KZAP ... looks like money in Lebanon
TSX member Global wired Elgindy money to Lebanon
TSX Venture Exchange *TSX
Shares issued 0 May 26 2002 close $.000
Friday May 24 2002 Street Wire
by Brent Mudry
In the first detailed revelation of advance Sept. 11 knowledge, the U.S. government suggests controversial California short Amr Ibrahim (Anthony) Elgindy, an important client of Vancouver brokerage Global Securities, might have been tipped off about Osama bin Laden's Sept. 11 terrorist attacks on the World Trade Center in New York and the Pentagon in Washington, and tried to dump his shares the day before.
The stunning, and unproven, allegation was made Friday morning at a detention hearing in San Diego by Brooklyn Assistant United States Attorney Ken Breen of the Eastern District of New York. The Sept. 11 comments formed part of the government's successful argument that Mr. Elgindy poses a serious flight risk, and he was denied bail.
Mr. Breen also presented verbal evidence to Magistrate Judge John Houston of Mr. Elgindy moving funds offshore, including $700,000 transferred to Lebanon, and the fact that the short gave directions for his Web site operation to start sending profits to Lebanon. (All figures are in U.S. dollars.) While Stockwatch reported Thursday that Mr. Elgindy bought a hotel in Lebanon two months ago, citing an unconfirmed source, Mr. Breen did not mention the hotel in court.
Court testimony showed that Global Securities was a major origin of these offshore transfers.
Mr. Elgindy's San Diego attorney, Jeanne Knight, told the court that her client was buying a vacation home in Lebanon. The government presented no written documentation in court detailing Mr. Elgindy's financial dealings, including his offshore transactions, or any other details of the case. Mr. Breen was in transit back to New York after the California hearing and could not be reached for comment. Ms. Knight was not able to return calls from Stockwatch.
Mr. Elgindy, born in Cairo, has lived in the U.S. since age two or three, according to U.S. authorities, but he retains dual American-Egyptian citizenship. To bolster its flight-risk argument, the government suggests he might have been tipped off about the arrests Tuesday of several associates in Albuquerque, N.M. When police searched his house, the fax machine held documents giving power of attorney to Mr. Elgindy's wife to dispose of his assets.
Mr. Elgindy's brother, Khaled Elgindy, is a Washington-based Arab American activist involved in Islamic affairs and Amr Elgindy himself has shown a charitable interest in Muslim issues, but there is no evidence that either are connected to, or in any way condone, the cause of Mr. bin Laden, his Al Qaeda network or any other terrorist organizations.
"What we have going for us is the moral high ground," Khaled Elgindy told a Washington panel discussion on "How to Discuss Jerusalem with the American Public." Mr. Elgindy said that while the Jewish lobby has the art of manipulation, the skills and the experience, the Arab Muslim community has the "weapons" of truth and justice in its arsenal.
The San Diego court revelations are particularly striking as one of Anthony Elgindy's most important and trusted brokers is Art Smolensky, the founder and chairman of brokerage Global Securities, and Mr. Smolensky is a prominent member of Vancouver's Jewish community.
According to the government, Mr. Elgindy phoned one of his brokers on Sept. 10 and requested the liquidation of a $300,000 trust account in the name of his children.
Mr. Elgindy is charged only with securities fraud related offences, none of which relate in any way to terrorism or treason.
"The allegations under investigation, Your Honour, consistent with how I described them, which is as part of risk of flight and certainly not something that's charged at this time, but the investigation is continuing, is that on September 10th, in the afternoon, Mr. Elgindy contacted his broker at Salomon Smith Barney, the broker who was in charge of Uniform Gift to Minor trust accounts in the names of Mr. Elgindy's children, and he asked the broker to liquidate those accounts, and he made a comment predicting the market was going to drop to 3,000 at a point in time when the market was at approximately 9,600," Mr. Breen told the court.
"He was unsuccessful in doing that because it was late in the day, he didn't have authority to do that because the accounts were trust accounts. But certainly something that could be taken from his attempt in that regard is that perhaps Mr. Elgindy had pre-knowledge of the September 11th attacks and, rather than report it, he was attempting to profit from that information."
The Dow Jones Industrial Average closed at 9,600 on Sept. 10, plunged to 8,700 when trading resumed after the Sept. 11-related market halt, and bottomed out just above 8,100 a week later.
The judge told the court he would "disregard" the implication that Mr. Elgindy might have known in advance about the terrorist attacks, either in specific or in general.
Prosecutor Mr. Breen told the court that, with Mr. Elgindy's illicit access to FBI and grand jury databases, he would have been privvy to a report, an "FBI-302," describing an FBI interview with the Salomon broker who was in contact with him that day. "That was accessed by Mr. Royer (a former FBI Special Agent in league with Mr. Elgindy) and the information provided to Mr. Elgindy."
Judge Houston asked if this interview related to Sept. 11.
"Regarding Mr. Elgindy's attempt to make those trades on September 10th. And again, this is not something that at this point in time we have sufficient evidence to charge, and it may never be charged, but, to the extent that it's relevant here, it's relevant to the risk of flight and that Mr. Elgindy is potentially facing more serious charges," stated prosecutor Mr. Breen.
The court was told Mr. Elgindy made the Sept. 10 calls to his Salomon broker at about 12:00 or 12:15 pm Pacific time. Mr. Elgindy and his assistant had a series of conversations with the broker, asking him to liquidate the accounts, which had an approximate value of $300,000.
"In the course of the communications between the broker and Mr. Elgindy, Mr. Elgindy indicated or predicted that the market was going to drop to 3,000. There was no time frame for that context. But the evidence shows, and this 302 indicates, that Mr. Elgindy did have a meeting scheduled with the broker the next day but that he was calling on the 10th in order to try to effect this transaction," Mr. Breen told the court. The prosecutor confirmed the broker contacted the FBI with the information.
The federal prosecutor then traced out financial details regarding the flight risk assessment.
"Mr. Elgindy, as the Pretrial Services report indicates, does have significant foreign ties, including dual citizenship in Egypt. In addition that that, we've determined that he's transferred approximately $700,000 to Lebanon in a series of wire transfers, some of which came from Canada where Mr. Elgindy kept one of his securities accounts at Global Securities."
Two wires were identified: a $125,000 transfer on Nov. 24 and a $300,000 transfer on Feb. 13. "I've been advised by our forfeiture people that they've found additional transfers that total approximately $700,000, but I don't have that specific information."
"In addition to that, in February 2002, the defendant gave instructions to somebody who he was business partners with as to his website, that Mr. Elgindy's portion of the profits in the website should be sent by wire directly to Lebanon instead of to Mr. Elgindy here in the United States," Mr. Breen told the court.
"In addition to that, in April 2002, the defendant transferred the assets that he had in accounts in Canada from his brokerage accounts into a company that was set up in Beirut, Lebanon."
"In connection with the defendant's arrest, there was a search that was done at his business and at his residence and, during those searches, the agents found what I would describe as a getaway stash -- $43,000 in cash, gold jewelry, coins, and a loose diamond, along with a passport. They also found on the fax machine that the defendant had been tipped of the arrest shortly before it, presumably by somebody who is in New Mexico, where two defendants were arrested earlier in the day," states Mr. Breen.
The prosecutor also pointed out that Mr. Elgindy was on probation for his insurance disability compensation fraud, and that his stock fraud offences were during this probation period, while he also "has a history of drug abuse, including cocaine and marijuana."
"Mr. Royer, after being Mirandized, provided information about Mr. Elgindy and, in fact, indicated that it was likely that Mr. Elgindy would have drugs in his house. He didn't, although our position on that is because he had time to prepare for the arrest and the search, that he easily could have disposed of those," Mr. Breen told the judge. While no drugs were found, ammunition was located in the Elgindy residence, which is a probation offence.
Defence counsel Ms. Knight presented a better picture of her client.
"A flight risk is someone who is a fugitive or a head of a big drug organization or someone who has a lot to lose by staying here. Mr. client is a U.S. citizen. His wife is present in court, as she usually is, Mary Faith Elgindy, who was born in Louisiana. They have three beautiful sons ... His mother is a pediatrician in Chicago. His father's a professor. He has brothers -- a brother that works in the White House. All of his family are professionals."
Ms. Knight also pointed out that the liquidation of Mr. Elgindy's children's college fund accounts was executed on Sept. 18, and while he had $2-million in the market himself at that time, his accounts were not liquidated then. The defence lawyer stated Mr. Elgindy moved his brokerage account "to Yukon Territory, Canada, not Beirut, so my concern is part of this is just smacking of racial profiling."
Mr. Breen countered these points. "The address given for the Yukon corporation is a Beirut, Lebanon address, so I'm not sure what counsel means by that. The two million in stock, Your Honour, what he had invested were short positions that would only benefit from that kind of event. What he did is liquidated the long positions that were vulnerable to that kind of news."
Judge Houston notes the pretrial services report indicates that Mr. Elgindy travels to Canada four or five times a year, to Kosovo and Macedonia once or twice a year, and he was last in Egypt, a country which he needs no visa for, in November. "The court also notes that, and finds that you have a home in Lebanon." Mr. Elgindy was deemed a serious flight risk and denied bail.
(c) Copyright 2002 Canjex Publishing Ltd. canada-stockwatch.com
ANd this is just getting started...
Wonder if all those subscribers knew where their money was going and so forth. Glad I was a part of this and on the other side.
WOnder if the tax form 1040 was checked for having offshore accounts. Most do not check that and his entire email could be checked for offshore. Rico has a lot of leadway to it.
:-) Gary |
