NYT: U.S. Suggests, Without Proof, Stock Adviser Knew of 9/11
Publication Date: Saturday May 25, 2002
Business/Financial Desk; Section C; Page 1, Column 5
c. 2002 New York Times Company
By ALEX BERENSON
A San Diego stock adviser who is accused of bribing an F.B.I. agent to give
him confidential government information may have had prior knowledge of the
Sept. 11 attacks, a federal prosecutor said yesterday. But a judge
disregarded that contention and the adviser's lawyer called the allegation
ludicrous.
In a court hearing in San Diego, Kenneth Breen, an assistant United States
attorney, said the adviser, Amr Ibrahim Elgindy, tried to sell $300,000 in
stock on the afternoon of Sept. 10 and told his broker that the stock market
would soon plunge. ''Perhaps Mr. Elgindy had preknowledge of Sept. 11, and
rather than report it he attempted to profit from it,'' Mr. Breen said.
Mr. Breen, coordinator of the stock market unit of a government task force
set up to investigate financing for terrorist groups, offered no other
evidence that Mr. Elgindy had prior knowledge of the attacks.
A lawyer for Mr. Elgindy said the allegation appeared to be motivated by
the fact that Mr. Elgindy is Muslim and was born in Egypt. Senior F.B.I.
officials also said they had no evidence that Mr. Elgindy had prior
knowledge of the attacks.
In the hearing yesterday, Mr. Breen asked Judge John A. Houston of Federal
District Court in San Diego to hold Mr. Elgindy without bond. Mr. Elgindy,
also known as Tony Elgindy and Anthony Pacific, recently moved $700,000 to
Lebanon and is a serious flight risk, Mr. Breen said.
Judge Houston disregarded Mr. Breen's claims about Mr. Elgindy and Sept.
11. But the judge said there was enough other evidence that Mr. Elgindy
might flee to justify detaining him at least until a June 6 hearing to
determine whether he should be moved to New York for a trial.
Jeanne Geren Knight, a lawyer for Mr. Elgindy, said after the hearing that
Mr. Breen's allegations were ludicrous and untrue. ''The government, for
lack of factual evidence, has decided to smear my client with terrorist
innuendoes,'' Ms. Knight said. ''This is smacking of racial profiling.''
Mr. Elgindy and four other people, including one current and one former
F.B.I. agent, were charged Wednesday with using confidential government
information to manipulate stock prices and extort money from companies.
Jeffrey A. Royer, who was an F.B.I. agent before joining Mr. Elgindy's stock
advisory firm in December, accepted $30,000 from a partner of Mr. Elgindy's
in exchange for providing Mr. Elgindy with information about current
criminal investigations of companies, prosecutors allege.
Mr. Elgindy and his partner, Derrick W. Cleveland, sold short the shares of
companies that they learned were under investigation, according to the
indictment. (Short sellers borrow shares and sell them, hoping to buy them
back later at a lower price and pocket the difference.) Then Mr. Elgindy
publicized the negative information on two Web sites he ran, hoping that the
companies' stocks would fall, prosecutors say.
At the hearing yesterday, Mr. Breen said that on the afternoon of Sept. 10,
Mr. Elgindy contacted his broker at Salomon Smith Barney and asked him to
sell $300,000 in stock in his children's trust funds. During the Sept. 10
conversation, Mr. Elgindy predicted that the Dow Jones industrial average,
which at the time stood at about 9,600, would soon crash to below 3,000, Mr.
Breen said. Mr. Elgindy was unable to sell the stock before markets closed
Sept. 10, and it was instead sold Sept. 18, the first day that markets
reopened for trading after the attacks, Mr. Breen said.
The Salomon Smith Barney broker contacted the F.B.I. after the attacks to
report the conversation, Mr. Breen said. He did not identify the broker. A
spokesman for Salomon Smith Barney confirmed that Mr. Elgindy was a client
but said that Salomon did not comment on matters relating to its clients.
Mr. Elgindy also transferred more than $700,000 to Lebanon in the months
after the attacks, Mr. Breen said. When F.B.I. agents raided Mr. Elgindy's
home outside San Diego on Wednesday, Mr. Breen said, they found $43,000 in
cash, as well as a loose diamond and faxes indicating that Mr. Elgindy had
been tipped about the raid and had given his wife a power of attorney to
liquidate his assets.
Ms. Knight, Mr. Elgindy's lawyer, denied that Mr. Elgindy had any prior
knowledge of the attacks.
Mr. Elgindy's wife is from Louisiana, Ms. Knight said, adding that his
mother was a pediatrician and his father a professor. ''Tony isn't political
at all,'' she said. ''He's a capitalist. He's not going to move to a third
world country.''
Senior law enforcement officials said yesterday that investigators had no
hard evidence that Mr. Elgindy had advance information about the Sept. 11
attacks. So far, they have not found anyone who had prior knowledge of the
attacks, they said. But they said the investigation into why Mr. Elgindy
tried to sell the shares in his children's trust accounts before Sept. 11
had raised questions that had not been fully answered.
Mr. Elgindy has been an active supporter of Muslim causes. In 1999, he
arranged to bring 30 Muslim refugees from Kosovo to the United States,
according to The Daily Herald of Chicago.
Mr. Elgindy said the violence in Kosovo, Serbia's southern province,
appalled him, comparing it to the shootings at Columbine High School in
Colorado. ''Take Columbine, have it occur five times a day for a year, and
that's Kosovo,'' Mr. Elgindy told The Daily Herald.
Mr. Elgindy's father and brother are also active in Arab and Muslim causes.
His father, Ibrahim Elgindy, founded an umbrella group of Muslim
organizations in Chicago and led a 1998 protest on behalf of Muhammad A.
Salah, whose assets were seized that year after the United States government
linked Mr. Salah to Hamas, the radical Palestinian group. Mr. Elgindy's
brother, Khaled, has worked for several Arab political groups.
Neither Ibrahim Elgindy nor Khaled Elgindy has ever been linked to
terrorism. Khaled Elgindy did not return calls yesterday. Ibrahim Elgindy
could not be reached for comment.
Mr. Elgindy himself publicly criticized the Sept. 11 attacks. In a press
release that day, his company, Pacific Equity Investigations, said, ''We
must seek, find, apprehend and destroy those who are responsible for this
terrorist attack.''
Two days later, Mr. Elgindy put out another press release, saying that he
had forwarded to the F.B.I. and the Securities and Exchange Commission
''many Internet posts and messages that may have relevance on this tragedy
and the capture of the responsible parties behind it.'' He also asked that
investors refrain from selling short the stocks of any United States
companies or the United States dollar.
Mr. Elgindy sold the shares in his children's trusts five days later. |
