Trader Courted Attention, Trouble
Showing off a Ferrari and an in-your-face attitude, Amr I. “Anthony” Elgindy peered out of America’s TV sets in May 1997 to warn that small investors “haven’t got a prayer” against mobsters and con artists he said were using bribes and beatings to force Wall Street brokers to promote worthless stocks to their clients.
“That’s not going to happen to me,” the Cairo-born stockbroker with the wrestler’s build told Brian Ross of ABC’s “20/20.” Saying a bullet inscribed with his name had arrived in the mail, Elgindy displayed a Colt pistol and a tape recorder--describing them as his weapons to help authorities battle this empire of corruption.
Today, though, it is Elgindy who is the target of corruption allegations. Arrested May 22 at his Encinitas office and now being held without bail in San Diego’s Metropolitan Correctional Center, he faces extradition to New York, accused of stealing secrets from federal criminal databases with help from FBI agents and then using the information to reap profits in the stock market.
Elgindy, 34, who contends he’s the victim of double-dealing associates and vindictive regulators, is described by neighbors and business associates as a man of outsized charm, with an arrogant streak and a craving for attention. During a controversial career in the securities business, Elgindy has been an FBI informant, the defendant in a securities arbitration claim filed by his own mother--and now a defendant in a stock-manipulation case drawing national attention.
According to an indictment handed up by a New York grand jury, Elgindy and his associates, including one former and one current FBI agent, used confidential material from FBI files to shake down companies under federal scrutiny or to profit by betting their stock prices would fall. He is charged with racketeering, fraud, extortion and obstruction of justice.
Moreover, Assistant U.S. Atty. Ken Breen said at a May 24 bail hearing in federal court in San Diego that Elgindy might have had advance warning of the Sept. 11 terrorist attacks--a charge his lawyer called “racial profiling” and one Elgindy calls “very, very sleazy.”
In a telephone interview from jail over the weekend, he contended that the Sept. 11 questions were raised only because “of my birthplace, my name, the color of my skin.”
By his own estimate, Elgindy has made a fortune over the years selling stocks short, the legal but oft-reviled strategy of selling borrowed shares in hopes of making a profit by buying them back cheaper should the stock decline.
Indeed, his use of Internet sites--which charged subscribers up to $600 a month--to trumpet the flaws of his targeted companies made him one of the best-known short sellers in recent years, what Wired magazine called “the Mad Max of Wall Street.”
In one celebrated case, he urged investors to sell K-tel International Inc. after the stock soared from $5 to $30 in April and May 1998 on optimism about a plan to sell the company’s greatest-hit recordings over the Internet. He was right: K-tel shares quickly plunged and were back to $6 by August 1998.
Elgindy says all of the material he used to target stocks--including material on criminal investigations of executives allegedly stolen from FBI databases--were gathered from legitimate sources.
“Everything that I’ve discovered I’ve discovered publicly,” he said Saturday.
If, as he says, Elgindy is the victim of regulators, acquaintances and investigators offended by his outspokenness, the public record provides clues to their hostility: a long trail of lawsuits, embittered former associates, criminal investigations and convictions, and disputes with the National Assn. of Securities Dealers while at brokerages in San Diego and Texas.
Elgindy, whose family moved from Egypt to the Chicago area when he was 3, studied briefly at the University of Southern California, worked as a car salesman in San Diego, then gravitated to the more lucrative brokerage business.
His first such job in 1988 was with the notorious “penny stock” firm Blinder, Robinson & Co. He maintains he left the firm--nicknamed “blind ‘em and rob ‘em” by burned investors--after learning it specialized in promoting worthless small stocks.
Elgindy contended that exposure to unsavory practices at Blinder and at other small brokerages paved the way for him to become an informant for the Securities and Exchange Commission, the FBI and other federal agencies. “I have given the government hundreds if not thousands of tips on Wall Street frauds,” he claimed.
Elgindy said he became an informant in 1994 in return for immunity from prosecution for his role in a stock-promotion kickback case. The informant deal was made public in May 2000 as he was sentenced to four months in prison after pleading guilty to insurance fraud.
At the sentencing hearing in Fort Worth, strikingly divergent portraits emerged of Elgindy. His wife, Mary Faith, the daughter of a Tennessee Baptist minister, said her husband was a devoted father to their three sons, the oldest of whom has attention deficit disorder and Tourette’s syndrome. Other defense witnesses described Elgindy as an outright savior to dozens of Kosovo refugee families, saying he raised more than $48,000, helped them move to America and provided housing, cars and clothing after they arrived.
Prosecutors, however, portrayed Elgindy as a repeated liar who, they hinted, may have pocketed some donations intended for the victims of Kosovo atrocities.
Elgindy also has had several run-ins with securities regulators. In a 1992 NASD arbitration action, Elgindy’s mother, anesthesiologist Laila I. Gomaa, accused Elgindy and his AMR Securities Inc. of making unauthorized trades in her pension account. She ultimately was awarded $30,000.
In 1997, NASD censured and fined him $30,000 for numerous alleged violations of securities rules. A year later, NASD records show, the group revoked his registration for failing to pay a fine and barred him from the brokerage business, although Elgindy says he resigned from the NASD in protest over mistreatment.
In his latest and most serious predicament, Elgindy categorically denies wrongdoing, offering explanations for charges in the indictment, such as payments totaling $30,425 to then-FBI agent Jeffrey A. Royer in exchange for information. He also responded to the government’s questions about whether he had foreknowledge of the Sept.11 attacks and about his later wiring of a large sum to Lebanon.
The payments to Royer allegedly were made by Derrick W. Cleveland, identified in the indictment as a short seller “who assisted” Elgindy. But Elgindy said he was never involved in any payments that may have been made and described Cleveland as just a subscriber who was never on his payroll.
“It was my understanding that they [Cleveland and Royer] were school friends,” said Elgindy, suggesting the funds Cleveland allegedly transferred to the FBI agent might have been intended to help Royer pay debts.
As for the issue of advance knowledge of Sept. 11, Elgindy acknowledged sending at least $600,000 to Lebanon during the fall. He said he wanted his sons to spend several months a year in the Middle East to stay in touch with their heritage, and he transferred the funds so he could set up an office and buy a car and a seaside condo in Lebanon for the family to use on those visits.
Elgindy also acknowledged having made large bets that stocks would decline around the time of the attacks. But as a longtime short seller, he said it was typical for him to have large short positions, and that none of his short positions were in stocks that would have been particularly affected by the attacks, such as online travel agencies or securities tied to New York real estate.
Bill Muller of the U.S. attorney’s office in Brooklyn, which brought the case, declined to comment on Elgindy’s statements.
While Elgindy sits in jail awaiting a Thursday extradition hearing, flags of the United States, California and Egypt still fly at Elgindy’s estate in Encinitas’ rural Olivenhain district, which the Elgindys bought last year for $2.2million, taking on a $1.5-million mortgage, San Diego County property records show.
The estate includes an elaborate faux-rock pool that he told his Internet subscribers cost $300,000--part of a lifestyle that featured sumptuous parties and a circle of acquaintances that, according to a published report, included actor Verne Troyer, Dr. Evil’s diminutive clone Mini-Me in “Austin Powers: The Spy Who Shagged Me.”
On May 22, a Wednesday, Elgindy’s neighbors watched authorities truck away a Bentley, a Ferrari, a Jaguar, a Humvee and a limo as suspected ill-gotten gains. Just the previous Saturday night, Elgindy had thrown a party to celebrate the completion of his mansion.
Times staff writers James S. Granelli, Thomas S. Mulligan and Josh Friedman contributed to this report.
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