A federal judge Monday sentenced former stock picker Anthony Elgindy to 11 years and three months in prison for using inside information to make short sales and extort money from companies he criticized in an online newsletter.
Elgindy, a resident of Encinitas, Calif., was convicted last year on 11 counts of racketeering conspiracy, securities fraud, wire fraud and extortion. He used inside information supplied by former FBI agent Jeffrey Royer to spread negative publicity about companies through his online newsletter AnthonyPacific.com.
In addition to short-selling on inside information, Elgindy was convicted of extorting payments from some companies to buy his silence. Elgindy, who was also ordered to forfeit $1.6 million, said during a 40-minute statement to the court that he didn't commit a crime and had instead defended small investors by exposing over-hyped stock.
"As intently as I listened, I heard not one word of genuine remorse," U.S. District Judge Raymond Dearie said in federal court in Brooklyn.
Short sellers seek to profit by correctly predicting a decline in a stock's price. They sell borrowed shares, planning to buy them later at a lower price and return them to the holders.
Elgindy's gains from trading shares of 32 companies using illegally leaked information totaled $3 million, and he made an additional $1.6 million in website fees, the government said.
Royer and Elgindy, both 38, were acquitted of 17 other charges. Royer is free on bail until his sentencing, scheduled for July 28. Elgindy's lawyer said his client would appeal.
Elgindy has been in jail since April 2004, when he was arrested in Islip, N.Y., after trying to board a flight to San Diego while free on bail.
He was carrying fake identification, $25,000 in cash and $40,000 worth of jewelry, court papers said. Prosecutors said there was evidence that he intended to flee to Lebanon.
At his sentencing hearing, Elgindy portrayed himself as a defender of the market and an investor advocate.
"I had become a credible voice in the financial markets," he told the court. "I saw myself as the defender of the average investor."
Prosecutors rejected Elgindy's argument, noting that he had served four months in jail in 2000 on a previous conviction for insurance fraud.
"He knew exactly what he was doing from the first," Assistant U.S. Atty. John Nathanson said. "He did this repeatedly."