Trader Courted Attention, Trouble
Profile: Amr Elgindy, accused of stealing secret FBI data, led a flashy lifestyle. Some
call him a savior; others, a liar. 

E. Scott Reckard
Los Angeles Times 
June 3, 2002

Showing off a Ferrari and an in-your-face attitude, Amr I. "Anthony" Elgindy peered
out of America's TV sets in May 1997 to warn that small investors  "haven't got a
prayer" against mobsters and con artists he said were using bribes and beatings to
force Wall Street brokers to promote worthless stocks to their clients.

"That's not going to happen to me," the Cairo-born stockbroker with the wrestler's
build told Brian Ross of ABC's "20/20." Saying a bullet inscribed with his name had
arrived in the mail, Elgindy displayed a Colt pistol and a tape recorder--describing
them as his weapons to help authorities battle this empire of corruption.

Today, though, it is Elgindy who is the target of corruption allegations. Arrested
May 22 at his Encinitas office and now being held without bail in San Diego's
Metropolitan Correctional Center, he faces extradition to New York, accused of
stealing secrets from federal criminal databases with help from FBI agents and then
using the information to reap profits in the stock market. Elgindy, 34, who contends
he's the victim of double-dealing associates and vindictive regulators, is described
by neighbors and business associates as a man of outsized charm, with an arrogant
streak and a craving for attention. During a controversial career in the securities
business, Elgindy has been an FBI informant, the defendant in a securities arbitration
claim filed by his own mother--and now a defendant in a stock-manipulation case
drawing national attention.

According to an indictment handed up by a New York grand jury, Elgindy and
his associates, including one former and one current FBI agent, used
confidential material from FBI files to shake down companies under federal
scrutiny or to profit by betting their stock prices would fall. He is charged with
racketeering, fraud, extortion and obstruction of justice.

Moreover, Assistant U.S. Atty. Ken Breen said at a May 24 bail hearing in
federal court in San Diego that Elgindy might have had advance warning of the
Sept. 11 terrorist attacks--a charge his lawyer called "racial profiling" and one
Elgindy calls "very, very sleazy."

In a telephone interview from jail over the weekend, he contended that the
Sept. 11 questions were raised only because "of my birthplace, my name, the
color of my skin."

By his own estimate, Elgindy has made a fortune over the years selling stocks
short, the legal but oft-reviled strategy of selling borrowed shares in hopes of
making a profit by buying them back cheaper should the stock decline.

Indeed, his use of Internet sites--which charged subscribers up to $600 a
month--to trumpet the flaws of his targeted companies made him one of the
best-known short sellers in recent years, what Wired magazine called "the Mad
Max of Wall Street."

In one celebrated case, he urged investors to sell K-tel International Inc. after
the stock soared from $5 to $30 in April and May 1998 on optimism about a
plan to sell the company's greatest-hit recordings over the Internet. He was
right: K-tel shares quickly plunged and were back to $6 by August 1998.

Elgindy says all of the material he used to target stocks--including material on
criminal investigations of executives allegedly stolen from FBI databases--were
gathered from legitimate sources.

"Everything that I've discovered I've discovered publicly," he said Saturday.

If, as he says, Elgindy is the victim of regulators, acquaintances and
investigators offended by his outspokenness, the public record provides clues
to their hostility: a long trail of lawsuits, embittered former associates, criminal
investigations and convictions, and disputes with the National Assn. of
Securities Dealers while at brokerages in San Diego and Texas.

Elgindy, whose family moved from Egypt to the Chicago area when he was 3,
studied briefly at the University of Southern California, worked as a car
salesman in San Diego, then gravitated to the more lucrative brokerage
business.

His first such job in 1988 was with the notorious "penny stock" firm Blinder,
Robinson & Co. He maintains he left the firm--nicknamed "blind 'em and rob
'em" by burned investors--after learning it specialized in promoting worthless
small stocks.

Elgindy contended that exposure to unsavory practices at Blinder and at other
small brokerages paved the way for him to become an informant for the
Securities and Exchange Commission, the FBI and other federal agencies. "I
have given the government hundreds if not thousands of tips on Wall Street
frauds," he claimed.

Elgindy said he became an informant in 1994 in return for immunity from
prosecution for his role in a stock-promotion kickback case. The informant
deal was made public in May 2000 as he was sentenced to four months in
prison after pleading guilty to insurance fraud.

At the sentencing hearing in Fort Worth, strikingly divergent portraits emerged
of Elgindy. His wife, Mary Faith, the daughter of a Tennessee Baptist minister,
said her husband was a devoted father to their three sons, the oldest of whom
has attention deficit disorder and Tourette's syndrome. Other defense witnesses
described Elgindy as an outright savior to dozens of Kosovo refugee families,
saying he raised more than $48,000, helped them move to America and
provided housing, cars and clothing after they arrived.

Prosecutors, however, portrayed Elgindy as a repeated liar who, they hinted,
may have pocketed some donations intended for the victims of Kosovo
atrocities.

Elgindy also has had several run-ins with securities regulators. In a 1992
NASD arbitration action, Elgindy's mother, anesthesiologist Laila I. Gomaa,
accused Elgindy and his AMR Securities Inc. of making unauthorized trades in
her pension account. She ultimately was awarded $30,000.

In 1997, NASD censured and fined him $30,000 for numerous alleged
violations of securities rules. A year later, NASD records show, the group
revoked his registration for failing to pay a fine and barred him from the
brokerage business, although Elgindy says he resigned from the NASD in
protest over mistreatment.

In his latest and most serious predicament, Elgindy categorically denies
wrongdoing, offering explanations for charges in the indictment, such as
payments totaling $30,425 to then-FBI agent Jeffrey A. Royer in exchange for
information. He also responded to the government's questions about whether
he had foreknowledge of the Sept.11 attacks and about his later wiring of a
large sum to Lebanon.

The payments to Royer allegedly were made by Derrick W. Cleveland,
identified in the indictment as a short seller "who assisted" Elgindy. But Elgindy
said he was never involved in any payments that may have been made and
described Cleveland as just a subscriber who was never on his payroll.

"It was my understanding that they [Cleveland and Royer] were school
friends," said Elgindy, suggesting the funds Cleveland allegedly transferred to
the FBI agent might have been intended to help Royer pay debts.

As for the issue of advance knowledge of Sept. 11, Elgindy acknowledged
sending at least $600,000 to Lebanon during the fall. He said he wanted his
sons to spend several months a year in the Middle East to stay in touch with
their heritage, and he transferred the funds so he could set up an office and buy
a car and a seaside condo in Lebanon for the family to use on those visits.

Elgindy also acknowledged having made large bets that stocks would decline
around the time of the attacks. But as a longtime short seller, he said it was
typical for him to have large short positions, and that none of his short positions
were in stocks that would have been particularly affected by the attacks, such
as online travel agencies or securities tied to New York real estate.

Bill Muller of the U.S. attorney's office in Brooklyn, which brought the case,
declined to comment on Elgindy's statements.

While Elgindy sits in jail awaiting a Thursday extradition hearing, flags of the
United States, California and Egypt still fly at Elgindy's estate in Encinitas' rural
Olivenhain district, which the Elgindys bought last year for $2.2million, taking
on a $1.5-million mortgage, San Diego County property records show.

The estate includes an elaborate faux-rock pool that he told his Internet
subscribers cost $300,000--part of a lifestyle that featured sumptuous parties
and a circle of acquaintances that, according to a published report, included
actor Verne Troyer, Dr. Evil's diminutive clone Mini-Me in "Austin Powers:
The Spy Who Shagged Me."

On May 22, a Wednesday, Elgindy's neighbors watched authorities truck away
a Bentley, a Ferrari, a Jaguar, a Humvee and a limo as suspected ill-gotten
gains. Just the previous Saturday night, Elgindy had thrown a party to celebrate
the completion of his mansion.