- The Washington Times - Monday, January 24, 2005

NEW YORK (AP) — A former FBI agent and an Internet penny stock adviser were convicted yesterday of mining government computers for confidential information they used to manipulate the stock market.

Former agent Jeffrey Royer was convicted of racketeering, securities fraud, obstruction of justice and witness tampering for leaking details of FBI investigations and executives’ criminal histories to San Diego stock picker Anthony Elgindy.

Elgindy was convicted of racketeering, securities fraud and extortion. He dropped his face into his hands and sobbed uncontrollably as the jury foreman read the verdict. U.S. marshals led him weeping from the federal courtroom in Brooklyn.

The two men face between 10 and 20 years in prison.

Prosecutors said Elgindy bet against penny stocks and drove down their prices by publicizing damaging information he received from Royer. Elgindy also extorted companies by offering to withhold the information in exchange for cash, prosecutors said.

“Under the guise of protecting investors from fraud, Royer and Elgindy used the FBI’s crime-fighting tools and resources actually to defraud the public,” U.S. Attorney Roslynn Mauskopf said.

Royer also was accused of tipping off Elgindy to an FBI probe into whether the Egyptian-born trader knew about the September 11 terrorist attacks before they occurred. Prosecutors initially believed Elgindy profited from his advance knowledge by selling off stocks that plunged after the attacks, prosecutors said.

That probe did not result in charges against Elgindy, but jurors heard references to it throughout the trial. Elgindy’s attorneys said they would examine the issue as they began to plan an appeal.

“We expect the many complex and controversial issues presented by this case to be the subject of a vigorous appeal,” attorney Barry Berke said.

Defense attorneys contended that Royer fed FBI data to Elgindy and another trader as part of a freelance effort to sniff out corporate fraud with the traders’ help.

“He really and sincerely believes he’s innocent,” said Royer’s attorney, Lawrence Gerzog.

Royer was an agent in the Gallup, N.M., office investigating mostly crimes on Indian tribal land.

And, Royer thought Elgindy would help him pay off tens of thousands of dollars in personal debt and then hire him as a private investigator after he left the FBI, prosecutors said.

Elgindy will remain in federal custody until his sentencing, which has not been scheduled. Royer remained free pending appeal.

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