Trader may have known of attacks: prosecutor
By PAUL WALDIE
From Saturday's Globe and Mail
Toronto — A popular U.S. short-seller arrested on charges of insider-trading and racketeering may have known about the Sept. 11 terrorist attacks, a prosecutor in San Diego said yesterday.
Amr (Anthony) Elgindy, 34, called his broker on Sept. 10 and asked him to liquidate his children's $300,000 (U.S.) trust account, Ken Breen, an assistant U.S. attorney, said yesterday.
Mr. Elgindy was arrested this week in California in connection with allegations that he used police information supplied by two FBI agents to short stocks over the past two years.
The agents and two of Mr. Elgindy's coworkers have also been arrested. Some of Mr. Elgindy's trading was allegedly done through a Vancouver-based brokerage.
Short-selling involves selling borrowed shares in the hope of buying them back at a lower price and pocketing the difference.
Mr. Elgindy "made a comment [to his broker] predicting the market would drop to 3,000," Mr. Breen told a federal judge yesterday during a detention hearing in San Diego for Mr. Elgindy. Mr. Breen did not name the broker. (The Dow closed at 9,605 before the attack. It sank to around 8,376 in the two weeks afterward and has since rebounded to around 10,000.)
"Perhaps Mr. Elgindy had preknowledge of the Sept. 11 attacks. Instead of trying to report it, he tried to profit from it," Mr. Breen said.
Mr. Elgindy was born in Egypt and his brother, Khaled, is an active member of several Islamic groups including an organization that delivered humanitarian aid to Iraq in 1998. His lawyer, Jeanne Knight, confirmed that Mr. Elgindy called his broker, but suggested the timing was coincidental.
"It seems like the government, for lack of factual evidence, has decided to smear my client with terrorist innuendoes," Ms. Knight told the court. "This is smacking of racial profiling."
A judge ordered Mr. Elgindy held without bond and said he was going to "disregard" the terrorism suggestions. There was no suggestion the FBI agents in question supplied terrorism information to Mr. Elgindy.
Mr. Elgindy ran Insidetruth.com (now defunct), a popular Web site for short sellers; AnthonyPacific.com (also not in operation), a subscription e-mail newsletter; and Pacific Equity Investigations, a San Diego-based company dedicated to stopping improper on-line investing.
He gained a huge following on the Net for blunt commentary (he once called a company "an overinflated pig") and profitable stock picks.
Earlier this week, the U.S. Federal Bureau of Investigation raided his $2.2-million mansion near San Diego, where they found tens of thousands of dollars in cash and gold coins. The U.S. Attorney's Office is also seeking a court order to seize Mr. Elgindy's Bentley, Jaguar and Hummer sport utility vehicle, along with money in bank accounts in the United States and Canada.
Douglas Garrod, president of Vancouver's Global Securities Corp., said Mr. Elgindy had an account at the firm for 18 months.
"He's not a big client, but he's a well-known short-seller," Mr. Garod said yesterday. "We don't know anything about the subject matter of the charges, that's for sure."
He said Mr. Elgindy had other accounts in Vancouver, but he would not provide details.
"I do have some of that information, but unfortunately, I am not in a position to pass it on. Not because it's client confidentiality but for other reasons," he said.
The FBI investigated Mr. Elgindy last fall as part of a massive police probe into the Sept. 11 attacks, The Wall Street Journal reported. Sources say he was cleared of any links to terrorism, but agents uncovered his alleged stock scam.
U.S. officials allege that in 2000, Mr. Elgindy began receiving information gleaned from FBI computers by Jeffrey Royer, an agent in Oklahoma. Mr. Royer resigned from the FBI in December, 2001, and joined Mr. Elgindy's company. In March, 2002, Mr. Royer allegedly recruited Lynn Wingate, an FBI agent in New Mexico, to supply the FBI computer information. |
