A@P; Amr &quot;Anthony&quot; Elgindy Discussion; Anthony@Pacific

Top 193. Jan 25, 2005 11:51 AM

» Kirk - Stock Picker Elgindy Convicted of Racketeering, Fraud

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Stock Picker Elgindy Convicted of Racketeering, Fraud (Update1)
http://www.bloomberg.com/apps/news?pid=1...

Jan. 24 (Bloomberg) -- Stock picker Anthony Elgindy was convicted of racketeering and fraud for parlaying illegal tips from an FBI agent into trading profits by short-selling stocks of companies under government investigation.

Elgindy, 36, who also went by the name Anthony Pacific, was convicted by a federal jury in Brooklyn, New York, after about four days of deliberations. The trial began in November. The former agent, Jeffrey Royer, 41, was also convicted.

Authorities said Elgindy used inside information obtained from Royer to spread negative publicity about some of the companies being probed through his online newsletter, AnthonyPacific.com. Prosecutors said Elgindy would extort payments from the targets of his vitriol to get him to stop.

``We are gratified that the jury considered the evidence and rendered a just verdict,'' U.S. Attorney Roslynn Mauskopf said in a statement.

Royer ``violated the trust of the FBI by brazenly partnering with Elgindy to commit a laundry-list of crimes,'' Mauskopf 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, and to insulate themselves from detection and prosecution,'' she said. ``Elgindy's conviction marks the end of his public charade as a crusader against fraud in the markets.''

20 Years

Short-sellers profit by correctly predicting a stock's decline. They sell borrowed shares and then replace the stock at a cheaper price, pocketing the difference.

Elgindy and Royer face a maximum of 20 years in prison for their conviction on racketeering, the most serious charge. No sentencing date was set by U.S. District Judge Raymond Dearie.

In all, they were convicted of 11 counts of racketeering and fraud and acquitted of 17 counts, including securities fraud, extortion and obstruction of justice. Elgindy's lawyer, Barry Berke, said he would appeal.

``The many complex and controversial issues presented by the case will be the subject of a vigorous appeal, particularly given the number of counts Mr. Elgindy was acquitted of,'' Berke said.

Elgindy didn't testify in his own defense. Royer did. The former FBI agent told jurors he shared agency secrets with his co- defendant, though he said he only did it to get more information from Elgindy and subscribers to his Web site.

Sept. 11

Elgindy has been in jail since April after trying to board a domestic flight to Phoenix with a connection to San Diego. He was carrying fake identification, $25,000 in cash and $40,000 worth of jewelry, according to court papers.

After his initial arrest in May 2002, federal prosecutors suggested Elgindy may have had advance knowledge of the Sept. 11, 2001, terrorist attacks because he'd predicted beforehand that the stock market would collapse and had tried to sell stock in his children's trust funds.

Berke said his client worked with a group of ``junior detectives'' -- individual investors who followed Elgindy's advice and investigated companies -- to perform a public service by exposing frauds.

``They were investigating, uncovering and exposing these fraudulent companies,'' Berke said in his opening arguments last fall. Elgindy was an early skeptic of technology and Internet companies in the late 1990s, asserting on a Web site, Silicon Investor, that they were overvalued, Berke said.

Editor: Pinsley.

To contact the reporter on this story:
Christopher Mumma in New York at at cmumma@bloomberg.net.

To contact the editor responsible for this story:
Pat Oster in New York at at poster@bloomberg.net.

Last Updated: January 24, 2005 16:28 EST

-- posted by Kirk

http://www.siliconinvestor.com/readmsg.a...

Top 194. Jan 25, 2005 12:06 PM

» Kirk - SI Bob on Elgindy's Conviction.

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This is a great post. I agree with SI Bob. I wonder if some were out to "get" Elgindy for exposing their game. The FBI was made to look foolish so the Feds wanted to nail someone too rather than admit they were made fools of.

The charge that bothers me is that of Anthony accepting payment to call off his attacks. If the CEOs accusing him of this were from "respectable" companies that were still in business, then I'd have to agree with their testimony. It sounds like they were caught in the pissing fight with Elgindy so they were more than happy to testify to "get even."

It will be intersting to see how this goes on appeal. Like most, I always wonder when an innocent man doesn't take the stand to give his side.

To: slave who wrote (89580) 1/25/2005 1:13:47 PM
From: SI Bob Read Replies (2) of 89770
Originally Posted at
http://www.siliconinvestor.com/readmsg.a...

He figured he would act as a crusader and be a RAT whenever it served HIS purpose

I don't know enough to refute or support that statement, but it's not incompatible with my belief that he identified scams and profited by doing so, as do many others, and as do those of us who hope we've identified good companies to invest in. We tend to buy or sell companies for our own interests; specifically profit.

But the statement that he is a "rat whenever it served his purpose" begs an obvious question: Was he right? Did anyone keep score or perhaps would anyone want to do so after the fact using our Advanced Search?

I think it's relevant, but it obviously wasn't relevant to the government, whether he was simply a self- (and others-) serving rat, or a *lying* one. Huge difference, IMO.

Without getting into specifics, since I'm sure I can't, I know that there was a fishing expedition looking for *anyone* on this site who'd ever posted negatively about any of a huge list of tickers. It was an impossible task and the fishermen were duly informed as much.

But what I found particularly interesting was that the huge list contained familiar tickers. Ones I knew off the top of my head had been halted by the SEC, never to trade again. I was familiar with so many of them because they'd been at the center of TofU-violating flamewars right here. Flamewars that Tony was often involved in because he was calling the companies scams.

I randomly pulled up quotes for about a dozen of the listed stocks. All but one or two had no quotes or came back as bad tickers.

So, at a glance, it looked like most of the stocks he'd called scams had proven themselves to be so.

I don't know Tony as well as you do, but I've dealt with him enough to feel like I can have an opinion about him.

My take has always been that he was prone to hyperbole at times, like when he tore into James Cramer, an individual for whom I have *enormous* respect. I still remember a classic post of his (deleted?) in which he said that he'd someday employ Mr. Cramer to gnaw his lawn.

I'd come to feel that Tony would write very negatively about companies or people if he believed he was right. I think the last posts he ever wrote to or about me were ones in which he railed against both me and iHub, and the word "scam" got used. He was wrong, but I think he honestly believed he was right. I briefly thought that perhaps his negative posts about me and iHub were because he was getting ready to ramp up a competing site, but decided that didn't fit my perception of him. I don't mind if people rail against me when they believe they're right and they don't lie when doing so. We're all entitled to our opinions. I remember sommmeone who also very loudly complained about me, but intentionally used lies and half-truths to support their position. I can't respect that. But I respected Tony's opinion about me, though I knew for a fact that he was wrong. Why? Because he offered negative opinions that he apparently *thought* were true. Big difference.

But I digress, as usual.

What I'm really curious about is what percentage of companies he ever referred to as "scams" turned out to be scams. 80% or higher wouldn't surprise me at all.

A huge list of companies that I'm sure would still be trading and would be used as vehicles for hypesters to steal the money of the foolish or less experienced.

So, if he called a company a scam or POS or whatever and said so only to profit from a short position, without really believing what he was saying about the companies, that'd be wrong.

I see nothing wrong with identifying a company you think is a scam, shorting it, then publicly saying "Hey, look what I just found!" Same thing as finding a gem, buying it, and telling everyone what a gem it is.

I think this whole sordid affair raises deeper philosophical issues. Ones I'm not mentally equipped to work out on my own. Like whether, his own profits aside, did he do more harm or more good on the aggregate. I think the latter. And it doesn't count on the "harm" side of the ledger if a cheerleader or tout or fool lost money because they'd invested in a company Tony had correctly identified as a scam or at least way overvalued.

Overall, I think the investment community as a whole gained in a huge way from his presence and I'm glad that people like him (and many others) wave red flags when appropriate because the SEC certainly can't or won't on its own. And, pretty much by definition, once the SEC moves to prevent investor harm, most of the damage has already been done.

Far better for the open-eyed investor to sell at a loss when individuals raise red flags than to lose 100% of their investment when the SEC says "This is a scam and nobody can buy or sell it anymore."

IMO, the SEC and FBI steam-rollered one of their biggest benefactors. If he did illegal things while helping the SEC, FBI, and investors at large, yes, he should be punished. If lying to line his own pockets isn't part of the list of things he did wrong, then I think the amount of good he did (as measured by how often he correctly shined the light on scams, and his always-present sermons about resource management) should be taken into account when determining what that punishment should be.

All the above said, I still have a real problem with this "extortion" charge. I just can't see any way to make that one stick, even by just applying simple logic.

If he really did demand payment from companies he thought were scams in return for keeping his mouth shut, then I hope he enjoys a long stay at Club Fed, because as a whistle-blower, he assumed the responsibility of *always* blowing the whistle when he saw a foul. To remain silent while knowingly watching investors being bilked would be just as bad as touting scam stocks. Accepting/demanding payment to do so would be worse.

And there certainly are an enormous number of people who've done that and escaped prosecution -- they weren't famous enough to be worthy feathers in anyone's cap.

As I said before, the only person I saw publicly claim to have been extorted by Tony was a CEO who, if they said the sky was blue, I'd have to look out the window to make sure it wasn't actually red.

I've a sneaking suspicion the extortion charge was made to stick based on the say-so of penny-stock CEO's, and it wouldn't surprise me to find that they're the CEO's of no-longer-trading companies. So it's the part of the case that I'm most eager to learn the details of.

Oh, and to the person who said basically that Pluvia and Tony were bedmates, that's not my recollection, although it's ancient enough history that I don't remember the details well. But what I remember is that Pluvia and Tony were the "cat and dog" of SI. Sure, they both liked to expose scams, and as such they likely encountered the same scams a time or two, but there was a LOT of bad blood between the two of them, the details of which are sketchy and irrelevant to me.

So, I can't disagree with you, slave, because I apparently don't know Tony as well as you do, but what I know of Tony is that he's a person who saved a lot of people from themselves, hurt a lot of touts, crooked CEO's, and their ilk, and was a bit of an asshole, and I had to suspend him many times for that and even terminated his account at one point. He seemed to occasionally think he was above the site's rules, and had to be reined in, and maybe that "above the rules" mindset carried over into other aspects of his life, but I don't know.

Overall, based on what I know of him, I like him and am grateful for the countless dollars he saved others and for being the best educator to come down the pike when it comes to teaching people to include skepticism as an important investment tool.

All of the above my opinion and as such, I reserve the right to be wrong. But I don't think I am.

To: KM who wrote (550) 12/22/1999 1:01:00 PM
From: Anthony@Pacific Read Replies (3) of 1704

They are lying scumbags with an agenda..and Cramer can kiss my derrier,

Harvard...hah!!...if he is polite ..Ill let him mow my yard.., using the self propeled mower otherwise he will be forced to use his Bovine Molars..and chew my yard crispy clean..

-- posted by Kirk

http://www.nytimes.com/2005/06/24/busine...

Top 195. Jun 24, 2005 7:41 AM

» Kirk - Guilty Plea Entered by Ex-F.B.I. Agent

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June 24, 2005
Guilty Plea Entered by Ex-F.B.I. Agent
By THE ASSOCIATED PRESS

A former agent for the Federal Bureau of Investigation pleaded guilty yesterday to obstruction of justice, saying she had provided confidential government information to another former F.B.I. agent who has been convicted of racketeering, securities fraud and other charges.

Lynn Wingate, 37, pleaded guilty yesterday in Federal District Court in Brooklyn. She was a colleague and romantic companion of a former F.B.I. agent, Jeffrey A. Royer of Gallup, N.M., who was convicted in January of leaking details of F.B.I. investigations and executives' criminal histories to a San Diego stock picker, Anthony Elgindy. Mr. Elgindy was convicted of racketeering, securities fraud and extortion at the same trial.

Ms. Wingate told Judge Raymond J. Dearie of Federal District Court that she had given Mr. Royer information from F.B.I. computers about the investigation that eventually led to Mr. Royer's arrest.

-- posted by Kirk

Top 196. Aug 2, 2005 6:05 AM

» Kirk - Elgindy Pleads Guilty to Using a Fake Identity

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August 2, 2005
WALL ST. ROUNDUP
Elgindy Pleads Guilty to Using a Fake Identity
From Bloomberg News

Former San Diego financial analyst Anthony Elgindy, who was convicted in January of racketeering, pleaded guilty Monday to using a false name at a New York airport last year as he tried to board a flight to San Diego, U.S. prosecutors said.

Elgindy admitted making false statements and presenting false identity papers at Long Island's MacArthur Airport on April 17, 2004.

At the time, he was free on bail awaiting trial on charges that he parlayed illegal tips from an FBI agent into trading profits by short-selling stocks of companies being investigated by the government.

"This case demonstrates that any defendant who attempts to flee while on pretrial release will be vigorously prosecuted," U.S. Atty. Roslynn R. Mauskopf of the Eastern District of New York said in a statement.

Elgindy faces a maximum of 20 years for his conviction in January and is awaiting sentencing in that case. He faces a maximum of five years for each of the two charges to which he pleaded guilty before U.S. District Judge Raymond J. Dearie on Monday, authorities said.

Elgindy was carrying about $25,000 in cash and $30,000 in jewelry in his luggage when he attempted to board with false papers identifying him as "Herbert Manny Velasco," authorities said.

In the racketeering and fraud case, the government said Elgindy used inside information obtained from FBI agent Jeffrey Royer to spread negative publicity about companies being investigated through his online stock-advice newsletter, AnthonyPacific.com.

Prosecutors said he would extort payments from the targets of his bad publicity to get him to stop. Royer was also convicted.

-- posted by Kirk

http://www.nypost.com/business/27909.htm

Top 197. Sep 10, 2005 6:46 AM

» Kirk - DEFIANT ELGINDY SEEKS TO KEEP HIS LOOT

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DEFIANT ELGINDY SEEKS TO KEEP HIS LOOT

By RODDY BOYD

Amr "Anthony" Elgindy, the most infamous dot-com era stock trader, filed papers this week contesting the Feds' demand that he forfeit $12 million of his ill-gotten gains.

Elgindy was convicted in January of parlaying illegal information from former FBI special agent Jeffrey Royer into millions of dollars worth of gains.

He took sensitive information from criminal inquiries and shorted the stocks of companies under investigation.

Elgindy aggressively posted negative publicity — often false — across numerous message boards and Web sites to help drive the price of the stocks he and a few of his colleagues targeted.

He faces a 20-year sentence and is being asked to forfeit $12 million.

Elgindy's defense lawyers argue that the sum total of his illegal trading was $71,000, which included $30,000 in fees he charged subscribers to his site.

They also claim that Elgindy's actions were justified in part because he believed the companies he targeted were "scam companies" where investors were likely to have sustained losses.

In an Internet posting last week, Elgindy said he had "lost my family, friends, business reputation and credibility."

Far from humble though, Elgindy argued that the government was "absurd," to think he would risk his fortune for what he said was only "$41,000" in "profits."

He has been in jail since last April after being caught using a fake name to board a plane at MacArthur Airport. At the time of his arrest, he had $55,000 in cash and jewels in his luggage.

-- posted by Kirk

Top 198. Sep 10, 2005 7:46 AM

» Kirk - Re: DEFIANT ELGINDY SEEKS TO KEEP HIS LOOT

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In response to DEFIANT ELGINDY SEEKS TO KEEP HIS LOOT posted by Kirk:

In an Internet posting last week, Elgindy said he had "lost my family, friends, business reputation and credibility."

Link to his posting

From: Anthony@Pacific 9/8/2005 2:39:02 PM
Read Replies (4) of 92470

I am posting this for Tony at his request. This is all text provided by Tony and any statements put forth here are his and not necessarily mine, though I'm going to reply with my own 2 cents.

This message is in 3 parts:

1. Intro from Tony
2. Opposition to Forfeiture
3. Joshuan Kellner's Affadavit in support of Opposition to Forfeiture.

Bob Zumbrunnen

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Dear folks,

It’s me, Anthony. I am writing to you all publicly for the first time since April of last year. Immediately following this open letter you will find a document that relates to the sentencing phase of this trial. This document quite simply will blow your mind. In the coming days and weeks you will see what the case of US v. Elgindy was really all about.

Keep in mind as you review the following documents, that I had every cent I ever had to my name seized and frozen three years ago. Since then I’ve spent millions defending this case. I have lost virtually every dollar I ever earned or saved in the past 17 years. I have lost my family, friends, business reputation, credibility, and most of all my liberty and my desperate need to be with my three young boys has not diminished as they face these critical years ahead.

On May 21, 2002, at my office in Encinitas, California, FBI agents stormed into my office and arrested me. The following day in a courtroom packed with spectators and reporters I was informed of the various securities related charges against me. My lawyer, Jeanne Knight, then requested bail. A man spoke up identifying himself as my prosecutor. He had flown in from New York. He stated in open court that aside from the stock market related charges there was another parallel investigation-- an investigation into whether I knew about the attacks months earlier on September 11. He stated that he believed that not only did I know about them but that I “tried to profit from it, rather than report it.” These nine words effectively ended the world for me as I knew it. Overnight I went from being a relatively well known short seller, comical internet commentator, and financial analyst to an enemy of the United States. My family was speechless, and my children suffered immeasurable shame and humiliation. There are simply no words to adequately explain the horror and pain we all felt. Not only was I facing charges of inside trading and corruption, I was linked to this country’s worst mass murder in history. My Egyptian heritage only added credibility and weight to his words. It may be worth noting that the 9/11 Commission Report, which interviewed Ken Breen, concluded: “Exhaustive investigations by the Securities and Exchange Commission, FBI, and other agencies have uncovered no evidence that anyone with advance knowledge of the attacks profited through securities transactions.” Unfortunately, words once spoken cannot be retracted and I was forever a tainted man.

My request for bail was denied, setting off a month long journey in buses, vans and airplanes, handcuffed and shackled, to New York City. My family was without resources, shunned by all but a few good friends. What followed for me was and continues to be a nightmare without end. I will have a great deal to say in the coming days about the events of the past three years, as well as the events that led up to my conviction. What I hope you will do now is read the following document that has been filed by my lawyers. It is a detailed response to the government’s request that I forfeit an amount in excess of $11 million dollars. An amount, BTW, that could translate into a 20 year sentence.

That I risked everything I had, my name, my family, a successful business, three wonderful children for $41,000.00 in profits is absurd. That 20 years of my life could be confiscated is a frightening commentary on our system of justice.

Stay tuned. It’s all coming to an A&P grocer near you.

Peace

A@P

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Part 2: Opposition to Forfeiture....

For the rest, see Link to his posting.

It sure seems "they" were out to get "him." Perhaps it is because "he" corrupted one of "theirs" (an FBI agent) and got caught?

From my following of the case, I don't think what he did was much different than what Martha did and his punishment should have been similar. Inside info is inside info and the only difference was one insider worked for law enforcement.

-- posted by Kirk

http://www.siliconinvestor.com/readmsg.a...

Top 199. Sep 20, 2005 10:34 AM

» Kirk - 9/14/05 post from Anthony

From: Anthony@Pacific 9/14/2005 5:46:49 PM
Read Replies (3) of 92526

Another post from Anthony:

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Dear Folks,

The SEC in March 2004 ruled that the NASD didn't have enough evidence to support allegations that I had manipulated the price of Saf-T-Lok Inc. and overturned the $50,000 fine levied against me by the NASD. The NASD filed an almost unprecedented appeal of that decision in May 2004.

The U.S. Court of Appeals for the District of Columbia recently heard oral arguments on this matter. The substance of those arguments was provided in a recent Washington Post article on September 9, 2005.

I take particular satisfaction in the following two statements:

"This is an extraordinary attempt to expand their authority," Eric Summergrad, the SEC's deputy solicitor general, told a three-judge panel.

Judge Harry Edwards rebuked the NASD, saying "the SEC is clearly the higher tribunal." He said "we don't allow lower tribunals to challenge higher tribunals who have authority over them. We just don't."

I will reserve any further comments on the specifics of this case and/or the ramifications of any decision until the esteemed panel of Judges issue their written ruling. In the meantime, I am providing the brief I filed, pro se, in reply to the NASD appeal. This brief was filed and received on
May 4, 2005 in the U.S. Court of Appeals for the District of Columbia.

Stay tuned. There is more to come.

Peace,

Anthony

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I'm scanning the cited brief and will post a link to it when I'm able to. If anyone else already has it in PDF or another format, please post a link to it or email it to me at bobz@investorshub.com so I can put it on the server for public viewing.

Bob Zumbrunnen

To: Anthony@Pacific who wrote (92492) 9/14/2005 6:47:57 PM
From: SI Bob Respond to of 92526

Links to the Brief Tony referenced, scanned a page at a time.

-- posted by Kirk

http://www.s-ox.com/news/detail.cfm?arti...

Top 200. Oct 7, 2005 7:31 AM

» Kirk - Anthony's prosecuter goes into private practice...

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Anthony's prosecuter goes into private practice...

Kenneth M. Breen Joins Fulbright & Jaworsk
2005-10-06 16:00:00.0 CDT

He was lead counsel in the Amr Elgindy and Jeffrey Royer case, in which a prominent Internet stock advisor conspired with an FBI agent to short-sell stocks using confidential law enforcement information illegally obtained from FBI and SEC files."

Full Story:

Breen headed up complex white-collar prosecutions and financial crimes cases for Eastern District, including insider trading, market manipulation, tax fraud, anti-counterfeiting and money laundering.

Kenneth M. Breen, who has spent the last ten years as a federal prosecutor, most recently as Deputy Chief of the Business and Securities Fraud Section of the U.S. Attorney’s office for the Eastern District of New York, this week joins Fulbright & Jaworski L.L.P as a partner in the firm’s New York office.

Breen will focus his practice on white collar criminal defense, securities litigation and regulatory enforcement defense, commercial litigation, anti-counterfeiting and corporate internal investigations. He is the second former federal prosecutor to join Fulbright in the past month. In June, the firm’s Houston office added Michael Shelby, the former U.S. Attorney for the Southern District of Texas.

“Ken Breen has established himself as one of the leading white collar prosecutors in the important Eastern District of New York,” said Steven B. Pfeiffer, Chair of the Fulbright’s executive committee. “We are pleased to have him join our expanding white collar criminal defense and securities litigation teams. Ken’s experience with complex financial crimes investigations and high profile cases will be a key to the growth of our nationwide practice.”

“Fulbright presents a unique opportunity to help build a great white collar defense practice,” said Breen. “Having helped develop the vital Securities Fraud unit for the active Eastern District, the prospect of growing a white collar and securities practice at Fulbright was highly appealing. “I look forward to carrying on Fulbright’s tradition of assisting individuals and corporations in their compliance efforts, while helping those who are investigated and accused resolve their problems in a responsible way,” continued Breen. “This includes advocating for the reputation and freedom of the wrongly and unfairly targeted and accused.”

Breen, age 39, was a federal white collar prosecutor for more than a decade. He served during the past six years in the U.S. Attorney’s Office; prior to that, he was a trial attorney in the Justice Department’s Tax Division, in Washington, D.C. Breen has served on the U.S. Attorney’s Advisory Committee and as Bankruptcy Fraud Coordinator, and lectured and trained new prosecutors in matters of trial practice and advocacy.

Following the Sept. 11, 2001 attacks, Breen served as Coordinator of the Capital Markets Unit of the Terrorist Financing Task Force in Washington, D.C. The unit investigated whether profiteering in the financial markets occurred in anticipation of the Sept. 11 attacks.

During his tenure as a prosecutor, Breen argued appeals and tried more than 40 cases to verdict. He was lead counsel in the Amr Elgindy and Jeffrey Royer case, in which a prominent Internet stock advisor conspired with an FBI agent to short-sell stocks using confidential law enforcement information illegally obtained from FBI and SEC files.

Other high profile cases successfully prosecuted by Breen included the Lung Fong Chen matter, a corporate fraud case involving self dealing by bank officers; and the Moshe Milstein case, in which a pharmaceutical wholesaler was convicted for distributing misbranded and counterfeit pharmaceuticals and for trademark infringement. Breen is the recipient of numerous awards for his work as a prosecutor, including the Tax Division’s Outstanding Attorney Award, as well as awards from the Federal Bureau of Investigation, the U.S. Postal Inspection Service, the Internal Revenue Service,the U.S. Food & Drug Administration, the U.S. Secret Service, the New York City Police Department and the Recording Industry Association of America.

Prior to becoming a prosecutor, Breen was an associate at Mudge, Rose, Guthrie, Alexander & Ferdon, where he represented corporate and individual clients in complex civil and regulatory matters, including intellectual property, anti-counterfeiting, antitrust and commercial disputes.

Breen earned his J.D. degree in 1992 at Boston College Law School, and graduated cum laude with a degree in English in 1989 from Boston College.

About Fulbright’s White Collar Criminal Defense Practice
From multi-million dollar whistleblower investigations to high-profile public corruption cases, Fulbright has experience representing corporations, their officers and directors, and international business and government entities in grand jury investigations, criminal cases, related civil lawsuits and Congressional investigations.

The firm’s white collar criminal defense team has developed special skills in handling such matters as government contracting fraud, criminal antitrust matters, RICO, money laundering, Foreign Corrupt Practices Act violations, securities fraud, health care fraud, banking fraud, environmental crime, tax fraud, and false statements to government agencies. In particular, Fulbright’s team assists in corporate governance matters by conducting internal corporate and audit committee investigations and by developing effective corporate compliance programs to help avoid criminal liability.

Fulbright & Jaworski L.L.P. is consistently ranked among the best litigation firms in the United States. The firm was named a top U.S. dispute resolution law firm in the Global Counsel 2004/2005 Dispute Resolution Handbook; among the “Arbitration Elite” by The American Lawyer; a top 10 U.S. law firm for intellectual property litigation by IP Worldwide; among the U.S.’s top 30 firms for client service by BTI Consulting and a top 20 corporate law firm in America by Corporate Board Member magazine. Founded in 1919, Fulbright is a full-service international law firm, with more than 900 attorneys in 11 offices.

For more information, visit www.fulbright.com.

-- posted by Kirk

Top 201. Oct 23, 2005 8:42 AM

» Kirk - 10/5/05: Greetings to All (From Prison)

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From: Anthony@Pacific 10/5/2005 6:05:13 PM
Original Post http://www.siliconinvestor.com/readmsg.a...

Posted by Bob Zumbrunnen on Tony's behalf via his account. The words here are Tony's as are the charts I've provided links to.

--------------------------------------------------------------

Greetings to All,

I hope this post finds you happy and well. Before I get too far ahead, let me first touch upon a few things by way of explanation for those who may have no idea where this is coming from.

I am a short seller, which means I make my money when stock prices fall. It is NOT the opposite of going long; that is woefully simplistic. Short selling has always been poorly understood. Those who engage in it are typically portrayed as “messengers of doom and gloom.” Short selling, like abortion, is legal, yet can generate a physical and negative visceral response. Unfortunately it is also an easy “sell” to categorize short selling as “un-American”, “evil” or “wrong.” There is a universal negative bias against short sellers; that is most likely why there isn’t an opposing bronze statue of a Bear next to the Bull across the street from the NYSE. Had they ever put up this symbol of the mighty “downtick”, it would probably get blown up every other day. In reality, short sellers are behind much of the greatest research on Wall Street.

My name is Anthony Elgindy, aka AP, A&P, Anthony@Pacific. I started right here on Silicon Investor 7 years ago, when I started the “Dear Anthony” thread. I later started a private stock discussion site, anthonypacific.com, and a free site, Insidetruth.com that featured stock scams that I thought were outrageous and interesting enough to pick apart for public scrutiny as well as my own entertainment.

I started my career as a professional short seller back in 1995 when I founded Key West Securities in the tiny town of Hurst, Texas. I was harsh, abrasive, and apparently entertaining to some. It wasn’t long before I started popping up in magazines and on TV. In 1997 I appeared on ABC’s 20/20 with Brian Ross and Barbara Walters. I criticized the NASD for looking the other way and allowing frauds and scams to flourish on the OTC markets it oversaw. For years and years I exposed hundreds and hundreds of scams, and I made millions of dollars doing it. The scammers, con-men, promoters and snake-oil salesmen behind these deals moaned and groaned, cried and complained about my tactics, my words and anything I did. I was accused of everything imaginable, from helping Osama Bin Laden buy cars, to threatening to kill Alan Greenspan and even trading ahead of the 1st WTC bombing here in NY. I have been accused of paying off SEC attorneys, message board posters, reporters, and most recently FBI agents. Those complaints had always fallen on deaf ears. The FBI and SEC paid little attention to the woes and grievances of people who wanted to be allowed to fleece small investors unmolested. This all was about to change.

On September 11, 2001, two airplanes slammed into the WTC towers, and when those buildings collapsed, for the first time ever, my nationality mattered. Suddenly, scammers had a voice, con-men had an audience, and dishonest insiders could taste relief. These complaints, previously ignored, quickly found their way to an extremely ambitious and aggressive Assistant US Attorney named Ken Breen, who worked on a terrorist task force in Washington, D.C. when he moved to NY; he brought these “complaints” and “evidence” and presented them to a grand jury sitting in the Eastern District of New York, a district in which my contacts were virtually zero. Mr. Breen had an innate dislike and philosophical bias against short sellers in general. In fact many of the witnesses he called at my trial shared his dislike for short selling and short sellers in general.

Some time in the next 60 days a notice of appeal will be filed. The scope of the appellate issues will be far reaching, covering in more detail and with more specificity many more issues than can possibly be mentioned here.

I am currently being held in NY, a fact that should briefly be addressed. My professional trading activities were all centered in California, as were my bank accounts, computers, most relevant documents, and the majority of my site members, yet criminal charges were brought against me in Brooklyn, NY.

It is hard to conceive of a criminal prosecution that was more removed from the Eastern District of New York than this one. Virtually every single trade in every single security occurred in Canada, California or elsewhere, via telephone from my office at Pacific Equity training center or my home in San Diego. Further, the alleged "nerve center" of the charged RICO enterprise was not located in the Eastern District of New York, but rather in San Diego, California, where anthonypacific.com, my private website was based, and where the bank of twelve computers seized by the government, was taken.

I was arrested at my office in Encinitas, California, located in the Southern District of California, a district in which more than 200 Assistant US Attorneys serve. Yet Mr. Breen personally appeared at the initial appearance before the Magistrate, flying across the country for what should have been a routine bail hearing for an American citizen. Why was that done? It was done to enable him to make the following comment that set the tone for this entire prosecution: "Perhaps Mr. Elgindy had pre-knowledge of Sept. 11, and rather than report it he attempted to profit from it.”

For months the FBI had held steadfast to the contention that they had not found anyone or any agency that had any pre knowledge of Sept 11th. But suddenly, amazingly, and maliciously without a single shred of evidence to support and mountains of evidence to refute, Mr. Breen accused me, Anthony Elgindy, an American who attended USC, played football, wrestled, and graduated an Illinois State Scholar, of being the one person on the planet who knew about Sept 11th.

Why was this case brought to trial in New York, when I traded and lived in California, my servers were in Florida and my broker was in Canada? There was only one obvious reason. There could be no better place for the government to try an Arab American who “may” have known about 9-11 than in a jurisdiction next to ground zero. From that day until the verdicts were read, the dark cloud of 9-11 tainted every single aspect of this case. The words “terror” and “9-11” are mentioned over 350 times throughout the 37 day trial.

An impartial jury is an essential component of a criminal defendant’s fair trial, and, by exposing possibly biases on the part of jurors, voir dire serves to protect each and every defendant’s right to an impartial jury. Despite that, not once before or after the jury was empanelled, was anyone permitted to ask A SINGLE QUESTION of any juror about their feelings or possible involvement in 9-11 and/or its aftermath. For all we knew, all 12 jurors plus 6 alternates had breakfast together in the twin towers that morning. For all we know, each of them lost a loved one when they later collapsed. We don’t know. What we do know is that we WILL NEVER KNOW any of these things from any of those jurors.

I was convicted by this NY jury of various securities related charges under a “RICO” indictment. In my case, the government prosecutors loosely connected a number of defendants to each other under the umbrella of RICO, a very powerful and frightening tool that was used to transform me from a well known, credible, partly comical and partly offensive hyperbole ranting trader into an enemy of the United States overnight. By utilizing RICO, the prosecutors were able to intimidate and frighten literally hundreds of witnesses, thereby ensuring that their fictitious allegations would be presented to a jury virtually unchallenged. This is the first time since May, 2002, that anyone has discussed any aspect of this case IN DEPTH publicly; not surprisingly it’s ME who is doing it now.

What you are about to read is an accurate, factual and painfully conservative summary of certain issues that relate to the prosecution of the case now known as U.S. v. Anthony Elgindy. It has taken me over five months to complete this document, and I expect only one further edit before it will be left in its final form. Let me be clear that these are my words, case citations and research, and the facts are backed by the trial record and admitted exhibits.

The only story you were probably told or have read was that I corrupted an FBI agent and used him to get confidential information that I then used for trading, or that I extorted cheap shares from vulnerable con-men/CEO’s. You also were likely told that I somehow controlled the relay of negative information, in part through my website, in such a way that flooded the market with exaggerated negative sentiment in order to manipulate shares of bulletin board stocks downward. It is very possible that you were among the thousands of people with whom I interacted publicly, here on Silicon Investor or on InsideTruth.com. It is also possible that you were one of the 438 people who came and went on my old private trading site. I have much to say to those who interacted with me, those who believed in me, and those who relied on me. This is the beginning of what I have to say.

This case involved 6 stocks originally, but was later expanded to cover 41 unique stocks, thus forcing us to effectively defend 41 “mini-trials” within a trial. Factor in different defendants, a hedge fund or two, and the parameters become obscene. I was also charged with “extorting” 2 CEO’s of small scam companies for reasons that no one has ever offered. During the trial the government only managed to introduce “evidence” for 19 of the 41. Of these 19, I was convicted of only 4 of them. My calculated gains resulting from “inside trading” in these four add up to a little over $41,000.00. If one calculates the gains on all 19 mentioned but not proven to the jury, the amount tops out at approximately $160,000.00.

Among the players in this saga are Robert Hansen, “rhansen”, who was my website administrator and friend, Derrick Cleveland, a subscriber whose best friend was also an FBI agent, both of whom are from Oklahoma. Other players include Don Kent Terrell, aka “Quack” a subscriber from Minnesota whose connection with me is confined to the walls of my chat room, and Jonathan Daws, another subscriber, who managed a hedge fund, and also ran a secret chat room called “RC Chat” (retired chat).

There are two FBI agents charged in this case, Special Agent Jeff Royer and his girlfriend Lynn Wingate. I do not know Ms. Wingate, nor am I familiar with her role, so I will address Mr. Royer.

Derrick Cleveland we learned prior to trial had been a convicted drug trafficker, who had been sentenced to 10 years for trafficking in cocaine. We also learned that he had an extensive criminal background. Prior to watching me on TV, reading about me in the Wall Street Journal, or in WIRED magazine, Cleveland worked at a small day-trading outfit in Oklahoma, struggling to make a living as a day trader. Royer was a relatively green agent who was working white collar crime.

One day Royer walks into Cleveland’s office and discloses that he is investigating a “pump and dump” scheme being run by some unsavory characters. Cleveland seizes this opportunity to pass himself of as someone who is knowledgeable about the markets. Unfortunately for Royer, Cleveland knew less about the markets than Royer did about being an agent. Before long Cleveland, the former cocaine dealer, had become a paid informant for the FBI

Cleveland’s first move amazingly is to get Royer to “give him” information about the “pump and dumps”, not to expose them but to sneak in and buy them. Royer obliges, and immediately galvanizes forever their unholy alliance. Not surprisingly, Cleveland immediately manages to lose $25,000.00 that wasn’t his to lose. It didn’t take long before other shenanigans and dealings in yet another stock surfaced between Cleveland and Royer. This time the FBI took action, and pulled Royer off white collar fraud completely, and sends him to work “Indian Crimes” on an Indian Reservation near Gallup, New Mexico.

Royer is now obligated to Cleveland, and Cleveland never lets him forget it. During the trial, Cleveland testified that he had a “routine” to get information from Royer and Royer always obliged. In one of many interviews between Cleveland and AUSA Breen, Cleveland describes these routines as being “part of just another day in the life of Derrick and Jeff”. Having failed to make money on the long side with his best friend, and having Royer pulled off white collar crime was a setback. Unfortunately for me, Cleveland read news articles about me. He watched my 20/20 interview, and became fascinated with what I did. When he read in WIRED magazine that I had a private site, he set out to join, most likely with the goal of using his best friend Royer on the short side.

Throughout the trial, the prosecution called witness after witness, who testified how much they respected, admired and trusted Royer. Simply “being an FBI agent” carried with it enough prestige to impress most people around him. The mere fact that one could claim to have a friend or colleague who was an FBI agent created a certain awe in people, and that awe was something heavily relied upon by the FBI. Officer Mitchell, a police officer from New Mexico, testified that Royer was his close friend. He looked up to S/A Royer, trusting him implicitly. Former romantic interests testified that they were impressed and trusted him. They all spoke about the air of authority and confidence he presented. Even after S/A Royer left the FBI, SEC attorney Doug Gordimer testified that he maintained a close relationship to Royer and never believed or suspected that anything was wrong.

Office Mitchell testified that after Royer left the FBI, he also believed Royer was acting honorably and continued to trust Royer’s motives and actions. When S/A Royer asked Mitchell to do a criminal background search on a subject after leaving the FBI, he did it. Royer explained that he was in need of this information to follow up on some “unfinished business”, and Officer Mitchell believed him.

All of these witnesses who took the stand described their full faith and trust in S/A Royer during and after his tenure with the FBI. Many of these witnesses were trained and experienced veterans of law enforcement, who were diligent and proficient in detecting deception and identifying liars, yet every single one of them testified about their shock upon hearing of Royer’s arrest.

Royer testified in his defense. He testified that indeed I never asked or solicited any information from him. He testified that he did searches at Cleveland’s request, or as a result of his own curiosity in connection with a “legal purpose” that only he knew. He lashed out angrily and defensively about his actions and his role. He clearly did not like being questioned, and his arrogance was obvious to everyone in the courtroom. “He was the FBI”, and nobody should ever forget it. His testimony was truly a spectacle to behold, and I thought finally the jury will get to see how this man behaves, and what presence he exudes around others.

Extremely experienced officers and agents believed this man. Everyone trusted this man. If trained, professional and veteran FBI agents, SEC attorneys and police officers believed in him when he was with the FBI and continued to do so after he left the FBI, how can I be held to a different standard? How was I better equipped to know he was “no good?” If anything, I was more easily impressed, more flattered and more trusting. I was honored that an agent of the world’s top law enforcement agency, the FBI, saw value in what I did. For their argument to be valid, it would have been necessary that I was a better judge of character than all of the experts.

This case is ALL about searches, specifically the searches done by S/A Royer. An FBI Agent like Jeff Royer cannot simply run a search in the FBI databases if he is curious about something or someone. We learned at trial that there are specific rules and steps an agent must follow.

First there must be a legitimate suspicion or belief that there is some kind of illegal activity taking place, or some other legitimate reason for the search. In addition, the agent is required to specify what his suspicions are. To facilitate this, each FBI office has various “codes” that are assigned. There are obviously multiple purposes for this, the most obvious being the ability to allow agents world wide to know who, what and why a fellow agent is looking at a subject.

We also learned that the codes, once used, are never erased, and remain in the system forever. Agent Royer conducted over 1500 illegal searches during his 5 year tenure with the FBI. EACH of these searches is a felony, punishable by 10 years in prison. Agent Royer potentially faces 15,000 years in prison for these searches, however he was never charged for those crimes. Why? Because those searches showed that Royer considered these FBI confidential databases to be personal “super-google” machines. All these searches put together show a much different picture than the one the prosecutor needed to paint. Mr. Breen wasn’t interested in the 1500 felony searches, he was only interested in the few dozen searches he could forcibly link and attribute to me, through Cleveland. The evidence also showed that the searches were always initiated by either Cleveland or Royer himself. Cleveland testified that he was the one who decided which stocks among the thousands discussed on my site, should be checked by Special Agent Royer. Not once did Cleveland testify that I solicited any information from Royer. Naturally the Gallup office of the FBI didn’t have a code for “pump and dump” or “cooking the books.” When Royer ran a search on me or someone he was curious about, he used codes like “198F”. This is a code used for someone who is sexually abusing a child on an Indian Reservation, or he used a code for the suspected robbery of an ATM machine in New Mexico.

If this trial proved anything at all, it was that Jeff Royer was indeed a rogue and possibly corrupt agent. The corrupt relationship, if in fact there was one, existed between Derrick Cleveland and Jeff Royer. I use the word “possible” because I have yet to understand where or how exactly Royer benefited.

The government initially alleged that payments in excess of $30,000.00 were made by me through Derrick Cleveland, for the purpose of corruptly inducing Royer to give me confidential FBI information. This theory was later abandoned when the government was unable to document a single red cent passing from me to Royer or anyone else for information. Unable to support their initial allegations that money was exchanged for information, the prosecution theory then morphed into allegations that the corrupt inducement was a “lucrative job offer.”

Agent Royer had been interested in working for me, and we did have serious discussions about that, but he wanted to live in Denver, near his children; I on the other hand, had little interest in an out of state employee. Discussions about possible employment therefore were not actively pursued, and Jeff Royer was never hired. He remained unemployed for the entire five months from his resignation from the FBI until the day he was arrested.

The evidence presented at trial showed that for years and years, long before the existence of my websites, or any relationship with Royer, Cleveland or other characters in this saga, I already had developed relationships with numerous government regulators and Law Enforcement officials as part of my work as a short-seller and investigative analyst.

This case alleged, as did Cleveland, “Quack” and “rhansen”, that my “illegal enterprise” began the day I retuned from jail following a four month sentence for a false insurance claim I filed 7 years earlier. I served the four month sentence in 2000, and wrote almost daily about my experiences there. At that point I had hundreds of site members. I had believed and expressed that those four months were the worst of my life, and I vowed to never do anything to jeopardize my liberty again. Between 1993 and 2000 I had became an extremely successful short seller who had amassed millions of dollars in wealth. I was on T.V., in magazines, and the subject of three books. Things couldn’t have been better. There is no denying that the publicity about the four month sentence was embarrassing and humiliating. Here was the self described fraud buster being jailed for fraud himself. With the support of hundreds if not thousands of internet supporters, I served my sentence and sought closure to what had been the worst struggle of my life. Little did I know what lay ahead.

Upon returning home I was placed on probation for three years. For a new felon, dealing with law enforcement is subject to court approval. Any contact with other convicted felons is completely prohibited. Because my business as a short seller put me in touch with both felons and law enforcement, I repeatedly sought and obtained explicit permission to deal with both felons and law enforcement officials. A condition of that permission was that I disclose those contacts to my probation officer on a monthly basis.

The evidence showed that my dealings with law enforcement prior to the four months in jail continued after my release, changed only by the additional requirement that the contacts be reported to a probation officer. Initially my relationship with Special Agent Royer was no different than the relationships I had with the numerous other representatives of law enforcement and regulatory agencies with which I spoke often. Our relationship changed when Special Agent Royer expressed to me his desire to transition from law enforcement to trading. He believed that I was best suited to teach both himself and his best friend, Derrick Cleveland, how to trade.

Skipping forward, I was convicted of possessing information regarding an investigation into Sea view (SEVU), and disseminating that information to my site members. What was NOT made clear however, was that it was MY OWN SITE that generated the information that led to the investigation. The chat logs from my site are full of examples of the work the site members did on this investigation. We called purveyors, retailers, suppliers, even the company itself, all in an effort to investigate the company’s claims which we believed to be false. This sort of due diligence is exactly what the SEC directs the public to do before investing in a company. It was ME, not Special Agent Royer, who interviewed an employee, Ken Cook, regarding the fraud in the company. It was ME who directed him to the FBI office in Clearwater, Florida. Ken Cook was then interviewed by Special Agent Charlotte Brazeil and Special Agent Neil Palenzuela in the Clearwater FBI office. I was fully debriefed by them as well, and reported my debriefing to my probation officer (http://adserv.stocksite.com/images/tonys... ), along with their contact information.

It was during this initial period of research and due diligence conducted by us that our trading positions were taken. In FBI Special Agent Charlotte Brazeil’s first interview after my arrest, she stated under oath that the three investigations into SEVU by the FBI and SEC were initiated by the information generated on my website and the information that was obtained from Ken Cook. I began those investigations. Prior to my reports and investigative work, there was NO active investigation into SEVU by any law enforcement or regulatory agency for any reason. At trial, however, Agent Brazeil never testified.

It was not until January 12, 2001 that Special Agent Royer told me that there were three investigations into SEVU. I then told the site members what he told me, verbatim, and then documented it in my notebook and sent it to my US probation officer (http://adserv.stocksite.com/images/tonys... ). This investigation was MINE, all mine. I started it, and I provided all the information to the FBI. At trial, Special Agent Neil Palenzuela, Brazeil’s partner testified that he had no recollection of who started the investigation, although he did remember Ken Cook. He also testified that those investigations terminated when the CEO of SEVU died.

Like anyone else in my shoes might have done, when told that my work had been fruitful, I proudly communicated that praise to those who worked on the investigation with me. No one on my site needed, relied on, or used FBI information to make trading decisions. Just like the hundreds of equally corrupt companies we shorted before and after SEVU, we knew the company was corrupt, therefore we knew the stock price was doomed.

Much like a neighborhood watch group, we reported corrupt and dirty companies weekly to numerous regulatory and law enforcement agencies. Those reports, however, resulted in action only a fraction of the time, and we never relied on regulatory action to make a trade. The confirmation of an FBI investigation was provided long after we had initiated our positions in SEVU. There was no testimony that I relied on that FBI information to place a trade, because there were no such trade. My next SEVU trade was not until January 29, 2001, some 17 days after I received the information.

In both the initial and superseding indictments, the prosecution repeatedly references this specific chat excerpt. On January 12, 2001, I identified in the chat room the three investigations into SEVU, and I made the comment “Hansen, erase the logs.” I said this as I stated in the chat room later, because I didn’t want to jeopardize an ongoing FBI investigation by having anyone posting this information on public message boards. Unfortunately it was already too late, since Ken Cook had made that information public 5 days earlier. In post # 17,954, long since deleted, and 5 days before January 12, after being debriefed by the FBI, Ken Cook announced that both the SEC and the FBI were investigating SEVU. Mr. Cook made this post on a public SEVU message board located at Raging Bull.com, a popular public site for stock traders to exchange information and opinions. His post was noticed immediately by site members and the following exchange occurred on

January 7, 2001:

[12:52] DMG >> Is KCPoisenArrow, Ken Cook? Look at the last bullet item! Who is putting this out?
http://www.ragingbull.altavista.com/mboa...
[12:52] stirlingmoss >> he denied being Ken Cook in an earlier post, but who
knows
[12:53] DMG >> "ONGOING FBI SEC CRIMINAL INVESTIGATION.

When I remembered that Ken Cook had already made that public disclosure, I decided not to erase the chat logs-nor were they EVER erased-since we realized the information had already been made public in a public forum frequented by both SEVU shareholders and management. The jury was never told that the chat was not deleted. Robert Hansen incorrectly testified that he deleted this chat when in fact he had not done so. The prosecutors solicited this testimony, and then embraced it instead of correcting it.

There were ongoing jokes about erasing the logs, mostly done during fights, when off color jokes were made, or when someone was posting inappropriate adult site links, not confidential regulatory information. On January 12, 2001, I posted the following in my chat room:

[16:44] AnthonyPacific >> 4 the 3 investigations are wire fraud, mkt
manipulation, and mail fraud officially by the FBI SEC is dong a title 15
investigation..and none of this can leave or go public..if you do you willbe
pros
[16:44] AnthonyPacific >> 4 thats a fact direct;ly from the FBI
[16:44] AnthonyPacific >> 4 erase the log Hansen

[16:45] AnthonyPacific >> 4 i dont think we will get anymore info again thast all we get
[16:45] Salogan >> no more info from FBI Tony?
[16:46] AnthonyPacific >> 4 sal i think we have gotten our fair share salogen
and this is out of courtesy for all the hard work
[16:47] AnthonyPacific >> 4 i think we did good
[16:47] AnthonyPacific >> 4 if anyone even mentions FBI on a message board I
think you will get in a woreld of trouble
[16:48] AnthonyPacific >> 4 ok folks?
[16:48] AnthonyPacific >> 4 Bye everyone
[16:49] Kris >> i thoght FBI was already mention on boards
[16:49] Kris >> i think ken cook menitoned them didn't he?
[16:51] AnthonyPacific >> 4 well from today on

The chat text following the now famous line “erase the log Hansen” has never before been made public, and obviously portrays a different picture than what the prosecutors have led everyone to believe.

Of the 1100 chat logs in this case, the prosecution was unable to find any chat log deletions even remotely associated with the SEC or FBI with the exception of a few hours on January 2, 2001, the same day Special Agent Royer accessed the FBI computers for a search on SEVU’s CEO, Richard McBride. Despite having retrieved the deleted logs during their investigation, the prosecution never introduced them into evidence. WHY? Because it was not Anthony Elgindy who asked that the logs be deleted, and the real reason they were deleted was to prevent the SEVU CEO from covering up or destroying his fraud, something he attempted to do when he staged a “break-in” at his headquarters, reporting that his mainframes and important documents were stolen. The deleted text was exculpatory.

I clearly had no belief that the receipt of this information was wrong. The stock had already experienced the majority of its decline, my coverage was over, and I didn’t make an additional trade for over 2 weeks. IF this belief was wrong, it was the fault of the FBI who should have known better. I was not charged with knowing what the FBI can and can’t disclose to me. Further, anyone who knows anything about shorting stocks knows that an “investigation” is meaningless information when making trading decisions-something that was frequently discussed among traders on the site.

Unfortunately the average American investor doesn’t understand that when the SEC, for example, informs a company or person that they are conducting a “formal non-public investigation”, that company is REQUIRED to publicly disclose that “non-public” information. The government’s star witness, Derrick Cleveland, testified that “this kind of information is the best in the world.” I knew differently.

Therefore there was no effort to attempt to capitalize on and use “inside information” because the flow of information on SEVU began with me and my site members. My short position began on Oct. 9, 2000 when the stock was $10 a share. By the time there was any information disclosed about an FBI investigation, the stock had traded around $3 a share. No one was entering positions at that point, and when asked if I was taking a position, I stated NO.

Further, the very information that was supposed to be so circumspect regarding an investigation was posted on the investment chat site “Raging Bull” 5 days prior to anything I posted on my website. Thus the question to be asked is what IS “public” information? Had the information that SEVU was garbage been effectively disseminated in a manner sufficient to ensure its availability to the investing public? Had the market ‘absorbed’ the disclosed information? It seems a stock going from $10 to $3 indicates that the investing public absorbed it quite well.

The testimony and evidence overwhelmingly shows that the motivation and purpose in providing this information to governmental agencies was to expose a fraudulent company, or ideally to cause them to be shut down while profiting at their expense.

We introduced evidence and testimony going back to 1997 showing my interactions, on tape and in writing, with lawyers and agents of regulatory agencies regarding fraudulent companies, many of which I was openly shorting at the time. For example, in 1997 in a stock called Quigley, “QGLY”, a company selling cold lozenges, I was contacted by SEC attorney Jonathan Levy and FBI Agent Mike Gaeta. Both were aware that I knew of their investigations into QGLY, both knew I was short, and both testified that no one else in the public would or could have known what I knew. The testimony showed that frequently when I spoke with regulatory agency representatives they often disclosed SEC or FBI interest in specific companies, acknowledging that the public did not know about that interest, while at the same time acknowledging my short position in the very companies they admitted to investigating. When these conversations occur on a regular basis, am I not to presume that the agent knows what he can and cannot disclose to me? Would any reasonable person have assumed otherwise?

When I initiate an investigation that is beneficial to the investing public by exposing a fraud, I obviously possess an informational advantage as a result of my due diligence and hard work. However, under the misappropriation theory of insider trading with which I was charged, a person violates the law when he misappropriates material nonpublic information in breach of a fiduciary duty or similar relationship of trust and confidence and uses that information in a securities transaction.

Agent Royer’s fraud was consummated, not when he gained the confidential information, but when, without disclosure to the FBI, he or his tippee used the information to purchase or sell securities. The securities transaction and the breach of duty thus coincide. The government was required to prove that I knew Special Agent Royer was sharing material, confidential, non-public information in violation of his fiduciary duty to the FBI, and that I traded on that information. Yet there was NO EVIDENCE that this was the case. On the contrary, if I had known that what Special Agent Royer said or did was wrong, would I have openly repeated it to my site members, and more importantly, would I have reported that information to my probation officer (http://adserv.stocksite.com/images/tonys... )? My site had between 150-200 people logged on at any given time during market hours, yet not a single one ever spoke up and said “Hey, what’s going on here?” No one ever filed a complaint with anyone. The words “FBI” and “SEC” appear over 4000 times in chat and there was ONE deletion, eventually recovered. I am simply confused as to what I could have done differently.

I was interviewed by Agent Brazeil, and completely debriefed on SEVU. I introduced her to Ken Cook, the product manager at SEVU, and I introduced her to the beginning of this investigation. I dealt with 12 different Law Enforcement agents/officers regarding SEVU. The jury found me guilty of inside trading in SEVU, yet I was acquitted of inside trading and manipulation in SULPHCO, “SLPH.” One cannot appreciate the jury’s confusion and prejudice unless you see what the prosecution presented for SEVU and compare it with what they offered for SLPH. What you see at the bottom is everything the prosecution offered and everything at the top is what they left out that we had to fill in. I started both investigations by the SEC and FBI into SLPH. I also started both investigations into SEVU when I sent Ken Cook to Agents Charlotte Brazeil, Neil Palenzuela., and SEC attorney Andrew Snowdon. I now stand convicted of knowing about the very investigations I began in SEVU, yet acquitted of the investigations I began into SLPH. In both cases I reported my contacts with Law Enforcement and S/A Royer to my probation officer. Once again I am stumped and frustrated because I don’t know what I could have done differently. Something is very wrong with this picture.

Next I would like to address the allegations of manipulation through group trading, staged release of information, dissemination of negative information and front running. To make out a claim of market manipulation, the government must present evidence that I intended to engage in some type of deceptive behavior in conjunction with my short selling that either injected inaccurate information into the marketplace or created artificial demand for the securities. The word intent is used in excess of 90 times in the instructions to the jury. To prove fraudulent intent, the government was required to prove that I intentionally devised or participated in a scheme with knowledge of the scheme's fraudulent nature and with the intent that the scheme's illicit objectives be achieved. They simply did not present that evidence, because it does not exist.

The prosecution had the task of getting 12 people to look and see what over 400 plus other people never saw, day in and day out, for years. Knowing they could never prove intent, they substituted character assassination. They also set out to “demonize” short selling. They painted the picture that all short sellers are bad and horrible sources of information. They introduced prejudicial, unfounded and ludicrous allegations of suspected activities relating to September 11. They introduced a blown-up photograph of me with an FBI business card on my forehead. They were so excited when they blew up the image of the fake ID they practically danced with it in front of the jury. The assault on my character was relentless. Every possible opportunity to chip at me, to tear me down, was seized. The message they wanted to send was that no one could possibly get information of value from me, because I was simply ME.

SEC attorneys who previously had sought information about stocks I was investigating and shorting could no longer recognize or remember emails they sent to me. SEC attorneys with whom I had worked in the past and who had patted me on the back no longer could recognize my work. The countless hours of work and research out into each Insidetruth.com report were summarily dismissed. It became clear that a pattern was developing. Insidetruth.com reports became “radio-active”, most couldn’t recall ever reading them or why they sent the reports to other SEC attorneys. Who needs “intent” when you can sling mud?

The government alleges that my website members sometimes coordinated to sell their shares all at once to pressure stock prices downward. I would point out that it is completely legal for a large group of people to buy or sell a stock at the same time. However by simply making these allegations, the prosecution was somehow able to invent a brand new crime during the trial. They called it “group trading,” defined by their witness as “Trading where everybody is trading in the same direction, same stock, with the same results of stock going down.” To support their allegations of criminal activity, they cite my own words in chat where I am describing my understanding of “collusion”. Collusion involves non-bona fide buy or sell orders placed by more than two people with the sole intent of creating a false market picture. There were never any such trades by anyone, nor is anyone alleged to have ever entered any fake orders. Groups of people are legally permitted to buy or sell a stock, and there is no such law that states otherwise. Even if they acquire a large position and the effect of that position is to depress the stock price, it does not constitute manipulative or deceptive activity. The truth is that short selling-even massive short selling-does not create a false impression of supply and demand in the marketplace because there necessarily are other parties betting against these positions. That short selling may depress share prices, which in turn enables traders to buy more shares for less money, is not evidence of unlawful market manipulation, or fraudulent intent, but rather is a natural consequence of a lawful and carefully regulated trading practice, namely short selling. GFL Advantage Fund, Ltd. v. Colkitt, 272 F. 3rd 189, 2001. “Short selling is simply not unlawful, even in large quantities and even if the trading does negatively affect the purchase price," as long as "the trading volume and price reflect supply and demand based on accurate market information." In re Olympia Brewing Co. Securities Litigation, 613 F.Supp. 1286. This is true even if more shares are sold short than physically exist. Sullivan & Long Inc. v. Scattered Corp., 47 F. 3rd 857, C.A. 7 (Ill.), 1995.

When it comes to short selling in general, the SEC itself acknowledges that "short selling provides the market with at least two important benefits: market liquidity and pricing efficiency." The SEC explains these benefits further saying that "Market liquidity is generally provided through short selling.”Market participants who believe a stock is overvalued may engage in short sales in an attempt to profit from a perceived divergence of prices from true economic values. Such short sellers add to stock pricing efficiency because their transactions inform the market of their evaluation of future stock price performance. This evaluation is reflected in the resulting market price of the security."

When you are in a chat room with 10, 20, 50 or 200 people, and you are all looking for trading ideas, long or short, and one of them bumps into a juicy looking, ripe scam that seems to be in the middle of a yet un-exposed pump and dump, it is not surprising to see the stock drop or even collapse when people begin to sell the stock. Insiders and pump and dumpers hate when anyone joins them in selling their stock. This stock movement is no different than the more commonly seen gap ups in a stock’s price after good news. One only need to watch any financial channel during a “buy, sell or hold” segment to see a massive change in a stock’s price as some analyst says it’s a great buy or an over-valued company while thousands of loyal viewers push the buy or sell button simultaneously.

I did nothing but tell the truth, or what I believed to be the truth; there was no testimony to the contrary. If information is truthful, how can it possibly be manipulative?

What we were doing was in effect promoting efficiency in the securities market by researching and exposing fraudulent companies, and profiting from that legitimate information advantage-an advantage created through our own hard work and due diligence.

The effect of trading on an information advantage is to penalize ignorance, and to bring market values into closer, quicker conformity with economic reality. Legitimate traders and analysts should be able to profit from their diligence without having to speculate as to the risk of a criminal penalty, or whether they will violate a duty by trading while in possession of public information. If a company is a fraud and a scam, having no value other than its own puffery, how can one exaggerate that fact? They have no legitimate earnings, and their value consists of nothing more than their creative ability to fabricate and publish fraudulent press releases. No trader, broker, analyst, fund manager or investor owes any obligation to the public, any group or agency to disclose their research, findings opinions or most of all their trading positions. The resulting selling pressure exerted on any stock is completely legitimate so long as every one of the buy and sell orders are legitimate, bona fide orders that are placed by investors who actually intend to buy or sell the security. Quite contrary to the narrow minded views of the prosecutors in this case, to suppress well researched actions of short sellers would allow these fraudulent, scam companies to induce even more innocent victims into their web, only to sooner or later be fleeced of all their investment dollars. That is what ultimately erodes investor confidence in the marketplace causing them to choose other investments, which would hurt the liquidity of the exchanges, the liquidity of the marketplace, and eventually the capital structure of our country.

The front running allegations and convictions were especially incredible. Interestingly the prosecution never once in the indictment or in the trial disclosed my execution price, not even when it is directly related to my conviction, such as in the front running conviction for INIV. For example, I was convicted of front running for the following situation: I entered an order to short three thousand shares of INIV at 12:44 PM, at a price of $4.45. Within minutes I got a call with a trade report, confirming a sale of 3000 shares at $4.45. I then called it a short on the site at 12:50 PM. In chat I tell my site members that I had shorted 3,000 shares a few minutes earlier. You can see for yourselves, no one placed a short sale immediately after my call; the next trade in INIV was done 8 minutes later.

CHAT: 8/17/01

[12:50] anthony >> INIV<--short 15-20% @ 4.45>
[12:51] anthony >> INIV located in CHINA
[12:51] anthony >> caujseway bay, people s republic of china
[12:51] anthony >> phone 852-4329
[12:51] anthony >> PROP job
[12:51] anthony >> used to be ISOF
[12:54] anthony >> INIV already split
[12:54] anthony >> this ois the post split price
[12:54] doorman >> INIV volume hasn't moved since call? I'm showing 21600
[12:55] anthony >> i sold the 3 seconbds before the call
[12:55] anthony >> 3K
[12:58] anthony >> i waited for INVI to get high then called it
[12:58] chris431 >> 20k print 4.35 iniv
[12:59] anthony >> good let em choke
[12:59] anthony >> pete how many out on this pig.
[12:59] anthony >> anyone want to guess whose 20 that is
[13:01] ebrahim >> wow .. they filled me at 4.35 ;)
[13:01] anthony >> iniv is crooked

There was NO evidence presented that anyone was harmed by this or ANY OTHER trade that was alleged to be front running, or trading against the site. There were no site members to present testimony of harm because there was NO HARM. My pattern and practice was to trade what I said I was trading, Each time I said I shorted a certain stock at a certain price that’s what I did. The government presented no evidence to the contrary because such evidence did not exist. We presented chat from one of the dozens of site trading classes discussing what one could expect on trading calls.

[21:06] rhansen >> You will see two types of calls here
[21:06] rhansen >> Broadcast and Chat
[21:06] WhoLovesYa >> good calls and bad calls
[21:06] maximus >> and long and short
[21:06] rhansen >> Broadcast calls will not only sound the gong sound but also
go to your email and / or pager
[21:07] rhansen >> Chat calls are simply posted in chat because they are risky
or very short term and are only applicable to people in chat
[21:08] rhansen >> You have to remember, a call wether broadcast or not is just
a trader here saying that he or she is making a trade
[21:09] rhansen >> If you follow that trader a lot then you might chose to make
the same trade, but that is completely up to you
[21:09] rhansen >> They are not "telling" you what to do, simply saying what
they are doing
[21:10] anthony >> and in some cases,,they are telling you what they have just
done

Amazingly I was convicted of fraud through the act of front running my site members by selling INIV at $4.45 at 12:44 PM, then suggesting INIV was a good short at $4.45 a few minutes later. In chat we see a member at 12:58 referencing a 20,000 share print on INIV at $4.45, then 11 minutes after the short call at $4.45, another member is filled at $4.45. Anyone who knows trading must be shaking his/her head in disbelief. The jury simply did not get it.

Can we for a moment examine what front running actually is? As defined by the SEC itself, front-running occurs when a licensed broker executes a proprietary trade while in possession of unexecuted customer orders for the same security to the detriment of his customer. Was I a licensed broker? Absolutely not. Was there a scintilla of evidence of harm to ANYONE as a result of my trades? No, there was not. Further, the “directives” or “advice” which is how the government mistakenly characterize my opinions and beliefs on the site, were all at specific prices at which I believed a good short position should be executed. There was not a single example presented by the government that I encouraged or suggested that someone sell at a price less favorable than my very own execution. Yet I stand convicted of front running and trading against my own advice?

Another incredible example of the injustice of this case is the conviction for trading in VLPI in count 32. VLPI you may recall is the company that attempted to profit from the post 9-11 turmoil surrounding the ANTHRAX scare by claiming they were about to unveil a home test kit for Anthrax. This kit was to be sold at Ace Hardware among other locations. That was all false of course. But this didn’t keep the stock from moving from a few cents a share to almost $3.00 a share on 10’s of millions of shares.

This was the only chronology presented by the prosecution:

B/C means a Global site wide and email broadcast, meaning an official broadcast trading call sent by
email to every single site member and to live chat simultaneously.

10/23/01@ 9:17am Elgindy shorts VLPI
10/23/01@11:44am B/C VLPIàshort @1.80-200(add)
10/24/01 Elgindy covers VLPI

The chronology of VLPI calls and my trading calls are as follows: (http://adserv.stocksite.com/images/tonys... )

10/15/01 @ 13:10 Elgindy shorts VLPI @ .88
10/15/01 @ 13:17 B/C VLPIàshort 20% @ .88-.90 (scam, exploits attacks)

10/16/01 @ 11:45 B/C VLPI cover @ .60-.62 (gain of 33%)
10/16/01 @ 11:48 Elgindy covers VLPI @ .60

10/17/01 @ 2:07 pm B/C VLPIàshort 20% @ 1.26-1.30 (second pass)
10/17/01 @ 2:08 pm Elgindy shorts VLPI @ 1.25
10/17/01 @ 1:45 pm Email B/C VLPI-à is a 100% position candidate

10/18/01 @ 12:55am*( In the middle of the night) VLPIà making illegal claims
10/18/01 @ 7 :30 pm email B/C/ VLPIàbanned from posts on message boards

10/19/01 @ 9:23 am B/C VLPI-àshort 25% @1.95 (add)
10/19/01 @ 9:17 am Elgindy places order to short VLPI @ 1.96

10/23/01 @ 10:56am Elgindy shorts VLPI @ 1.83-1.90
10/23/01 @ 11:44am B/C VLPI-àshort 20% @ 1.80-2.00
10/23/01 @ 3:57pm email B/C-à VLPI report on InsideTruth
10/23/01 @ 4:10pm email B/C “go audio, my last ‘til my return”
10/23/01 @ 5:02pm email B/C/ “new policy while I am gone”
10/23/01 @ 7:24pm email B/C “Ace Hardware denies selling VLPI Anhrax kits”

10/24/01 @ 10:56am during the day, Elgindy covers 90% of his VLPI position @ .80

10/28/01 @ 12:55pm email B/C “I am in Cairo, it appears to be incredibly safe”

11/20/01 @ 8:09pm email B/C “I am home, hope everyone is well”
11/20-11/27/01 Elgindy re-shorts VLPI @ average .60

11/28/01 @ 12:30 B/C “VLPIàSEC investigation, Tests were never certified”
12/14/01 B/C “VLPI à raided by FBI, cover at 18 cents.
12/14/01 Elgindy covers all VLPI short position @ 18 cents

I was convicted of front running based on a short sale made on 10/23/01. This was the third call made on this stock, adding to a position that we had begun trading on 10/17/01, and traded almost every day for a week. As you can see in the chronology, I made a call on VLPI on 10/17 @ 1.26. I then made a second call, adding to my VLPI short, on 10/19 @ 1.95. I clearly state it’s an “add” to an existing short position. Finally on 10/23 I make a third call, also an add, @ 1.80-2.00. I sold 5,000 shares at an average price of 1.85 on the 23rd. I was short over 100,000 shares of VLPI, yet this one 5000 share trade resulted in a felony conviction of wire fraud? This is not even front running. Further, how can any additional short sales in VLPI possibly front run anyone since they are presumably already short?

Count 21 alleged that I traded against my advice. What advice? The sell short calls on 10/23/01 that preceded the SELL recommendation I published on InsideTruth.com were made when the stock was trading near $2.00 as you can see from the above chronology.

This chronology shows that I participated in every trade I suggested with one exception. On 10/23/01 at 7:24 pm Ace Hardware denied they were selling the test kits. The next day, VLPI shares plunged. My previous short call and sales were at roughly 1.90, and the stock was at .80 on 10/24. However, since I was leaving the country, and could not monitor the position, I decided to quietly book most of my VLPI profits of over 50% so I wouldn’t have to worry about a six figure short position in a penny stock while I was away. Upon my return, I quietly re-entered my short position, at a price lower than where I covered. In other words, I paid a .20 premium just for the peace of mind I had of not having to worry about an open position while on vacation.

The prosecution failed to disclose the price at which I sold VLPI on 10/23, or the price at which I bought it on 10/24. They also never disclose the critically important intervening announcement that Ace Hardware was not selling the Anthrax test kits as had been represented. The price dropped by 50% overnight. ANY trader in my shoes would have covered that position. Had the government been candid and the jury understood what had occurred, they would have seen the last “short” call on VLPI was a cover @ .18 on 12/14/01.This would have given anyone who followed my calls a profit of close to or above 90%. Site members weren’t empty headed children; they were fully grown, mature traders perfectly capable of making their own decisions and managing their own money. None of them required that I “call” each and every transaction I made on my own behalf, nor did they expect that, nor did I promise that. How does my covering a position prior to my vacation relate in any way to their own money management decisions?

The Government was not unable to find any huge amounts of money made by me in any of these tiny scams that Cleveland and Royer searched, nor could they find any victims. They had no choice but to dig into minutia of thinly traded stocks that, on average, made me $10,000 each. The significance of these transactions are put in perspective by understanding that I made more trading HAND, the rival of PALM, than ALL of the stocks mentioned in the indictment combined. These thinly traded scam stocks were more for my entertainment than for profit.

This was part of the government’s strategy – confuse the jury, and then offer simplistic, contrived “explanations” to make them think they understood when they clearly didn’t. The jury was faced with an enormously complex case, which made it easier for them to be persuaded by the government’s pre-packaged account of the facts as well as the prosecutor’s own bias against short selling in general.

I was convicted even though I did exactly what I said I was going to do. No fraud, no testimony of fraud. Can you imagine a stock fraud prosecution in which the prosecutor never tells the jury the price at which the defendant bought or sold the stock? Where the prosecution never shows harm as a result of the trade, or puts a single “victim” of the alleged fraud on the witness stand?

I ask myself how is it possible to exaggerate negative sentiment in a company that is a fraud to begin with. Where is the line between appropriate negative and exaggerated negative? Is it now a crime to express extreme views, or have strongly held beliefs? Why am I not allowed to believe a stock is a good short or a scam, and communicate that opinion to others? How can it be a crime to tell 10, 20 or 100 people that a scam trading at $5.00 is in fact a scam? Is it manipulation because 50 people try to short a stock at $5 and only 7 or 8 get the position at $5, another 3 or 4 get it at $4.50 and the rest get nothing? If a company is a real company, any price dip will be met with enthusiastic buyers, happy to get a good deal, and normal market conditions will regulate the stock price. Smart investors will recognize the opportunity to buy more shares for less money. Only if a stock is a fraud will there be no buyers, because the price was artificially inflated to begin with. Scammers and insiders rely on pump and dump schemes, and become angry and vindictive against those who uncover their fraud, because the price will soon collapse when selling based on truthful information is combined with the insiders own selling.

Similarly, is it a crime to be short 10,000 shares of a stock, and trim down that position to 7,000 shares, or 3,000 shares as one manages his own capital and risk exposure? Is it really so inconceivable to believe a stock is a scam, and yet still trade it cautiously because the manipulation upward was so strong? Why should I not be allowed to profit from a trade simply for believing that the company share price will eventually implode to pennies per share? Why am I not allowed to close positions and restart them while always trading from a net-short position? Those on the site knew all about “recycling”, “milking the cow”, “private trading” and numerous other expressions used almost exclusively on the site. Most site members could tell you in detail how to extract 3-4 points from a $2.00 stock, using trading volatility.

Unfortunately that testimony was not presented at trial, since many site members who wanted to testify were intimidated by the government’s threats of possible prosecution, or being named as un-indicted co-conspirators. They were confused by the ability of the government to keep the names of the stocks sealed until time of trial, thus preventing both site members and their legal counsel from adequately assessing their own legal status. Those actions by the prosecutor, who according to the ABA Model Rules of Professional Conduct is required to act as a "minister of justice," meant that the jury had to rely in large part on Derrick Cleveland for information about how the site worked.

Common sense tells you that you don’t make money unless you take your profits. Especially in scam companies, one never knows when the next false press release will generate a 20-50 or 400% rise in the stock price. I was always trading the scams from the short side, but as a trader part of my discipline is always to book profits when they become available. We called it the 15-20% profit rule on the site.

It was further pointed out that in every one of my reports was a disclaimer stating that “I can and often do maintain a position consistent with my reports.” By extension this also means that I may NOT maintain such a position, although I usually did. Somehow the prosecution believed that partially covering a profitable short position, just like selling some of a profitable long position was not smart trading but rather trading against my advice and against my site members. It is a ludicrous concept, but yet that’s what the jury was led to believe. It is just another example of how confusing and contrived their presentation was, and how the jury really was misled. The fact that there was no trade that I broadcast that I did not actually do at a similar time as the broadcast, or that there was no evidence of a price differential to my benefit or to a site members’ detriment simply did not matter.

The allegations of “spreading false or misleading statements” concern two statements taken from hundreds of thousands of public statements made about thousands of topics over a period of many years. The first statement was my accusation in an email that Paul Brown was a convicted felon and the second was a statement that Insidetruth.com had uncovered ties between Adnam Kashoggi and Osama Bin-Laden. This latter report was released on September 25, 2001, AFTER trading in GENI had already been halted by the NASDAQ. Incidentally, after that report was published, GENI shares NEVER traded again.

The Paul Brown accusation was the result of a routine criminal background search that was conducted by a site member on December 18, 2001 showing Paul Brown to be a convicted felon. The site member “Quack” testified that he sent me that information the next day, December 19, 2001. I then contacted the Idaho Dept. of Corrections, and on a taped, site-wide audio broadcast phone call confirmed with them that Paul Brown was indeed a convicted felon. It was only later that I learned that Paul Brown’s conviction had been expunged, which I acknowledged to him both privately and publicly. At all times, however, I believed what I said to be true.

Meanwhile the alleged Osama Bin-Laden and Kashoggi link, it came from a published Dutch report that we had translated into English and once again we believed it was a true statement. During the trial, SEC attorney Rob Long admitted that the SEC itself was investigating the possible connection. Regardless of whether or not such a connection between a well known arms trader and Osama Bin-Laden existed, we believed it to be true-or at least plausible-just as others far more knowledgeable than ourselves did. More importantly, since when is it a crime to publicly express an opinion, even a mistaken opinion? The true perverse irony of the government’s accusation-that I wrongly tied a high-profile individual to terrorism in order to capitalize on the ensuing negative hype-is exactly what the prosecutors did to me. The difference was that if I did so, I did it unknowingly.

I now turn to the testimony of Derrick Cleveland, the star witness for the government. Having succeeded in frightening and intimidating most site members, the prosecution was able to present the avalanche of lies fabricated by Cleveland, virtually unchallenged, before the jury.

Derrick Cleveland testified that my price targets in InsideTruth.com were “unreasonable.” When I gave SEVU a price target of .05, he testified that he and everyone else expected me to stay short until SEVU hit that price of .05. Thus any cover of my position would cause me to be guilty of trading against my own advice, and trading against site members. Cleveland testified that he traded NSOL after obtaining inside information about Paul Brown from Jeff Royer. This is a lie. In fact, on December 18, 2001, members of my site learned that he had a felony conviction from a publicly available website; it was not until the next day, December 19, 2001, that Derrick Cleveland asked Jeff Royer to check it out in the FBI database. I traded based on the December 18th information as did many other site members. Ironically the significant person who did NOT trade NSOL was Derrick Cleveland himself since the check done by Jeff Royer showed that Paul Brown was not a convicted felon after all. Cleveland didn't trade NSOL like I and others did, because he knew the felony information was erroneous. He knew this because he was the only one who knew and apparently needed Royer’s information. It took me five days to learn what Cleveland knew on December 19th (http://adserv.stocksite.com/images/tonys... )

12/24/01

10:25] anthony >> 4 Brown had his felony conviction expunged
[10:26] anthony >> 4 He can legally deny it ever existed unless he is testifying
in criminal case
[10:26] anthony >> 4 I have the expungement document
[10:27] anthony >> he got it expunges to get the weopons permit

Cleveland testified that Royer was to remain a secret source of information and that both he and I knew that. The evidence, however, showed the opposite. I routinely and readily admitted on the site that some information was received from Royer; our relationship was not kept secret because I believed I had nothing to hide. My criminal liability necessarily must depend upon a showing that I knew Jeff Royer breached a fiduciary duty to the FBI-which evidence simply does not exist. Had I known there was something illegal about Jeff Royer’s comments, why would I so openly discuss them on my site that was comprised of hundreds of members? Even more baffling, why would I tell my probation officer (http://adserv.stocksite.com/images/tonys... ) exactly who I was meeting with, and what I was doing? Why would I put in writing-to a federal law enforcement official no less-that which I believed to be illegal?

Cleveland similarly testified that the chat alias “APCork” was Jeff Royer, but testimony by Robert Hansen, site administrator, showed that to be a lie as well.

Cleveland testified that he traded BIOP based exclusively on the “inside information” he received from Royer regarding a raid by Mexican authorities. Yet another lie, since the evidence showed that this information came from a publicly available news story reported on Bloomberg News 10 minutes earlier. (http://adserv.stocksite.com/images/tonys... )

-- posted by Kirk