FBI Agents Indicted for Feeding Info to Online Stock Analyst

Two FBI agents were among five people charged with securities fraud for allegedly participating in a scheme to feed confidential information to an Internet stock analyst. In exchange for money, agent Lynn Wingate and former agent Jeffrey Royer used FBI databases to provide their co-conspirators information on publicly traded companies, the indictment said.

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Two FBI agents were among five people charged with securities fraud for allegedly participating in a scheme to feed confidential information to an Internet stock analyst. Federal prosecutors charged FBI agent Lynn Wingate of Albuquerque, N.M., and Jeffrey Royer, a former Oklahoma City agent who resigned last year, in an indictment unsealed Wednesday. Analyst Amr “Tony” Elgindy, who allegedly used the inside FBI information to make money on the market, was also among those charged. In exchange for money, the agents used FBI databases to provide their co-conspirators information on publicly traded companies, the indictment said. In 2000 and 2001, an associate of Elgindy, Derrick Cleveland, wired Royer $30,000 while he was still an FBI agent, court papers said. Elgindy allegedly spread negative information on the companies on his Web site and to subscribers of his e-mail newsletter, InsideTruth.com, while betting that the companies’ stock would go down. The defendants “sometimes reported negative information about the targeted companies to the Securities and Exchange Commission and the FBI in order to initiate or hasten regulatory and law enforcement action, which they knew would cause the stock prices to fall sharply once such action became public,” court papers said. In one case, Royer searched the FBI’s confidential National Crime Information Center database and discovered the criminal history of a top executive for a company called Nuclear Solutions, the papers said. The same day, Elgindy began sending e-mails calling the executive “a convicted felon,” then sold the company’s stock short, the papers added. Elgindy and Cleveland, who is among those charged, also extorted cheap or free shares of stock in exchange for agreeing to stop their smear campaign, authorities said. After they became the focus of a grand jury investigation, Wingate allegedly fed Royer — by then an employee of Elgindy — secret information, including descriptions of subpoenaed documents. The charges “reveal a shocking partnership between an experienced stock manipulator and law enforcement agents, undertaken for their illicit personal financial gain,” said U.S. Attorney Alan Vinegrad. Royer and Wingate were released Wednesday and ordered to appear in court Tuesday. The other three suspects were being held pending court appearances. Wingate’s attorney, Steve McCue, said of his client, “She’s been a solid line FBI agent for three years, and she intends to plead not guilty and fight the case.” Attorneys for the other defendants could not immediately be located for comment. If convicted of all counts, Royer and Elgindy could receive 65 years in prison. Wingate faced up to 45 years in prison if convicted, and the other defendants, Cleveland and Troy Peters, each could be given 40-year prison terms. Copyright 2002 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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