Former FBI Agent Wingate Pleads Guilty In Elgindy Case

 
   Carol S. Remond 
   DOW JONES NEWSWIRES 
   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.