January 4, 2005
Former FBI Agent Testifies in His Own Defense
One of our earliest posts (Nov. 2 here) discussed the beginning of the securities fraud and market manipulation trial of Anthony Elgindy and former FBI Agent Jeffrey Royer. Among other things, Royer is accused of feeding confidential information to Elgindy about companies being investigated by the FBI and SEC, which Elgindy used to short the stock of the companies and, allegedly, to extort money from others under the threat of publicizing the investigations, which would negatively affect their shares. An article in the New York Times (Jan. 4) discusses Royer's cross-examination, in which he defended his disclosure of the information to Elgindy as a means of cultivating a source who could provide information about corporate fraud. The article states:
"I was interested in getting information back," said Mr. Royer, who was soft-spoken at first but grew more feisty as prosecutors continued with their cross-examination. He said he had no idea that Mr. Elgindy would use the information to sell stocks short, which involves borrowing shares in the hope that their price will fall.
Mr. Royer said that he thought that Mr. Elgindy's network of contacts in the investment world could provide the F.B.I. with useful information, and that he showed Mr. Elgindy some confidential e-mail messages and other documents related to companies under investigation as a way of winning trust.
"By sharing information, I would allow law enforcement and regulatory authorities to shut down companies that scammed the general public. That is what I planned to do."
Other government witnesses, including FBI agents, have testified that Royer gained access to password-protected files and disclosed the information to Elgindy, and that Royer said he planned to work for Elgindy when he resigned from the FBI in 2001. It will be interesting to see if Royer's explanation for his actions convinces the jury because he largely admits to disclosing secret information to Elgindy. It does not appear that Elgindy will testify. (ph)
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