OT: Van Sun says Elgindy accused of Sept. 11 knowledge
TSX Venture Exchange *TSX
Monday May 27 2002 In the News
The Vancouver Sun reports in its Saturday edition that an American stockbroker alleged to have run a fraud scheme using accounts at Vancouver-based Global Securties Corp. may have known about the Sept. 11 terrorist attacks and tried to profit from them, a U.S. prosecutor said Friday in a San Diego courtroom. The Sun's Derrick Penner, quoting a report by Stockwatch on Friday, said Amr (Anthony) Elgindy telephoned his broker Sept. 10 and asked him to liquidate his children's $300,000 (U.S.) trust account, assistant U.S. attorney Ken Breen told a federal judge at Mr. Elgindy's detention hearing. Mr. Breen said Mr. Elgindy predicted the market would drop 3,000 points in a comment to his broker. At the time, the Dow Jones stock index was 9,600. In addition, Mr. Breen said Mr. Elgindy transferred $700,000 (U.S.) to Lebanon, some of which came from Canada where he held accounts at Global. Mr. Elgindy, 34, of Encinitas, Calif., was ordered held without bail on charges of racketeering, extortion and obstruction of justice.
Before issuing the order, Magistrate Judge John Houston said he was going to disregard the suggestion Mr. Elgindy had anything to do with the terror attacks.
canada-stockwatch.com
TSX Venture member Global serviced Elgindy, corrupt FBI short
TSX Venture Exchange *TSX
Wednesday May 22 2002 Street Wire
by Brent Mudry
In the latest U.S. prosecution featuring suspect trading through Vancouver brokerage accounts, American authorities claim controversial California short Amr Ibrahim Elgindy bribed two corrupt FBI agents to provide confidential criminal database records, launched an Internet smear campaign on targeted penny stock promotions, shorted the stocks through brokerage accounts at Global Securities, and extorted targets in a shakedown. The case is particularly ironic, as Mr. Elgindy, also known as Anthony Elgindy, Tony Elgindy and Anthony Pacific, has revealed to the Securities and Exchange Commission, and shorted, numerous fraudulent penny stock promotions.
In a six-count grand jury indictment unsealed Wednesday in United States District Court for the Eastern District of New York in Brooklyn, Mr. Elgindy, Special Agent Lynn Wingate, former FBI agent Jeffrey A. Royer and Elgindy associates Derrick W. Cleveland and Troy M. Peters face charges including racketeering conspiracy, insider trading, market manipulation, extortion conspiracy and obstruction of justice.
Mr. Royer left the FBI in December to work with Mr. Elgindy at Pacific Equity Investigations, his San Diego-based business, two months after the grand jury was convened to investigate Mr. Elgindy's dealings. As part of the corrupt scheme, Mr. Cleveland, Mr. Elgindy's business partner, wired more than $30,000 to Mr. Royer while he was still serving as an FBI special agent. (All figures are in U.S. dollars.) The dirty G-man provided sensitive information from the FBI's National Crime Information Center database, which contains confidential criminal history information, and its Automated Case Support database, which contains confidential criminal investigation information.
All five were arrested Tuesday on the sealed indictment and made court appearances Wednesday. Mr. Royer, 39, of Encinitas, Calif., and Ms. Wingate, 34, of Albuquerque, N.M., appeared Wednesday morning in U.S. District Court in Albuquerque, while Mr. Elgindy, 34, of Encinitas, and Mr. Peters, 40, of Carlsbad, Calif., appeared Wednesday afternoon in U.S. District Court in San Diego. Mr. Cleveland, 36, of Oklahoma City Okla., appeared in federal court in Oklahoma City.
Canadian authorities, mainly the RCMP, are believed to have played a significant support role in the Elgindy investigation, including sourcing the Vancouver brokerage records. Although Global Securities is the only brokerage named in the indictment, the Vancouver brokerage merely serviced the allegedly illegal share trading and is not a target itself.
United States Attorney Alan Vinegrad and FBI Assistant Director-in-Charge Kevin P. Donovan claim Mr. Elgindy and his co-conspirators traded on material, non-public information that had been misappropriated from confidential law enforcement databases, illegally manipulated the market through the misuse of this confidential information, extorted stock from companies that feared the manipulation of their shares, and obstructed a federal grand jury investigation of the scheme. The grand jury investigation was launched by Mr. Vinegrad's office on Oct. 25. 2001.
Mr. Elgindy emerged in unfavourable publicity in Vancouver last year as a controversial client of Pacific International Securities, a besieged Vancouver brokerage fighting British Columbia Securities Commission allegations it serviced far too many penny stock rogues, even by Vancouver standards.
The indictment is a major attack on Mr. Elgindy, a significant figure in the world of penny stock shorts, who operates through the InsideTruth.com Web site, a subscription E-mail newsletter and a subscription-based investment Web site called AnthonyPacific.com. Through these sites, Mr. Elgindy has targeted numerous overinflated or outright fraudulent penny stock promotions, although this is the first time any of his shorting activities have been exposed as allegedly illegal.
The indictment notes that Mr. Elgindy released information and his short selling recommendations first to his paying subscribers and then, but not always, to the investing public at large. Subscribers of his AnthonyPacific site paid up to $600 per month, while E-mail subscribers paid up to $100 per month.
"Once the information was publicly available, Elgindy and his subscribers also posted it to various Internet bulletin boards, chat rooms and on related websites, often assuming fictitious identities to do so. The widespread dissemination of this negative information had the intended goal of exaggerating the downward pressure on the stock prices of targeted companies," states United States Attorney Alan Vinegrad in the indictment. Court filings also confirm Mr. Elgindy and Mr. Peters "sometime" reported negative information on targeted companies to the SEC and the FBI in order to prompt or hasten regulatory and law enforcement action, which they knew would cause stock prices to fall sharply.
Former FBI Special Agent Royer was a key figure in the case. He was a special agent from Nov. 12, 1996, through Dec. 12, 2001, when he left to join Mr. Elgindy. Mr. Royer was assigned to the FBI's Oklahoma City field office from March 6, 1997, to Nov. 6, 2000, when he was transferred to its resident office in Gallup, N.M.
The indictment alleges Mr. Cleveland began feeding Special Agent Royer in 1999 with information on individuals and companies he claimed were involved in securities fraud. In late 1999, Mr. Cleveland introduced Special Agent Royer to Mr. Elgindy, who began feeding the receptive agent and shorting targeted stocks. Special Agent Royer was often a conduit, referring some of Mr. Elgindy's information to other agents, as he was not assigned to investigate securities fraud himself.
U.S. authorities claim that beginning in 2000, Mr. Elgindy and Mr. Cleveland "corruptly induced" Special Agent Royer to provide them with confidential law enforcement information relating to companies that they and their subscribers had either sold short or were considering shorting. The helpful agent provided confidential NCIC and ACS data. In return, Mr. Cleveland allegedly wired Special Agent Royer sums of $8,500 on Nov. 28, 2000, $5,000 on Jan. 30, 2001, $9,925 on May 22, 2001, and $7,000 on May 31, 2001, none of which were reported by the agent to his superiors.
Mr. Elgindy worked all the angles, if U.S. Attorney Mr. Vinegrad is to be believed. "As a result of the above, the defendant Amr I. Elgindy cultivated the perception that he had the ability to devastate a targeted company's stock price. Elgindy, together with the defendant Troy Peters and Derrick W. Cleveland, and others, used that perception to extort cheap or free shares of stock from the insiders of targeted companies in exchange for agreeing no longer to short sell the companies' stock or spread negative information about the companies," states the indictment. This presumably was just a innovative entrepreneurial way to close out the short positions.
Mr. Elgindy and Mr. Peters allegedly used this confidential law enforcement information to assess whether the targeted companies were susceptible to exortion, based on the premise that companies in jeopardy of regulatory or criminal investigation rarely go crying to the authorities when they get shaked down. To up the ante, the pair sometimes coupled their exortionate demands with threats to report a company's activities to the SEC or the FBI. The indictment claims that once the extortionate shakedown demands were satisfied, Mr. Elgindy and Mr. Peters called off their dogged short subscribers.
The Elgindy case was one of the first targets of a new capital markets unit within a task force set up Sept. 18, 2001, by the U.S. Department of Justice's Criminal Division. A grand jury was convened Oct. 25 in the Eastern District of New York to investigate Mr. Elgindy and his short associates.
The ring was quick to discover their peril and allegedly obstructed justice in response, but it was still business as usual. The indictment claims that beginning in October, Special Agent Boyer regularly accessed the FBI's ACS case management system to glean detailed information on the grand jury investigation.
"Royer then advised Elgindy and the defendant Derrick W. Cleveland of the direction of the EDNY Grand Jury Investigation and that Elgindy was a target. All the while, the defendant Jeffrey A. Royer continued to provide confidential law enforcement information to the defendants Amr I. Elgindy and Derrick W. Cleveland, and others, in order to guide their buying and selling of the stocks of targeted companies or companies being considering (sic) for targeting, and to assist in their assessment of the susceptibility of these companies to extortion."
Mr. Elgindy also allegedly gave Special Agent Royer authority to execute trades in at least one account held in the name of Elgindy. Court documents do not identify if this account was at Global or any other Vancouver brokerage servicing Mr. Elgindy.
The FBI tipper became a tippee on Dec. 21, when he resigned from the FBI and immediately took a job with Mr. Elgindy at Pacific Equity Investigations, where he worked alongside Mr. Elgindy and Mr. Cleveland. Although he was now on the outside, Mr. Royer allegedly still gained access to confidential FBI database records through law enforcement personnel, only one of whom is named. There is no allegation the unidentified others had any clue they were handing over information for an illegal scheme.
The indictment claims that between this March and April, FBI Special Agent Wingate, assigned to the Albuquerque field office, served as Mr. Royer's mole, gathering confidential law enforcement information from the ACS database regarding criminal investigations of public companies and associated individuals. In this same period she allegedly also accessed and supplied ACS criminal and grand jury information, including a description of subpoenaed documents in the investigation of Mr. Royer and Mr. Elgindy. "Wingate also searched ACS for reference to her own name to determine whether she herself was a subject or target of the EDNY Grand Jury Investigation."
Mr. Royer also allegedly attempted without success to persuade another FBI special agent to access confidential ACS information on a company he and Mr. Elgindy had shorted.
"It was a further part of the conspiracy that, in or about and between November 2000 and May 2002, both dates being approximate and inclusive, after obtaining and receiving this material, non-public information about the targeted companies, but prior to the information being publicly disclosed to the investing public, the defendants Amr I. Elgindy, Derrick W. Cleveland and Jeffrey A. Royer, together with others, short sold stock of the targeted companies through brokerage accounts at Global Securities in Vancouver, British Columbia, Canada and elsewhere," states U.S. Attorney Mr. Vinegrad in the indictment.
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