Stock trader Elgindy out of jail, will be under house arrest
signonsandiego.com
By Dean Calbreath
STAFF WRITER
September 11, 2002
San Diego stock trader Anthony Elgindy was released from a New York jail yesterday after spending more than three months in pretrial custody.
Elgindy, who was charged in May with securities fraud and racketeering, posted a $2.5 million bond for his release, secured by five properties.
Even though he is out of jail, Elgindy will not be totally free.
Under the terms of his release, he will be allowed to return to his home in San Diego tomorrow. But he will be under house arrest, wearing an electronic bracelet that will allow the government to track his movements using global positioning satellites. He will be returned to New York for trial.
Elgindy's treatment contrasts with that of the other defendants in the trial: stock traders Derrick Cleveland and Troy Peters and former FBI agents Jeff Royer and Lynn Wingate.
The others were released on bail shortly after their arrest, after posting bonds of $100,000 to $500,000. They were not subjected to house arrest. Cleveland, who pleaded guilty in July, is now cooperating with authorities, but the others maintain their innocence.
San Diego attorney Jeanne Knight – who represented Elgindy at the time of his arrest – accused the government of "racial profiling" against Elgindy, who was born in Egypt but has been living in the United States since the age of 3.
The government initially suggested Elgindy had advance knowledge of the Sept. 11 terrorist attacks, since he tried to sell a chunk of stock on Sept. 10.
Prosecutors quickly dropped that claim. In fact, Internet records show Elgindy spent Sept. 11 tracking suspicious stock trades and passing the information on to the local office of the Federal Bureau of Investigation, which thanked him for his help.
Nevertheless, prosecutors continued to argue against bail for Elgindy, saying he constituted a flight risk. They said he had secretly purchased a home near Beirut and was shifting his assets to Lebanon.
But Elgindy's attorney, Gerald Lefcourt, argued there was nothing secretive about the Lebanon purchase – a vacation home that Elgindy boasted about on the Internet. Elgindy began buying the home before a grand jury investigated the securities charges, he said.
Lefcourt contrasted Elgindy's treatment to that of a reputed head of the Lucchese crime family in New York, who was released on bail just hours after his arrest.
Federal Judge Raymond Dearie ordered Elgindy released but sharply limited his movement. While in New York, he is limited to traveling to his attorney's office and the Carlton Hotel, where he is staying with his wife, Mary Faith Elgindy.
Elgindy was a high-flying stock trader before his arrest. He made his reputation by dispersing negative information about companies on his investment Web site. He and his Internet followers then engaged in "short-selling" the companies.
Short-sellers borrow stock and sell it, with the expectation that the price will fall. They buy back the stock at a cheaper price, if the price falls, to return it to the lender.
According to the government, Cleveland, a subscriber to Elgindy's Web site, obtained criminal records of corporate executives through his longtime friend, FBI agent Royer, and Royer's fellow agent and girlfriend, Wingate.
Elgindy then used the information against the companies and made money as their stock prices went down. Cleveland was accused of paying Royer $10,000 for the information.
Since his arrest, Elgindy's fans have challenged the government's account, noting that the information that he posted was freely available on the Web.
Copyright 2002 Union-Tribune Publishing Co. |
