Re: 6/4/02 - [Elgindy] Stockwatch: BCSC seeks to ban Elgindy from Howe Street
BCSC seeks to ban Elgindy from Howe Street
2002-06-04 08:20 PT - Street Wire
by Brent Mudry
Controversial California shortseller Amr Ibrahim (Anthony) Elgindy, denied bail since his arrest May 21 on a six-count grand jury indictment, faces a potential ban by the British Columbia Securities Commission. Mr. Elgindy, who opened a number of accounts at Vancouver brokerages Global Securities and Pacific International Securities to circumvent more onerous American short-selling restrictions, could be barred from dealing with Howe Street firms.
On May 24, three days after Mr. Elgindy was arrested in San Diego and two days after a grand jury indictment was unsealed in New York, the BCSC quietly imposed a temporary order banning him, his wife Mary Faith Elgindy, his indicted close associate Derrick Cleveland and their company, Pacific Equity Investigations, from having any trading activities in B.C. While the move might seem academic at present, as United States officials had already frozen all Elgindy-related accounts, the BCSC action could have a crushing impact on Mr. Elgindy's activities, whether he is convicted or vindicated of the serious U.S. charges.
In the indictment, Mr. Elgindy, Mr. Cleveland, associate Troy M. Peters, former FBI Special Agent Jeffrey A. Royer and current FBI Special Agent Lynn Wingate face charges including racketeering conspiracy, insider trading, market manipulation, extortion conspiracy and obstruction of justice. All are presumed innocent until proven guilty. No allegations of wrongdoing have been made against Global, the sole brokerage named in the indictment, or any other financial institutions.
In the May 24 order, BCSC executive director Steve Wilson, exerting his executive powers under the Securities Act, imposed immediate temporary bans on Mr. Elgindy and his fellow respondents, with a short-term return date of June 5. In a brief hearing on Wednesday, BCSC in-house lawyer Patricia Taylor is expected to present evidence supporting staff applications to adjourn the matter for 90 days to permit the conclusion of Mr. Elgindy's American criminal proceedings, and to extend the temporary ban until a full hearing is completed and a decision handed down. The tribunal panel will be led by BCSC vice-chair Joyce Maykut, assisted by fellow commissioners Neil Alexander and Marc Foreman.
Although the temporary bans are the only sanction imposed so far, the BCSC's notice of hearing also indicates the regulator seeks orders prohibiting Mr. Elgindy and Mr. Cleveland from serving as an officer or director of a public company, and from engaging in investor relations activities, plus the imposition of fines and hearing costs against the pair.
The BCSC notice confirms that Mr. Elgindy also used accounts at downtown Vancouver branches of at least two prominent Canadian banks, which were served by the RCMP with forfeiture orders issued May 20 by a judge in U.S. District Court for the Eastern District of New York. "Among the assets that are sought to be seized are funds on deposit at Global Securities, a registrant under the Act, the Bank of Montreal, and the Royal Bank," states Mr. Wilson in the order.
While the banks likely just served as intermediaries for Mr. Elgindy moving his money to and from Global Securities, and then offshore to Lebanon, the case is the latest embarrassment for Bank of Montreal, which claims to follow strict money laundering prevention procedures.
In April, 2000, the BCSC, on the behalf of the U.S. Securities and Exchange Commission, froze accounts of Exchange Bank and Trust, the shell offshore brass plate bank run out of Nevis and Nauru by stock fraudster Terry Neal, housed at the main downtown Vancouver branch of Bank of Montreal. The main account, with about $19-million frozen, is an apparent prime money laundering account for stock fraudsters, securities fraudsters and other riff-raff, with almost all of the frozen funds belonging to career fraudster and alleged Mafia associate Ed Durante. (All figures are in U.S. dollars.)
In another odd oversight, the BCSC notice cites only two of Mr. Elgindy's four run-ins with authorities in recent years. In its notice to ban Mr. Elgindy, the Canadian regulator notes the current grand jury indictment proceeding and a $3,000 fine and one-year suspension imposed Dec. 28 by the National Association of Securities Dealers in an unrelated case.
The NASD case involved Mr. Elgindy's trading violations in his shorting of Saf T Lok, a fraudulent penny stock promotion, in October, 1997. Oddly enough, Mr. Elgindy had accounts at Vancouver brokerage Pacific International Securities, which also serviced the fraudster he exposed, Shalom Weiss, a heavy trader in Saf T Lok shares through offshore accounts. Mr. Weiss was convicted in Florida in November, 1999, 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.
Unmentioned in the BCSC's Elgindy notice are two other bits of his baggage. The first is his 4-1/2-month jail term in 2000 after he pled guilty to mail fraud for ripping off an insurance company to the tune of $90,645 by collecting bogus disability payments while he was working as a broker at two national brokerage firms in 1994 and 1995. The second is a $30,000 fine and one-year suspension imposed by the NASD in 1997 for his violations in 1993 of the SOES, or Small Order Execution System, a U.S. stock trading system, by entering 108 dubious orders.
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