 1819, 3871). REFR, however, was a stock initially
brought to Cleveland’s attention through his participation on the
AP site.
30 Jeffrey Thorp (AP site member handle “Mweka”) actively
engaged in discussions on the AP website concerning stocks about
which confidential law enforcement information was disseminated,
including TDNT, (Tr. 765-76; GX-DC-143, 144, 145, 146, 147), IVSO
(Tr. 918-24; GX-DC-322, 324, 325), EGBT (Tr. 1662; GX-DC-301,
305, 306), VLPI (GX-DC-229) and NSOL (GX-DC-243).
56
active participants on the AP and RC sites who received and
traded on misappropriated information.
In fact, limiting the relevant traders to just these
eight individuals is likewise generous to the defendant. As the
defendant himself recently stated, “[m]y site had between 150-200
people logged on at any given time during market hours . . . .”
(Attachment 5A, 11/2/05). The defendant disseminated
misappropriated law enforcement information on numerous stocks to
his site members. He did so for the very purpose of inciting
them to trade in these stocks, in part because, having his own
short position, he could profit from the downward pressure caused
by site members’ short selling. Without having to determine
whether any of these individuals were themselves exposed to
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57
“tippee” liability, the defendant certainly understood and
profited from the fact that site members were trading on
misappropriated information. Through the defendant’s scheme,
hundreds or thousands of individual counter-parties to his site
members’ trades were materially disadvantaged by the defendant’s
criminal acts. The defendant should, therefore, properly be
charged with his site members’ gains in stocks they traded after
he disseminated misappropriated information on the AP site.
Unfortunately, the scope of the defendant’s scheme makes it
extremely difficult to calculate these gains. While those gains,
therefore, have not been used to calculate the defendant’s
guidelines sentence, this Court can consider them as a basis for
an upward variance under T. 18, U.S.C., Section 3553(a).
c. The Relevant Trades
As the defendant correctly states, the proper start
date for calculating insider trading profits is the date on which
confidential law enforcement information was disseminated.
(Def.’s Sentencing Mem., p. 81). Unlike the defendant, however,
the government has used two sets of start dates.
For the defendant, Royer, Cleveland and Wingate, the
start date for calculating trading gains is the date on which the
misappropriated information was first accessed by Royer or
Wingate. (GX-JL-1). There is ample evidence in the record of a
pattern in which Cleveland obtained information from Royer and
quickly passed it to the defendant. On some occasions, the
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58
defendant obtained information directly from Royer. The
defendant proposes that, instead of the access date, this Court
should look at the date information was first posted on the AP
site. That makes little sense because the record demonstrates
that the defendant did not always disseminate misappropriated
information to AP site members on first receiving it (in some
instances, he did not disseminate the information at all).
For Daws, Hansen, Terrell, McGreggor, Slotnick and
Thorpe, the government agrees for sentencing purposes that the
start date for calculating insider trading gains should be the
date information was first posted to the AP site.
The defendant argues that the end date for calculating
gains should be three days after the misappropriated material
first appeared on the AP site. (Def.’s Sentencing Mem., p. 82).
The government disagrees. For the reasons specified below, the
government has calculated trading gains by including all trading
in the relevant stocks after misappropriated information was
first accessed.
As this Court explained in its jury instructions,
information remains non-public “until it is disseminated in a
manner sufficient to insure its availability to the investing
public or to insure that the market has had an opportunity to
‘absorb’ [it] such that the company’s stock price has already
adjusted to reflect the information.” (Jury Charge, Tr. 8839).
Unlike in cases where an individual trades on advance knowledge
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59
of a negative earnings report or a glowing magazine article, the
information misappropriated by Royer and disseminated by the
defendant was made public only when the defendant chose to do so
for his own ends. Indeed, the defendant actively controlled the
dissemination of the misappropriated information in order to
insure that it became public only as he dictated - in part to
conceal his criminal activity - and threatened to penalize anyone
who crossed him.
The defendant contends, however, that the market
absorbed the information through AP site members’ trading.
(Def.’s Sentencing Mem., p. 82). This is an interesting
contention, as it concedes the government’s argument that the
defendant’s dissemination of misappropriated information
invariably caused site members to heavily trade on that
information as the defendant instructed. The defendant’s theory
that the negative information is fully absorbed into a stock
price - let alone the stock price of 32 different companies - in
three days, however, is sheer speculation. See Securities
Exchange Commission v. Mayhew, 121 F.3d 44, 50 (2d Cir. 1997)
(discussing “impounding” in context of corporate merger); United
States v. Libera, 989 F.2d 596, 601 (2d Cir. 1993) (discussing
“impounding” in context of publication of information in magazine
article). It may be that people disadvantaged by the
asymmetrical access to the misappropriated information see a
buying opportunity as the stock price drops. It may be that
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31 Another problem with the defendant’s methodology is
that, after initially placing misappropriated information on the
AP site, the defendant frequently posted additional information,
sometimes on multiple occasions. (GX-JL-1). It is not clear
how, or whether, the defendant’s methodology accounts for this.
60
insiders with an interest in the company’s share price support
it. It may be that, on certain occasions, AP site members’ short
selling of a particular stock was light in those first three
days. In any case, there is no evidence that the misappropriated
information was fully “impounded” into the stock price within the
first three days after it was first posted to the AP site.
The defendant also argues that, after three days,
inside information likely would not “motivate” someone’s trade
and that “the connection between the trade and the information
becomes too attenuated.”31 (Def.’s Sentencing Mem., p. 82). To
meet the standard for insider trading, however, the trader need
only be aware of non-public information that “in some way
informs” his or her investment decision. As noted above, the
information used and disseminated by the defendant was not made
public unless and until he said so. And, as the jury found, this
information clearly informed trading decisions. (Colloquy, Tr.
7709 (“It will not be a ‘but for’ type of instruction but
something along the lines of the information playing some part or
informing the investment decision. The government doesn't have
to prove but for this information these trades would not have
occurred, [that] obviously goes way too far.”)). This is
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61
particularly true here where the defendant, speaking to the same
audience to whom he provided misappropriated information,
routinely discussed stocks over weeks or months after providing
misappropriated information. To the extent that AP site members
continued to trade those stocks, their decisions must have been
informed by the information to which their membership made them
privy.
For these reasons, the government’s insider trading
gains calculation includes all trades (including losing trades)
in any of the 32 stocks made: as to the defendant, Royer,
Cleveland and Wingate, after the information was first
misappropriated by Royer; and, as to Daws, Hansen, Terrell,
McGreggor, Slotnick and Thorpe, after the information was first
disseminated on the AP site.
d. Total Insider Trading Gains
Based on the methodology articulated above, the gains
attributable to the defendant from trading on misappropriated
information are $3,017,317.86. (Attachment 1).
2. Revenue from AP Site Fees
The defendant earned $2,705,213.33 from the inception
of the AP site in December 1999 through its termination in May
2002. (GX-3001). Of that, the defendant earned $1,608,273.33
between October 2000 and May 2002. (Attachment 7). The
defendant argues, however, that only a small fraction of the AP
site was dedicated to misappropriated law enforcement
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62
information. (Kelner Aff., pp. 8-9). Moreover, the defendant
does not include any AP site fee revenue in his guidelines
calculations.
And yet, the defendant was found guilty of operating a
racketeering enterprise, and the engine of that enterprise was
the defendant’s AP site. The reason Cleveland initially
contacted the defendant to share misappropriated information was
because of the power of the site. Once on board, the defendant
disseminated the misappropriated information to site members.
The defendant told the site members how and when to trade on the
misappropriated information, and he tightly controlled its use.
Indeed, the defendant himself described his site fees as a
substitute for profits on trading he gave up to AP site members.
(GX-3312 (“I’m gonna give up X amount of dollars in gains on my
Trades. And in order to share that with more people . . . that’s
whey the Site was created, and why there was a charge. So what I
give up on fills, I make up in the site fees.”)). While the
defendant now claims that only a tiny fraction of his site was
dedicated to misappropriated information, Cleveland, Hansen and
Terrell described how the site changed to covering “scam”
companies in October 2000 when the defendant was released from
prison. While the AP site had members prior to the defendant's
participation in the Elgindy Enterprise, the site’s membership
declined while he was in jail. Regardless of the percentage of
trading calls and broadcasts associated with the stocks about
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63
which the defendant had misappropriated information, the nature
of that information was a significant part of the AP site.
Moreover, the defendant’s success as a stock
manipulator was due, in part, to the manner in which he deceived
AP site members about site fees. While he told members that
their fees went in their entirety to maintain the site, that was
patently false. In fact, in early 2001, the percentage of those
fees that went to site maintenance fell from 15% to 9%. It is
far less likely that members would have paid the defendant
hundreds of dollars a month had they known it went to line his
pockets. The defendant’s deception allowed him to maintain the
myth that he was providing an exclusive service largely to
benefit his members, as opposed to enrich himself. That gave him
an exaggerated influence he undoubtedly would not otherwise have
enjoyed. That exaggerated influence, manifest in his instructing
his members when and how to trade, together with the exaggerated
influence the defendant claimed for InsideTruth, enabled the
defendant to artificially impact stock prices.
In addition, the defendant’s own trading in
misappropriated stock was assisted by his use of the AP site.
Because he was able to influence stock prices through
dissemination of misappropriated information, he benefitted by
being able to cover his short positions at advantageous prices.
The AP site, in sum, lies at the very heart of the
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64
defendant’s racketeering enterprise and securities fraud schemes,
and the defendant obtained the revenues from it - at least those
generated from October 2000 through May 2002 - because of those
schemes.
3. Offense Level for Securities and Wire Fraud Charges
The base offense level is 7. See Guidelines Manual
(2004), § 2B1.1. The total gains from the offense attributable
to the defendant are $4,625,591.19 ($3,017,317.86 from trading
and $1,608,273.33 from site fees), resulting in an adjustment of
18 levels. See Guidelines Manual (2004), § 2B1.1(b)(J). The
defendant's insider trading and manipulation scheme harmed untold
trading counterparties - the "sheep" that the defendant "raped" -
and thus a 6 level enhancement is appropriate. See Guidelines
Manual (2004), § 2B1.1(b)(2)(C). The defendant acted as an
investment advisor to his site members, telling them when and how
to trade, an integral part of his scheme; a 4 level enhancement
is therefore warranted. See Guidelines Manual (2004), §
2B1.1(b)(15)(A)(iii). Finally, the defendant clearly used
sophisticated means to effect his scheme, including orchestrating
site member trading and timing release of information in order to
control stock prices. An additional 2 level "sophisticated
means" enhancement is thus appropriate. See Guidelines Manual
(2004), § 2B1.1(b)(9)(C). The total offense level for the
securities and wire fraud charges, excluding the enhancements
discussed below, is 37.
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32 This figure was derived by taking the price of each
NSOL trade (as reported on the audit trail provided by the NASD)
executed on January 31, 2002, multiplying that by the number of
shares traded, then dividing by the total number of shares
traded. This calculation excludes the shares transferred to the
defendant as part of the extortion. The defendant employs a
similar methodology, but uses NSOL’s closing price. The
government submits that the average price for the day is the
better measure of the price at which the defendant could have
obtained shares. Indeed, it is an extraordinarily generous
price, because an open-market purchase of 325,000 shares in a
single day in the stock of a small company undoubtedly would have
driven the price much higher, thus significantly increasing the
value of the extorted, discounted shares.
65
D. Guidelines Calculation for Extortion Counts
1. Proceeds from Extortion
a. NSOL
On January 31, 2002, as part of the extortionate scheme
of which he was convicted, the defendant purchased a covering
NSOL block of 325,000 shares for $327,146.75. (Tr. 4502). The
trade was executed at $1 per share (the additional $2,146.75 was
commissions). On January 31, 2002 NSOL had an opening price of
$1.71 per share, and closed at $1.40. The average price for the
day was $1.56.32 The government submits that the defendant’s
gain from the NSOL extortion was, therefore, $182,000 at a
minimum. Once again, this number is extremely generous to the
defendant. There is no evidence in the record that the defendant
ever paid a single dime for the discounted NSOL stock.
b. FLOR
As the defendant agrees, the FLOR extortion scheme was
very similar to that involving NSOL. In fact, the jury convicted
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66
the defendant of an extortion conspiracy that encompassed the
defendant's scheme to extort A. J. Nassar and FLOR. Just as he
did with Brown and NSOL, the defendant put extremely negative,
confidential law enforcement information about Nassar on the AP
site. (Tr. 735, 739). Based on that information, the defendant
and AP site members, at his direction, heavily shorted NSOL
stock, causing significant downward movement. Nassar believed
that the information posted by the defendant on the AP site
caused FLOR’s stock to drop and created a severe, potentially
bankrupting problem for the company. (Tr. 3690). In order to
get rid of the defendant, therefore, Nassar signed a bogus
investment banking agreement with Valhalla Capital that served no
purpose other than to transfer FLOR stock to the defendant. (Tr.
3695-98; GX-1890). After negotiating the price for the extorted
FLOR stock, the defendant told site members to cover their short
positions at the arranged price. (Tr. 745, 755). When Nassar
gave the defendant the extorted block of shares, the defendant
terminated coverage. (Tr. 759).
As this Court instructed the jury, to prove extortion,
the government must show: 1) wrongful receipt of property; 2) by
actual or threatened economic injury; and 3) an effect on
interstate commerce. (Jury Charge, Tr. 8864). Whether the
information he disseminated was truthful or not, the defendant
misused misappropriated information to place artificial selling
pressure on FLOR stock by exhorting his site members to short it.
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67
Nassar credibly testified that he was very concerned that the
defendant’s continued dissemination of this negative information
would have a material adverse impact on FLOR. The defendant then
used the threat of continued negative publicity to wrongfully
obtain a block of FLOR stock through a bogus investment
agreement, designed to conceal the reality of the extortion.
After the transaction was completed, the defendant terminated
coverage of FLOR.
The defendant argues that, because the information was
accurate, this cannot constitute extortion. But accurate
information - in this case, information misappropriated by a
corrupt FBI agent - wrongfully employed to create economic fear
can constitute extortion. In this case, the defendant had no
right to the information and no right to the benefit he received
therefrom.
The defendant further argues that the defendant
purchased the FLOR stock at the market price. That market price,
however, was orchestrated by the defendant. The defendant told
members to short FLOR based on misappropriated information. They
followed his instructions. When the defendant was negotiating
the price of the extorted shares, he tightly controlled site
members’ trading. The defendant told site members, “GET the hell
off the bid on FLOR at 2.50 & leave the 2.45 bid. . . . you are
screwing up everything for everyone.” (GX-DC-163). Once
arrangements were made, he told them, “FLOR we can all cover at
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68
2.45.” (GX-DC-164). “Thank you for the FLOR profits and on we
go. . . . Shot i think i did good in makin sure we didn’t have to
fight each other to buy em back.” (GX-DC-165). The defendant
clearly exercised his ability to control the price of FLOR stock
by telling his members how and when to trade. Had the defendant
failed to exercise that power, the price at which the defendant
and the AP membership would have been able to cover their
positions would have increased. As the defendant himself stated,
by extorting the FLOR block, he ensured that site members
realized profits because they “didn’t have to fight eachother to
buy em back.”
Through his FLOR extortion, the defendant purchased a
block of 100,000 shares. Because the block and any payment made
for it are difficult to trace, the government submits that the
defendant’s (modest) gains in FLOR should serve as a substitute.
The government submits, however, that this number is woefully
inadequate to capture the gains associated with the FLOR
extortion, as the defendant orchestrated profitable covering
trades for the numerous site members who he had instructed to
sell FLOR short.
As shown in Attachment 1, the defendant made $17,514.17
in FLOR trading on misappropriated information.
c. Total Gains from Extortion Scheme
The government agrees with the defendant that the
appropriate guidelines section is 2B3.3, carrying a base offense
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69
level of 9. The combined gains in the scheme to extort Brown and
Nassar of NSOL and FLOR shares are $199,514.17. See Guidelines
Manual (2004), § 3D1.2, Application Note 4 (discussing combining
quantities for similar crimes that are part of a common scheme).
The total offense level for the extortion scheme, excluding the
enhancements discussed below, is 18.
E. Guidelines Calculation for the Defendant’s Crimes Committed
While Released on Bail
The government agrees with the defendant’s conclusion
that his crimes committed while released on bail, to which the
defendant pled guilty, result in a total offense level of 7.
(Def.’s Sentencing Mem., pp. 102-03). Some portion of the
sentence associated with these crimes must be served consecutive
to the term imposed on the other charges. See 18, U.S.C., §
3147.
While the guidelines sentence associated with the bailrelease
case is comparatively light, it is worth noting that the
defendant - thumbing his nose at this Court’s authority -
committed yet another federal crime while out on bail during an
attempt to flee prosecution. This Court, should it choose to do
so, could sentence the defendant to 10 years imprisonment for
this crime consecutive to any term imposed on the racketeering
and securities fraud charges. See id.
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33 Royer himself lied to FBI Special Agent Gonzalez in an
interview conducted December 17, 2001, in which Royer denied ever
passing sensitive law enforcement information to the defendant.
(Tr. 4640-41).
70
F. Enhancements
1. Obstruction of Justice
a. Pre-Arrest Conduct
Prior to September 2001, the defendant routinely had
Royer determine from FBI files whether the defendant was under
investigation. In September 2001, Royer told Cleveland that the
defendant was under investigation. Royer and, after he left the
FBI, Wingate accessed information about the investigation on
numerous occasions. Royer and Cleveland spoke about the matter
many times, both before and after Royer left the FBI in December
2001. Royer gave Cleveland certain details about the
investigation, including that the defendant had contributed to a
Middle Eastern charity called “Mercy International.”
After Royer and Cleveland had moved to San Diego to
work with the defendant, Royer told Cleveland that he had given
some information to the defendant about the investigation. The
defendant’s knowledge about the investigation was clear from his
spontaneous post-arrest statement to Special Agent David
Sutherland that he did not contribute to Middle Eastern
charities.33
The defendant also acted like someone who understood he
was being investigated by the FBI in connection with a serious
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34 Cleveland’s testimony on this subject was corroborated
by the FBI agents who searched the defendant’s business at the
time of his May 2002 arrest. They found $42,900 in cash and a
stash of gold jewelry. (Tr. 4130-31; GX-137).
71
matter: he handled large sums of cash;34 he wired money to
Lebanon; he asked Royer what would happen if the defendant “fled”
to Lebanon; he told Cleveland that Lebanon had “the best bank
secrecy laws in the world;” he asked Hansen to start wiring AP
site fees to a bank in Lebanon; he traveled to Lebanon, without
his probation officer’s permission, in November 2001; he arranged
for the purchase of an apartment in Beirut, which he failed to
tell his probation officer; he transferred $124,995 to a Lebanese
bank account, which he also failed to tell her; he transferred an
additional $225,000 to a Lebanese bank account, which again he
failed to tell her; he opened a trading account in which he
described himself as a resident of Lebanon, and arranged for the
transfer of significant assets to that account; he asked his
probation officer for permission to travel to Lebanon for a
second time, shortly after which he told her he was quitting the
“whistleblowing” business; and he had Royer write a letter in
which Royer falsely claimed to be a current FBI agent to the
court in Texas recommending the defendant for early supervised
release termination.
The defendant also actively deceived this Court by
representing, through his lawyer, that he “had no intention of
before he traveled to Egypt in the fall of 2001 to travel to
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35 Stroud holds that “mere flight in the immediate
aftermath of a crime, without more, is insufficient to justify a
section 3C1.1 obstruction of justice enhancement.” Stroud, 893
F.3d at 507 (emphasis added).
36 That the defendant prepared to flee is evident from his
deception of his probation officer, his attempt to terminate
supervised release early, his purchase of property in Lebanon,
his transfer of funds thereto, his creation of a trading account
72
Lebanon. . . .” (See Aug. 22, 2002 Hearing Transcript, pp. 112-
13). Only after that hearing, the purpose of which was for the
defendant to secure pre-trial release, did the government
discover from AP site chat logs that the defendant had planned
his Lebanon excursion in advance of late-October 2001 trip to
Egypt. (GX-3497 (from October 10, 2001, “why dont ya meet me in
egypt . . . or lebanon”); GX-3499B (from October 23, 2001, a site
member asked the defendant “what part of Lebanon u going to?”)).
Under Section 3C1.1, an obstruction enhancement should
be applied where “the defendant willfully obstructed or impeded
or attempted to instruct or impede, the administration of justice
during the course of the investigation. . . .” While “mere
flight from arrest” is insufficient to support a finding of
obstruction under Section 3C1.1, see United States v. Stroud, 893
F.3d 504, 506 (2d Cir. 1990),35 conduct that has the “potential
to impede” the investigation or prosecution of a defendant is
sufficient. See United States v. Khimchiavili, 372 F.3d 75, 80
(2d Cir. 2004) (citing United States v. McKay, 183 F.3d 89, 95
(2d Cir. 1999)). Here, the defendant did much more than prepare
for his escape.36 The defendant, who had frequently received
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in which he described himself as a resident of Lebanon, and his
stockpiling of cash and jewelry. That evidence is supported by
the defendant’s 2004 attempt to flee.
37 The defendant also obstructed justice in at least one
additional way. He provided “materially false information to a
judge or magistrate” when he lied, through his lawyer, about his
trip to Lebanon. See Guidelines Manual (2004), § 3C1.1,
Application Note 4(f) (enhancement appropriate for “providing
materially false information to a judge or magistrate”). That
misrepresentation was designed not only to influence this Court’s
bail decision, but also was relevant to the obstruction charges
against the defendant. See Khimchiachvili, 372 F.3d at 80
(misrepresentation in financial affidavit for appointed counsel
lacked “obstructive intent”).
73
information from Royer about investigations into the defendant’s
activities, clearly did so here as well. He then altered his
behavior in light of the information he received by traveling and
transferring funds, in part the illicit proceeds of his crimes,
to Lebanon and by communicating to his probation officer that he
was quitting the “whisteblowing” business. Monitoring an
investigation and changing behavior accordingly, in addition to
preparing to flee, is sufficient to warrant an enhancement under
Section 3C1.1.37
b. Post-Arrest Conduct
The defendant’s post-arrest conduct, for which he pled
guilty, provides an independent basis for applying an obstruction
enhancement as to the racketeering and securities conspiracy
counts. Taken together with the pre-arrest conduct, there is
more than ample evidence to support that enhancement.
On April 17, 2004, the defendant attempted to flee by
assuming the identity of “Manny Velasco,” by gathering $25,000 in
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74

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Re: SEC v. PCBM et al., Div. No. 8:02-CV-822-T-EAJ
Post by sandi66 on Jan 9, 2012, 9:14pm

AMR I. ELGINDY - Page Three

repeatedly stole information from the FBI and SEC about dozens of
companies and individuals, traded on that information,
disseminated it to others and used it to manipulate the
securities market. The defendant, Royer, Wingate, Cleveland,
Hansen, Terrell and Daws were all convicted of participating in
the enterprise in one form or another. Peters has been indicted
on charges relating to the enterprise’s extortion scheme.
McGreggor, Slotnick, Thorp and dozens of others traded on
misappropriated information obtained through the enterprise.
By any measure, the enterprise was extensive. The
defendant was its leader.38 The guidelines provide examples of
those factors relevant to determine whether a defendant was an
“organizer or leader.” They include the defendant’s “exercise of
decision making authority,” “the nature of participation in the
offense,” “the degree of participation and planning or organizing
the offense,” “the nature and scope of the illegal activity,” and
the “degree of control and authority exercised over others.”
All of these factors were present in the defendant’s
conduct. He actively solicited misappropriated information from
Cleveland and Royer, and frequently directed their efforts to
particular companies and individuals. He offered Royer
employment and an opportunity to make millions of dollars in
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76
order to maintain the pipeline of misappropriated information.
He disseminated that information to Daws, Hansen, Terrell,
McGregor, Slotnick and Thorp, not to mention his hundreds of AP
site members. He orchestrated his members’ trading activity to
maximize the utility of the misappropriated information and to
manipulate stock prices. He published false and misleading
research reports to exaggerate his influence in the market. He
frequently told his members precisely how and when to trade the
stocks of the companies he targeted as part of the enterprise.
Indeed, it was the defendant’s very ability to provide
this kind of leadership that caused Cleveland to contact him in
March 2000 with the initial piece of misappropriated information
Cleveland received from Royer. The defendant immediately
verified Cleveland’s source, recognized the value of the
information he could obtain, and began his orchestration of this
massive fraud. A leadership enhancement as to the racketeering
enterprise is therefore appropriate.
b. Extortion Conspiracy
The defendant’s role in the extortion conspiracy was
equally significant. He placed misappropriated law enforcement
information, obtained from Royer, on his AP site. He directed
his site members to heavily short NSOL and FLOR stock. The
defendant personally harassed Brown, then negotiated with him for
the discounted block of stock that was his payoff for going away.
When he saw an opportunity to squeeze Brown and Nassar, he took
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77
it by arranging for the purchase of cheap shares for both himself
and his site members. The activity involved, besides the site
members who covered their positions with extorted shares, Royer
and Cleveland, who were the source of the misappropriated
information used by the defendant to extort the shares; and
Slavney, Peters and Roland Chapin who communicated to the
extortion victims how they could get rid of the defendant and who
arranged for the phony agreements that concealed the extortion
scheme.
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 77 of 88

39 Pursuant to Section 2E1.1 of both the 2001 and 2004
Guidelines Manuals, a racketeering conviction carries a minimum
base offense level of 19. That level is only relevant if is
lower than the offense level calculated separately for the
underlying racketeering acts. See Guidelines Manual (2004), §
2E1.1(a)(2). Because the latter calculation produces a higher
guidelines number, it is employed herein.
Under the former, however, all counts would be grouped
together under the racketeering activity except for the
frontrunning/trading against advice counts, which were not
charged as part of the racketeering enterprise, and the false
statement counts. The racketeering counts, including
enhancements for leadership role and obstruction, produce a
guidelines level of 25. The frontrunning/trading against advice
counts, only accounting for gains made on the counts of
conviction, produce an (understated) total offense level of 19.
See Guidelines Manual (2004), § 2B1.1 (Base Offense: 7; “Loss”
greater than $30,000 (Attachment 3): 6; more than 50 “site
member” victims: 4; sophisticated means: 2). The false statement
counts produce a total offense level of 7. (See Section III(E),
supra).
Under the grouping rules, the total offense level would
be 26 (under Sections 3D1.3 and 3D1.4, the RICO would constitute
one “unit,” the securities counts ½ “unit,” and the false
statement count would be disregarded). In Criminal History
Category III, the defendant would be facing a guidelines range of
78 to 97 months, with some portion of the incarceration of 4 to
10 months for the bail-release case to follow.
78
G. Final Offense Level39
Securities and Wire Fraud
Base Offense Level (2B1.1(a)(1)) 7
Plus: Gains from Offense (2B1.1(b)(1)(J)) 18
Plus: Greater than 250 Victims (2B1(b)(2)(C)) 6
Plus: Sophisticated Means 2
Plus: Investment Advisor (2B1.1(b)(15(A)(iii)) 4
Plus: Leadership Role (3B1.1(a)) 4
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79
Plus: Obstruction (3C1.1) 2
Adjusted Offense Level: 43
Extortion
Base Offense Level (2B3.3) 9
Plus: Gains from Offense (2B1.1(b)(1)(F)) 10
Plus: Leadership Role (3B1.1(a)) 4
Plus: Obstruction (3C1.1) 2
Adjusted Offense Level: 25
Bail-Release Offenses
Base Offense Level (2B1.1(a)(2)) 6
Plus: Commission of Offense on Release (2J1.7) 3
Less: Acceptance of Responsibility (3E1.1(a)) -2
Adjusted Offense Level: 7
Total Offense Level After Grouping
Securities and Wire Fraud Total Adjusted Level 43
Plus: Unit(s) Based on Extortion 0
Total Adjusted Offense Level: 43
H. Criminal History Category
In his submission, the defendant calculates different
criminal history categories applicable to his racketeering case
and his false statements case. A defendant’s criminal history,
however, should be calculated based on the entirety of that
history as of the date of sentence. There is no reason,
therefore, to apply different categories to the two cases.
The government agrees with the defendant and the PSR
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 79 of 88

40 If this Court does not follow the “one-book” rule, the
calculation, applying 2001 Guidelines Manual to everything but
the bail-release case, would be as follows: base offense level 6;
a “loss” greater than $2,500,000, plus 18; more than 50 victims,
plus 4; sophisticated means, plus 2; leadership role, plus 4;
obstruction, plus 2. Total adjusted offense level 36, for a
guidelines range, in Criminal History Category III, of 235 to 293
months incarceration (plus some portion of the incarceration
associated with the bail-release case to follow).
If this Court uses Section 2B1.4 (“insider trading”
guidelines), rather than Section 2B1.1, the 2001 and 2004
Guidelines Manuals produce the same results, as follows: base
offense level 8; a gain greater than $2,500,000, plus 18;
leadership role, plus 4; obstruction, plus 2; grouping (extortion
calculated as ½ unit under Section 3D1.4), plus 1. Total
adjusted offense level 33, for a guidelines range, in Criminal
History Category III, 168 to 210 months incarceration (plus some
portion of the incarceration associated with the bail-release
case to follow).
80
that the defendant should receive 2 criminal history points for
the 2000 fraud conviction; 2 points for committing the instant
offense while under a criminal justice sentence; and 1 point for
committing the instant offense less than two years after release.
(PSR, ¶¶ 156-59; Def.’s Sentencing Mem., p. 87).
For an individual in Criminal History Category III, the
guidelines imprisonment range for an offense level of 43 is
life.40 To the extent it is relevant (as some portion of it is
required to be served consecutive to any other sentence imposed),
in Criminal History Category III, the guidelines imprisonment for
the false statements case (offense level 7) is 4 to 10 months.
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81
I. Upward Departures
1. Disruption of Governmental Function
The above guidelines calculation results in a heavy
sentence, yet it takes no account of the very essence of the
defendant’s crime. He actively assisted in the corruption of an
FBI agent in one of the most serious breaches of trust in the
FBI’s history. Jeffrey Royer used his privileged position as an
FBI agent to access confidential law enforcement information on
hundreds of occasions for personal gain. Certain of the
investigations Royer compromised involved undercover agents and
cooperating witnesses. When Royer left the FBI to work with the
defendant - lured by the prospect of millions of dollars - the
defendant made sure that Royer found a successor, Lynn Wingate,
who would continue funneling misappropriated information to the
defendant.
The defendant, in March 2000, immediately saw and
seized upon this opportunity to benefit himself from Royer’s
despicable actions. The defendant disseminated misappropriated
information to hundreds of others so that he could benefit from
their trading and their membership fees. The defendant ensured
that the stream of misappropriated information would continue by
promising riches to Royer. The defendant recognized that he
could use Royer, a corrupt and corruptible agent, for his own
ends. Thus, the defendant invited Royer to his San Diego home to
show off the defendant’s wealth. With respect to the promised
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82
employment, the defendant prolonged his employment negotiations
with Royer while he made sure that Royer lined up a replacement
source of law enforcement information and wrote a letter to get
the defendant’s probation terminated early. The defendant
invited Royer to a Las Vegas “meeting,” then had himself and
others photographed with Royer’s card plastered to their heads.
The defendant referred to Royer as his “personal FBI agent.” The
defendant went so far as to have Royer falsely claim to be a
current FBI agent in a letter to the court in Texas so that the
defendant - who was in the midst of committing crimes with Royer
- could terminate his supervised release on his Texas conviction
early.
Perhaps most significantly, because of Royer’s
relationship with the defendant, Royer tapped into the FBI
computer to find information about an extremely serious and
sensitive investigation of the defendant. Royer passed on what
he learned to Cleveland and, at least to some extent, to the
defendant himself.
The FBI is only able to function because it has the
trust of the public. To maintain that trust, the FBI depends on
the integrity of its agents. As the defendant himself wrote on
his website, through his participation in Royer’s corruption, he
tried to alter the FBI’s motto from “Fidelity, Bravery, and
Integrity” to “Fidelity, Bravery and Insider Selling.” (Tr.
584). The SEC was also compromised by the defendant’s conduct.
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83
The defendant actively encouraged Royer to use his position to
pry information from SEC attorneys. The defendant himself used
the information he obtained from Royer, and his history as an
alleged “crusader for propriety in the marketplace,” to gather
confidential SEC information so that he could trade on it and
pass it along to his site members. Moreover, the relationship
between the FBI and SEC - one that is extremely important in
policing the securities markets - was significantly damaged by
the defendant's conduct.
This case encompasses one of the most egregious
instances of corruption of governmental functions in recent
history. The true nature of the criminal conduct here would
justify a sentence above the guidelines, either as an upward
departure under Section 5K2.7 or as a variance under T. 18,
U.S.C., § 3553(a). See also Guidelines Manual (2004), § 2C1.1
(Bribing Public Officials), Application Note 7 (“In a case in
which the court finds that the defendant’s conduct was part of a
systematic or pervasive corruption of a governmental function,
process or office that may cause loss of public confidence in
government, an upward departure may be warranted” under § 5K2.7).
2. Understated Criminal History Category
Under Section 4A1.3, this Court may upwardly depart
from the guidelines based on, among other things, “[p]rior
similar adult criminal conduct not resulting in a criminal
conviction.” Guidelines Manual (2004), § 4A1.3(a)(2)(E).
Case 1:02-cr-00589-RJD Document 506-2 Filed 02/10/2006 Page 83 of 88

41 Melvin Lloyd Richards, the primary defendant, was
sentenced to 27 months incarceration in connection with the Alco
case. Allen Stout was sentenced to 8 months incarceration in
connection with that case.
42 Both crimes occurred within ten years of the
defendant’s commencement of the crime for which he was convicted.
See Guidelines Manual (2004), § 4A1.2(e)(2).
84
Here, in addition to the defendant’s history of working
in infamous boiler rooms, on at least two occasions he committed
crimes for which he was not prosecuted. As detailed above, (see
Section II(A), supra), in 1993, he “accepted bribes from Melvin
Lloyd Richards and Allen Stout to sell securities, that Richards
and Stout were promoting, to the firm’s customers.” And, in
1996, the defendant was an accomplice in a “daisy chain” stock
manipulation.
Had the defendant been convicted of these crimes - even
assuming he was sentenced to a year or less for each of these two
serious offenses41 - they would each add two extra points to his
criminal history, moving it from Category III (5 criminal history
points) to Category IV (9 criminal history points).42
In addition, as calculated, the defendant’s criminal
history takes absolutely no account of the fact that the
defendant committed another federal crime - the false statements
offense - while on pre-trial release in an effort to flee
prosecution. That crime, if viewed separately from the
racketeering offenses, warrants one additional criminal history
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85
point as a crime for which the defendant, at the time of
sentencing, was convicted and not yet sentenced, see Guidelines
Manual (2004), § 4A1.2(a)(4), placing the defendant in Criminal
History Category V (10 criminal history points).
IV. OTHER 3553(a) FACTORS
A. Section 3553(a)(2)(A) - Seriousness of the Offense
This case involved a massive criminal enterprise
dedicated to misappropriating information from the FBI, trading
on that information, using it to manipulate stock prices and
disseminating it to hundreds of investors who could further use
it for their unjust advantage. Throughout his papers, the
defendant seeks to minimize the nature and scope of the
defendant’s crimes and the crimes of his enterprise. The
sentence he advocates, less than 43 months incarceration, (Def.’s
Sentencing Mem., p. 112), is woefully insufficient to reflect the
seriousness of the defendant’s conduct.
B. Section 3553(a)(2)(B) - Deterrence
Sentencing this defendant to a significant period of
incarceration will, hopefully, serve as a deterrent to those
individuals who see profit in defrauding the investing public.
That is particularly important here, where the scope of the
defendant’s crime was dependent on the largely unregulated
internet.
More importantly, a significant sentence will send a
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86
message to those who, for their own selfish ends, would corrupt
public officials, particularly those in sensitive law enforcement
jobs, that such behavior will not be tolerated.
C. Section 3553(a)(2)(C) - Protecting the Public
The defendant was terminated by an employer for
violating securities regulations in 1991. He received bribes to
peddle stock in 1993. He was an accomplice in a manipulation
scheme in 1996. He had his securities license revoked in 1997.
He was convicted of insurance fraud in 2000. He has now been
found guilty of leading a criminal enterprise over the course of
two years between 2000 and 2002. He continues to believe he has
done nothing wrong, and sees himself as martyred by overzealous
prosecutors and corrupt corporate executives.
In addition, as enumerated above, the defendant has a
lengthy history of lying to authorities. He lied to his
probation officer in 2001 regarding his trip to Lebanon. He lied
to her about various financial transactions associated with his
preparations for fleeing there. He lied, through his attorney,
to this Court as to whether he had pre-planned his 2001 Lebanon
trip. He lied to Transportation Safety Administration officials
when they stopped him - in his “Manny Velasco” persona - at the
airport in 2004. And he lied to state officials in connection
with that incident. Most importantly, when given the
opportunity, he did everything he could to undermine the work of
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87
both the FBI and SEC.
There is no reason to believe that this defendant has
mended, or will mend, his ways. There is, however, every reason
to believe that, once released, the defendant will find a new
means of taking advantage of the public.
D. Section 3553(a)(6) - Avoiding Sentencing Disparity
The defendant argues that, because Jonathan Daws’s plea
agreement stated that the estimated guidelines range for his case
is 18 to 24 months, a lengthy sentence for the defendant would be
unreasonable. The full text of Section 3553(a)(6) reads: a
sentencing court shall consider “the need to avoid unwarranted
sentence disparities among defendants with similar records who
have been found guilty of similar conduct.” First, this is just
one of many factors that this Court must consider. Second,
Daws’s “record” is not similar to the defendant’s. The defendant
is a convicted felon who routinely, over a period of many years,
violated the law for personal gain. And third, Daws’s conduct
was not “similar” to the defendant’s.
As detailed above, the defendant led a massive criminal
enterprise through which he received misappropriated information,
sometimes gathered at the defendant’s direction, disseminated
that information to persons whose trading he controlled,
manipulated stock prices, extorted shares of stock by threatening
continued manipulative conduct, obstructed justice, actively
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88

http://www.asensioexposed.com/apgovsentencing.pdf


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Re: SEC v. PCBM et al., Div. No. 8:02-CV-822-T-EAJ
Post by sandi66 on Mar 3, 2012, 8:18am

Marc Andreessen: 'This Feels Nothing Like 1999'

Published: Friday, 2 Mar 2012 | 11:15 AM ET

While investors may fear another tech bubble, many technology companies are building significant businesses, Internet pioneer Marc Andreessen told CNBC on Friday.


"On the private side, there is a fair amount of enthusiasm, but you know, a lot of these new companies are actually building really significant businesses," said Andreessen, co-creator of Netscape and co-founder of the Andreessen Horowitz fund.

The public market is not as optimistic. With tech stocks on the public side trading at a 30-year low compared to industrials, investors are still hesitant, said Andreessen, a Facebook board member.

"This does not feel anything like 1999. ... I think the tech stock, the public market is still completely traumatized by the dotcom crash," said Andreessen. "I think the investors and reporters and analysts and everybody is determined to not get taken advantage of again, and that is what everybody who lived through 2000, what they kind of remember."

http://www.cnbc.com/id/46602801

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Re: SEC v. PCBM et al., Div. No. 8:02-CV-822-T-EAJ
Post by sandi66 on Sept 30, 2012, 11:05am

CMKM Diamonds figure Turino pleads not guilty

2012-09-26 13:42 ET - Street Wire


by Mike Caswell

Jeffrey Turino, one of the 10 defendants in the CMKM Diamonds Inc. criminal fraud case, has pleaded not guilty. He entered the plea in a brief appearance before Magistrate Judge Carl W. Hoffman on Monday, Sept. 24. The judge ordered him detained pending trial.

Nevada prosecutors claim that Mr. Turino was part of the massive CMKM Diamonds fraud that ran from 2002 to 2004, in which the company's promoters dumped billions of unregistered shares, reaping $60-million in profits. (All figures are in U.S. dollars.) Although Mr. Turino was in the "shadows of the conspiracy" because of a penny stock ban, he still shared in a portion of the proceeds, the government says. He also allegedly aided the scheme by routing billions of unregistered CMKM shares through associates and nominees in Florida.

Like some of the other defendants in the case, Mr. Turino could not be found in the United States when he was first charged in March, 2010. Investigators eventually traced him to Europe, and police in the Netherlands arrested him in September, 2010. His appearance on Monday came after the U.S. successfully extradited him.

The CMKM indictment

The allegations against Mr. Turino are contained in a superseding 87-page indictment filed in Nevada on March 24, 2010. Prosecutors charged him and others with violations of the RICO Act and other laws in connection with a number of pump-and-dumps, the largest of which was CMKM. According to the indictment, the men operated as a criminal enterprise, causing publicly traded companies to improperly issue billions of shares. They then dumped those shares on investors, reaping around $70-million.

By far the largest of the pump-and-dumps identified in the indictment was CMKM, which prosecutors say netted $60-million. They identified the masterminds of the CMKM scheme as U.K. citizen John Edwards and Canadian stock promoter Urban Casavant, who are defendants. The indictment also named a number of other players, which included a lawyer (Brian Dvorak), a transfer agent (Helen Bagley) and Mr. Turino.

According to prosecutors, by the time of the CMKM promotion Mr. Turino had been working with Mr. Edwards for some time, serving as the sole officer for one prior pump-and-dump company. With CMKM, his role included helping route billions of shares through accounts controlled by associates and nominees in Florida. The indictment lists him among the "predominant sellers" of the stock.

Prosecutors said that Mr. Turino remained in the "shadows of the conspiracy," mostly because of a penny stock ban he received in 2003. According to the indictment, he and Mr. Edwards had taken part in a fraudulent promotion in 2001 of a company called Pinnacle Business Management Inc. Although much smaller than the later CMKM scheme, it also involved illegal share issuances. The men arranged for the company to improperly issue at least 4.3 billion free-trading shares, which they sold while publishing misleading news releases, the indictment stated.

(The promotion eventually attracted the attention of the U.S. Securities and Exchange Commission, which filed a civil suit against Mr. Turino and others in 2002. The SEC claimed that the company had greatly overstated the value of a proposed spin-off. Mr. Turino settled the case in December, 2003, agreeing to the penny stock ban. He did not admit to any wrongdoing in settling. The SEC has since secured a $9.6-million civil contempt penalty against him for violating the ban.)

The CMKM promotion, as described in the indictment, took place between November, 2002, and August, 2004, at least partly after that ban. Much of the indictment focused on Mr. Casavant and Mr. Edwards, explaining how they caused the company's issued share total to reach an extraordinary 800 billion shares through a string of illegal share issuances. During the scheme the men allegedly dumped billions of shares while the company issued misleading news releases touting the "Casavant diamond brand" and a purported $50-million jade collection, among other things.

Around the same time, Mr. Casavant was actively promoting the company by touring with a drag race team CMKM had sponsored, prosecutors said. The team, called "CMKXtreme," participated in a series of races, sporting vehicles with the company's stock symbol. Attendees wore shirts with slogans such as "Got CMKX?" The promotion reached its height in June, 2004, during the racing season. In total, around 40,000 people bought the stock, the government claimed.

So far there has been no participation from Mr. Casavant or Mr. Edwards in the case. Police have yet to arrest Mr. Casavant and Mr. Edwards awaits extradition from the United Kingdom, where he was arrested on the U.S. charges on Sept. 7, 2009.

Mr. Dvorak and Ms. Bagley both previously pleaded not guilty. The trial is set for Jan. 8, 2013.

(Further information regarding CMKM Diamonds and associated companies can be found in 76 Stockwatch articles dated Oct. 21, 2003; June 22; Sept. 16 and 24; Oct. 1, 15 and 20, 2004; Feb. 11, 14, 18, 22 and 23; March 1, 3, 4, 7, 14, 15, 16 and 21; June 6, 8, 9, 10, 13, 14, 15, 16, 17, 20, 21, 22, 29 and 30; July 1, 4, 6, 12 and 13; Aug. 2, 5 and 9; Sept. 7, 12, 27 and 30; Oct. 24, 26 and 31; Nov. 7, 11, 22 and 25; Dec. 1, 6, 9, 15 and 22, 2005; Jan. 3; Sept. 29; Oct. 4, 2006; Aug. 30, 2007; and April 7, 9, and 11, 2008; Sept. 21, 2009; Feb. 17 and 23; March 2, 5 and 10, 2010; May 18, 2010; Nov. 7, 2011; Jan. 20, 2012; and April 25, 2012.)

http://www.stockwatch.com/News/Item.aspx....926&symbol=CMKX