Ex-FBI Agent Admits He Gave Tips

A former FBI agent admitted that he gave online stock traders confidential details of federal investigations, including a probe of the Sept. 11 terrorist attacks.

One of the recipients was San Diego penny-stock picker Anthony Elgindy. Elgindy was investigated by a Justice Department task force examining whether anyone might have known of the terrorists’ plans and profited by selling vulnerable stocks just before the attacks, Jeffrey Royer said.

Elgindy was not charged in connection with that probe, but an investigation into the ties between Elgindy and Royer led to racketeering, securities fraud and other charges against the two men. They are on trial together in federal court in Brooklyn, N.Y.

Taking the stand in his defense, Royer acknowledged Monday that he revealed the existence of FBI and Securities and Exchange Commission investigations, executives’ criminal records and other sensitive information to Elgindy and associate Derrick Cleveland.

He said the apparent violations were justified because Elgindy and Cleveland were stock market experts who helped him develop evidence of financial wrongdoing.

Prosecutors say the relationship was criminal. Elgindy was accused of paying Royer for the information and using it to manipulate stock prices and extort money from firms that were the subjects of investigations.

When pressed by Assistant U.S. Atty. Seth Levine about apparent violations of FBI rules, Royer grew testy, asserting that he was an independent-minded agent who had the right to decide what information to reveal.

“It’s real easy for you to armchair quarterback when you don’t have anything to do with the case,” Royer told Levine. “Pursuant to a law-enforcement purpose, I can do anything I want with the files.”

Cleveland has pleaded guilty to conspiracy to commit securities fraud and testified against Elgindy and Royer.