Posted on 05/25/2002 1:46:42 AM PDT by JohnHuang2
Edited on 05/26/2004 5:06:33 PM PDT by Jim Robinson. [history]
May 25, 2002 -- An accused inside-trader made suspicious stock trades on Sept. 10, leading investigators to believe he might have known about the terror attacks a day later, a federal prosecutor said yesterday. Notorious short trader Amr Ibrahim Elgindy - also known as "Tony" and "Anthony Pacific" - allegedly ordered his kids' $300,000 trust fund liquidated the day before terrorists slammed planes into the World Trade Center and Pentagon.
(Excerpt) Read more at nypost.com ...
"Jeffrey A. Royer, then a special agent in the FBI's Oklahoma City office." & "Also indicted were Lynn Wingate, 34 years old, of Albuquerque , N.M., a special agent in the FBI's office there, who the government alleges also supplied Mr. Elgindy with secret FBI information; "
By: Michael Rapoport and Carol S. Remond
Dow Jones Newswires
NEW YORK -- Anthony Elgindy, the controversial short-seller and Internet stock commentator, has been charged with manipulating stocks by using secret government information fed to him by collaborators within the Federal Bureau of Investigation.
Mr. Elgindy was indicted by the U.S. Attorney's office in Brooklyn , N.Y. , on charges of racketeering, insider trading, market manipulation, extortion conspiracy and obstruction of justice. Four other people, including a current FBI agent and a former FBI agent, were also indicted.
The indictment alleges that Mr. Elgindy, through his FBI contacts, obtained confidential information from FBI databases about criminal history and investigations relating to companies that he was shorting or thinking of shorting. A short-seller sells borrowed shares and profits when a stock declines, so exclusive access to negative information about a company would be valuable to a short.
Mr. Elgindy then used the secret information to decide how to invest, prosecutors say, and distributed it to other short-sellers to encourage them to short the stock also. Paid subscribers to Mr. Elgindy's e-mail newsletter and investment Web site received the information also, prosecutors said.
In addition, according to the indictment, Mr. Elgindy extorted free or cheap shares of stock from the insiders of companies he had targeted in exchange for his agreement to lay off -- to stop shorting the companies and stop spreading negative information about them.
Mr. Elgindy was even able to spy on the government's grand jury investigation of him through his FBI contacts, prosecutors allege. One of the FBI agents indicted along with Mr. Elgindy gleaned information about the probe from an FBI database and told Mr. Elgindy of the direction of the investigation and that he was a target, according to the indictment.
A woman at Mr. Elgindy's home hung up the phone on a reporter who called seeking comment. Mr. Elgindy's attorney couldn't immediately be reached.
U.S. Attorney Alan Vinograd said in a statement that the indictment's allegations "reveal a shocking partnership between an experienced stock manipulator and law-enforcement agents, undertaken for their illicit personal financial gain."
According to the indictment, Mr. Elgindy, who publicly has fashioned himself as a "scam-buster" of fraudulent companies, sometimes reported negative information about the companies he was targeting to government regulators, to try to prompt investigations. One person he provided with information, according to the indictment, was Jeffrey A. Royer, then a special agent in the FBI's Oklahoma City office.
After that, the indictment alleges that Mr. Elgindy "corruptly induced" Mr. Royer to provide the secret information from FBI databases, such as data about the criminal history of officials at public companies, even though access to that information is strictly limited to law-enforcement personnel. An Elgindy associate wired more than $30,000 to Mr. Royer, according to the indictment.
Mr. Elgindy used the information to make investment decisions, and disseminated it to other short-sellers, the indictment alleges -- first through paid subscribers who paid Mr. Elgindy up to $600 a month for his recommendations and later through public Internet sites.
In one instance cited in the indictment, Mr. Royer found criminal-history information in an FBI database about Paul Brown, the founder of Nuclear Solutions Inc. (NSOL), and passed it to Mr. Elgindy, who shorted the stock and distributed a report to his subscribers last December calling Mr. Brown "a convicted felon."
The stock of Nuclear Solutions fell sharply in the aftermath of Mr. Elgindy's report. A Nuclear Solutions spokesman couldn't immediately be reached for comment.
The indictment refers to at least five other companies targeted by Mr. Elgindy besides Nuclear Solutions, but those companies aren't identified in the indictment.
Mr. Royer, 39 years old, of Encinitas, Calif. , later moved to a New Mexico FBI office and eventually took a job with Mr. Elgindy. He was indicted along with Mr. Elgindy, 34 years old, of Encinitas, whose real name is Amr I. Elgindy.
Also indicted were Lynn Wingate, 34 years old, of Albuquerque , N.M., a special agent in the FBI's office there, who the government alleges also supplied Mr. Elgindy with secret FBI information; and Derrick W. Cleveland , 36 years old, of Oklahoma City , and Troy M. Peters, 40 years old, of Carlsbad, Calif. , both short-sellers and associates of Mr. Elgindy's.
Mr. Elgindy, known by his online handle of "Anthony@Pacific," has a checkered, colorful history. He has worked for "boiler-room" brokerages in the past, and has said he has tried to atone for his past by helping authorities root out stock fraud.
But Mr. Elgindy served a four-month jail term in 2000 after pleading guilty to accepting disability payments that he wasn't entitled to. The prosecutor in that case has said that testimony and documents show that Mr. Elgindy co -owned a brokerage firm that took bribes in the early 1990s in exchange for promoting certain stocks, and agreed to work with the government in exchange for immunity. Mr. Elgindy has said that he cooperated with the government without any assurance that he would get immunity.
In addition, Mr. Elgindy was sanctioned by the National Association of Securities Dealers in 1997 over what the NASD said was his use of a system designed for small retail stock orders to execute trades for his firm's account. The NASD suspended him for 30 days and fined him $30,000; his NASD registration was later revoked after he decided to leave the securities industry and stopped making payments on the fine.
In 2001, an NASD hearing panel found that Mr. Elgindy and his brokerage Key West Securities had made a series of high bids for Saf T Lok Inc. (LOCK) stock in 1997 without intending to honor them, although the panel said the NASD failed to prove more-serious market-manipulation charges against Mr. Elgindy. Mr. Elgindy and Key West were each fined $3,000.
Mr. Elgindy has stirred controversy with his biting comments about stocks on his own subscription sites and on his discussion thread on the Silicon Investor stock-discussion site. He was kicked off Silicon Investor temporarily in 1999, although he was later allowed to return
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