Former FBI Agent Wingate Pleads Guilty In Elgindy Case

   Carol S. Remond 
June 23, 2005
  NEW YORK (Dow Jones)--Former Federal Bureau Of Investigation special agent
Lynn Wingate pleaded guilty to obstruction of justice in a Brooklyn courtroom
Thursday for her role in the U.S. government's case against short seller
Anthony Elgindy and others. 
Elgindy and four others were charged in May 2002 in the U.S. District Court for the Eastern District of New York with securities fraud, extortion and obstruction of justice. Others involved were later charged in the case. Elgindy and former FBI special agent Jeffrey Royer were found guilty of racketeering, conspiracy and securities fraud by a Brooklyn jury earlier this year and are awaiting sentencing. Others charged in the case have pleaded guilty to various charges and are also awaiting sentencing.
The case involved use of confidential government information illegally obtained by Elgindy from FBI agent Royer and others to manipulate the price of small publicly traded companies. Elgindy was a controversial short seller who ran two investing Web sites through which he shared damaging information with other investors. The government alleged that after he gained access to confidential government information, Elgindy would organize site members in order to maximize the impact of the release of negative information on the stock price of targeted companies. Short sellers sell securities in anticipation to profit later when their price goes down.
In Wingate's case, federal prosecutors alleged that she helped then-boyfriend Royer to illegally obtain nonpublic information contained in federal databases after he left the bureau in December 2001. Like Royer, Wingate was charged with racketeering and securities fraud. She was also charged with obstruction of justice for having impeded an investigation into suspect trading activity ahead of the attacks of Sept. 11, 2001. Court testimony during the trials of Elgindy and Royer showed that Wingate frequently checked FBI databases to keep Royer abreast of the progress of that probe, which later in 2001 transformed into an investigation of Elgindy, Royer and others who were later charged.
The obstruction of justice charge carries a maximum penalty of 10 year of imprisonment.
The government recommended as part of her plea agreement that Wingate serve between 18 and 24 months. She agreed not to appeal her sentencing if federal Judge Raymond Dearie sentences her to 24 months or less. Sentencing is scheduled for Sept. 30.
Wingate, in her allocution in court, had problems admitting to Judge Dearie that she, in fact, obstructed a grand jury investigation. After a few questions, to satisfy himself that she knew to what she was pleading guilty, Dearie accepted her guilty plea.
Former broker Troy Peters is now the only remaining defendant in the case. Peters, who is also charged in a 2003 criminal case in the Central District of California, is trying to work out a deal with federal prosecutors in Brooklyn and California.
Also charged in the Elgindy case were:
- Derrick Cleveland who pleaded guilty to conspiracy to commit securities fraud and cooperated with the government;
- Former hedge-fund manager Jonathan Daws who pleaded guilty to conspiracy to commit insider trading;
- Donald Kent Terrell, a former member of Elgindy's investing Web site, who pleaded guilty to conspiracy to commit securities fraud and cooperated with the government;
   - Robert Hansen, Elgindy's former webmaster, who pleaded guilty
to conspiracy to commit securities fraud and cooperated with the government.
They are all awaiting sentencing.