Anthony in the news again.... Here is the article!
National Bank of Canada (The) - Street Wire
National Bank's P.I. clients Elgindy, Weiss in Saf T Lok
National Bank of Canada (The) NA
Shares issued 190,497,751 Mar 4 2002 close $31.880
Tuesday Mar 5 2002 Street Wire
by Brent Mudry
Amr Ibrahim "Anthony" Elgindy, a well known penny stock short and controversial client of besieged Vancouver brokerage Pacific International Securities, has been found guilty of securities violations stemming from his deceptive 1997 shorting of Saf T Lok Inc., which featured another intriguing P.I. client, convicted massive mortgage fraudster Sholam Weiss, as a major offshore shareholder. (There is no suggestion Mr. Elgindy and Mr. Weiss were acting in concert or even knew of each other.)
In a recent disciplinary decision, NASD Regulation Inc., the enforcement agency of the National Association of Securities Dealers, suspended Mr. Elgindy for one year and fined him and his dormant brokerage, Key West Securities Inc., a total of $6,000, for making bogus bids and disseminating recommendations without disclosing his firm's status as a market maker for shares of Saf T Lok, also known as Saf-T-Lok. (All figures are in U.S. dollars.)
On the bright side, Mr. Elgindy dodged a major bullet. The NASDR panel rejected the Department of Market Regulation's allegation that Mr. Elgindy engaged in stock manipulation through his Saf T Lok activities.
Meanwhile, Mr. Elgindy's claims of not having an account at Pacific International is challenged by evidence of the British Columbia Securities Commission. Last July, Mr. Elgindy repeatedly denied to Stockwatch he had any account at the Vancouver brokerage, then stated, "I have never had an account at Pacific International with the name Anthony Elgindy." P.I. documents, however, provided to the BCSC under various investigation orders, show the brokerage hosts an account in the name Elgindy, No. 023-0124-0, owned or operated by Anthony Elgindy.
The NASDR disciplinary decision is the latest setback for Mr. Elgindy, who is eager to portray himself as a white knight in the dirty penny stock world who emerged from the dark side. Mr. Elgindy began his penny-stock career in 1988 at Blinder Robinson, a year and a half after the SEC's bid to shut down the notorious boiler operation became widely known.
"Since 1993, I have led the squeaky clean life and am 1,000-per-cent dedicated to what I do now for a living," Mr. Elgindy told Stockwatch last summer. 1993 was the year Mr. Elgindy made improper use of an SOES, or Small Order Execution System, terminal through entering 108 dubious orders.
Stockwatch noted this "squeaky clean life" included ripping off an insurance company by collecting $90,645 in bogus disability payments while he was working as a broker at two national brokerages in 1994 and 1995, bolstered by a fraudulent tax form. Mr. Elgindy pleaded guilty to mail fraud and was invited to a four-month stay in 2000 at one of the exclusive gated communities in Southern California owned by the United States Bureau of Prisons.
The latest NASDR decision shows Mr. Elgindy has not lost his touch for manipulating stock trading systems, although not the stocks themselves.
The Department of Market Regulation unsuccessfully alleged Mr. Elgindy manipulated the market for Saf T Lok shares between Oct. 9 and Nov. 11, 1997. The main activity was on Oct. 9, when Saf T Lok, a fraudulent penny stock promotion, capitalized on an Associated Press dispatch that the Clinton administration had struck an agreement with most of the country's gun makers to provide child safety locks for most handguns sold in the United States.
The stock opened at 44 cents that day and shot up to $3 on extremely heavy volume of 12 million shares. This was particularly notable, as Saf T Lok had posted an average daily trading volume in the previous six days of just 266,600 shares. The next day, Oct. 10, the stock closed at a brief peak price of $4.56 before declining.
Mr. Elgindy was quick to sniff a rat, which arguably was not too hard in Saf T Lok's case. The penny stock pro decided to aggressively short the stock on the morning of Oct. 9, culminating in a total short position of 58,000 shares.
This might have been fine had Mr. Elgindy not tried to tamper with the market. NASDR investigators claimed Mr. Elgindy first inflated his short sale prices with a series of high bids, which he did not intend to honour, and then lowered prices by releasing a series of five deceptive sell recommendations between Oct. 9 and Nov. 11, in which he repeatedly forgot to mention he was a market maker for the stock. While the panel found he did commit these acts, it also found these did not amount to stock manipulation.
"Such action fell far short of 'stage managing' market performance ... Mr. Elgindy's role in the Oct. 9, 1997, LOCKC market was minuscule," stated the panel. "The panel believes that his activities did not rise to the level of manipulation."
Mr. Elgindy was tripped up, however, by his tricky order entries. On the morning of Oct. 9, he made new and higher inside bids 27 times, and on 20 of these occasions he failed to purchase Saf T Lok shares at his posted price, despite preference orders directed to his firm.
"As evidence of the insincerity of the bids, the department showed several instances when, as Mr. Elgindy acknowledged, he sold LOCKC stock at the very price for which he was simulataneously purporting to buy it," stated the NASDR panel.
The panel also noted that when Mr. Elgindy was questioned by investigators just a few weeks after his trades, his answer cast further doubt on the sincerity of his bids. "I'm such an avid believer that this company is not only overvalued, overbought, oversubscribed to and overrated ... but just doesn't have a chance in hell of getting anywhere," Mr. Elgindy told the stock cops. "I wouldn't even buy their lock. How could I buy their stock?"
The panel found that Mr. Elgindy's pattern of bad-faith bids was so blatant as to be "egregious." "He had no legitimate excuse for his conduct and virtually admitted that he posted the bids for purposes other than making good faith purchases."
In determining its penalty, the panel also noted Mr. Elgindy's disciplinary history involving violations of SOES rules and entry of non bona fide orders into the SelectNet system. "This prior trading misconduct is particularly aggravating in the context of the present case, involving the posting of bids without intending to honour them."
Although not noted in the NASDR decision, by the time the panel held its three-day hearing in New York last April and May, Mr. Elgindy had won some vindication, not for his rule-breaking trading, but for calling Saf T Lock nothing more than a crock.
The SEC launched and settled enforcement cases against Saf T Lok and two officials on Dec. 20, 2000. Company chairman Franklin W. Brooks, then 66, and former president and chief executive John L. Gardner, then 64, each agreed to pay civil fines of $55,000.
In its complaint, filed in United States District Court for the Southern District of Florida, the SEC alleges that at various times in 1997 and 1998, Mr. Brooks and/or Mr. Gardner caused Saf T Lok to publish various press releases and make regulatory filings which falsely described a series of sales, consulting and development agreements in the millions of dollars.
Saf T Lok evidently had an intriguing history before and after Mr. Elgindy's rule-breaking mini short attack. In June, 1997, Nasdaq officials notified Saf T Lok management that the company faced delisting from the SmallCap Market because its total assets had fallen below the $2-million threshold.
In an ill-fated bid to raise capital, Saf T Lok began negotiating with none other than Sholam Weiss, also known as Shalom Weiss, who claimed to represent various offshore entities that were interested in investing through an offering of restricted Regulation S shares.
Mr. Weiss, like Mr. Elgindy, was a client of Pacific International Securities, the Vancouver brokerage currently fighting BCSC charges it did little to discourage market rogues from opening up accounts.
In November, 1999, after a lengthy trial in federal court in Orlando, Fla., Mr. Weiss was convicted of 78 counts of racketeering, wire fraud, money laundering and related charges. He fled during the start of jury deliberations and became a fugitive.
Mr. Weiss, who had been a respected member of New York's Jewish community, was sentenced in absentia to 845 years in jail and ordered to pay a $123-million fine and $125-million in restitution. After an Interpol alert led to a worldwide fugitive hunt, Mr. Weiss was tracked down and arrested in Vienna, Austria, on Oct. 24, 2000.
Mr. Weiss was among 12 defendants convicted between 1994 and 1999 in a massive mortgage fraud, an operation the Orlando, Fla., office of the FBI called "one of the largest white-collar crimes ever." The bureau, along with the Internal Revenue Service and the U.S. Postal Inspection Service, launched a probe in 1994 targeting two defendants running the National Heritage Life Insurance Co., with a believed fraud amount of $12-million. The case snowballed over the years into a $450-million complex mortgage and real estate fraud.
Mr. Weiss became involved with National Heritage, which had been a scam from day one, when he agreed to buy $100-million in mortgages and sell them for $135-million. Unfortunately for investors, he spent only $65-million on worthless, non-performing mortgages and diverted much of the remainder for his personal benefit, including spiriting funds away to Israel and Switzerland.
While it is unclear so far which stocks Mr. Weiss traded through Pacific International Securities, records obtained by the BCSC show he held several offshore accounts at the Vancouver brokerage: Amex Corp., Dagon Developments and Thirkell Trading. The Amex account, No. 023-0086-1, was based in Switzerland, while the Dagon account, No. 020-8924-1, was based in Israel. P.I. records show both these accounts received in large blocks of shares.
Over at Saf T Lok, the negotiations with Mr. Weiss, which began in June, continued into the fall and appeared to go well. The two sides contemplated pricing the Reg S shares at $1.50 a share, a discount of about 60 per cent from the market price of $3.60.
However, the Nasdaq's Listings Qualifications Panel stated in an Oct. 14, 1997, letter that such a steep discount was "excessive" and would be "harmful to the investing public." (By coincidence, five days earlier, on Oct. 9, Saf T Lok shares shot up and Mr. Elgindy embarked on his short attack.)
Nasdaq officials informed Saf T Lok that if the Weiss financing went through at $1.50, they would immediately delist the stock. Mr. Weiss quickly agreed to increase the offering price to $2 a share.
Saf T Lok eventually issued $3-million worth of shares and additional warrants to the three Weiss offshore companies and it avoided delisting.
It is not known whether the three offshore companies were Amex, Dagon and Thirkell, or other offshore companies in the mortgage fraudster's stable.
(c) Copyright 2002 Canjex Publishing Ltd. canada-stockwatch.com
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