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fung_derf Member Level  Friday, 05/25/18 01:25:58 PM
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Business Day Elgindy story

The Many Faces Of Amr I. Elgindy


Correction Appended

The faces that Amr Ibrahim Elgindy offered the world were as different as the names he used.

To the investors who paid him hundreds of dollars a month for stock tips that were often uncannily accurate, Mr. Elgindy was Anthony Pacific.

To the Muslim refugees he brought from Kosovo to the United States, he was Tony Elgindy, a benefactor who provided cars, apartments and even cash -- and asked for little in return.

But to the regulators and prosecutors who chased him throughout the 1990's, he was Amr I. Elgindy, a man they considered a liar and thief who avoided prison mainly because of his willingness to turn in co-conspirators in stock frauds.

Now Mr. Elgindy is moving from a San Diego jail to one in Brooklyn, charged with running a stock manipulation ring that is said to have included two F.B.I. agents who tipped Mr. Elgindy to current criminal investigations. Meanwhile, the investigation is widening, as the authorities publicly question whether Mr. Elgindy, who is Muslim and was born in Egypt, had advance knowledge of the Sept. 11 attacks.

So far, evidence backing that suspicion is scant. Jeanne G. Knight, Mr. Elgindy's lawyer, said that he had done nothing wrong and that he had no prior knowledge of the Sept. 11 attacks. In an interview, Ms. Knight accused the government of a form of racial profiling for denying Mr. Elgindy bail in part because of Sept. 11.

Still, the arrest and the charges against Mr. Elgindy, 34, have put him in the public eye and on the edge of ruin. He has been both places before.

Over the last decade, Mr. Elgindy chiseled a small fortune out of the often sleazy world of penny stocks, the shares of tiny companies that can double in a day and fall just as fast on waves of rumor and speculation. Along the way, he played off the fringe brokerage firms that pump penny stocks up against the short sellers who try to take them down, and he became a source of tips for both regulators and journalists.

''He always had an in with somebody,'' said Stuart R. Allen, a former investigator with the Securities and Exchange Commission. ''If it wasn't the authorities, it was the press.''

In the backwaters of the securities industry, where brokers can look more like bouncers and criminal records are common, the battles between long sellers and short sellers can be vicious and personal.

Mr. Elgindy seemed to thrive on the tension. On ABC's ''20/20'' five years ago, he said with relish that he carried a handgun and had ''received a bullet in the mail, a bullet with my name on it.''

''Three-hundred-pound guys walking into an office beating you up, making you do this, do this,'' he said. ''It's happening. It's happening on Wall Street. That's not going to happen to me.''

As his fortune grew, Mr. Elgindy acquired the trappings of wealth, including a Ferrari, a Bentley and a Hummer. Last year, he moved with his wife and three young sons into a $3 million house in the wealthy northern suburbs of San Diego.

But the money apparently did not change Mr. Elgindy's behavior. His own lawyers have called him ''edgy'' and ''intimidating.'' Several neighbors recalled being irritated by his speeding along the narrow, hilly streets near his new home.

''It was obvious he had achieved a certain level of success,'' said one neighbor, Rick Engebretsen. ''You'd think a certain amount of maturity would come along with that. But it didn't as far as I could tell.''

Mr. Engebretsen watched one day last month as F.B.I. agents stormed Mr. Elgindy's mansion.

''He seemed squirrelly, wiry. On the surface level he was O.K., but my wife and I had a terrible feeling about him,'' Mr. Engebretsen said. ''Was I surprised that I saw his house raided? No, I wasn't. I'd thought he was going to come out of there in a body bag or a raid.''

Before the million-dollar homes and flashy cars, Mr. Elgindy was struggling to make his mark in a new world after his family moved from Egypt to the suburbs of Chicago when he was 2 or 3.

From an early age, he had trouble living up to the high expectations his family set, he told friends. His father was a professor, his mother was a pediatrician; his two brothers went on to earn advanced degrees, and a sister became a teacher. His own path, he conceded, was more tortured.

He dropped out of high school and got an equivalency degree in 1985. He enrolled at the University of Southern California to study biomedical engineering and later studied biology at San Diego State, but he completed less than two years of course work, university records show.

Trouble found him early. In 1986, at 18, he was arrested for assault with a deadly weapon in Los Angeles; the charges were later dropped. He worked as an auto salesman at three different Chevrolet dealerships within a year before entering the murky world of buying and selling penny stocks.

His résumé includes some of the most notorious brokerage firms in the industry, the ''pump and dump'' shops that had long histories of manipulating stock prices and leaving investors out in the cold. Among these firms he joined, now defunct, was Blinder Robinson, nicknamed ''Blind 'em and Rob 'em.''

Mr. Elgindy later confessed to the authorities that he and brokers at another firm had accepted bribes from stock promoters seeking to manipulate shares. According to court records, in 1995 he was granted immunity in exchange for information about the scheme.

With his cooperation, federal prosecutors won convictions against four people on tax evasion charges. That was the beginning of Mr. Elgindy's life as a government informant, documents show. At a time when Wall Street was overrun by penny stock fraud and even the influence of organized crime, he helped government agents navigate the terrain. In court, the government has acknowledged that his tips were valuable.

Mr. Elgindy, who moved to Texas in 1994 to run his own brokerage firm, liked to boast about how he began wearing a wire. He also started carrying a gun, a small .380 Colt, because he had been repeatedly threatened, he said. When reporters visited his home, he would play tapes of secretly recorded conversations and show off his gun collection.

By the late 1990's, Mr. Elgindy had repackaged himself as a short seller who blew the whistle on crooked companies and wise guys. He was mentioned in a 1997 Business Week article about corrupt brokers. He was also written up in Wired magazine and featured on the Discovery Channel program ''Justice Files.''

Though many journalists were suspicious of Mr. Elgindy's motives, his information was often useful and provocative to them.

Bill Alpert, a longtime reporter at Barron's, the financial weekly in New York, remembers visiting Mr. Elgindy in 1996 at his home in Fort Worth and seeing stacks of cassette recordings he had made with people from the underbelly of Wall Street.

By then, Mr. Elgindy was driving a Ferrari and living comfortably in a home decorated with statues on columns, draped in velvet.

''Everyone in his family was accomplished, an achiever, and he'd gone astray,'' Mr. Alpert said. ''But by helping the government and helping get swindlers, this would help redeem him.''

When stock trading moved to the Internet and day trading became a fad, he moved his soapbox to the Web. On popular sites like Silicon Investor, an online stock forum, he plied his trade with great bravado.

He later set up a Web site and sold tips for a $600-a-month subscription fee. Few complained about the price.

''Most of the people on that site were doing 20 to 30k a week -- what's 600 bucks/mo.,'' one fan, who called himself Tool Dude, wrote in a recent post on the Silicon Investor site.

As early as 1997, though, Mr. Elgindy began to run into legal troubles. He had worked briefly for Bear Stearns in 1994 and later lost a civil suit over his firing by that firm. He was also sued by the insurance company MassMutual, which accused him of fraud for accepting disability checks worth $7,500 a month in 1994 for unemployment attributed to ''emotional stress'' even though he was employed at Bear, Stearns and another brokerage firm at that time.

That case was referred to the Justice Department and in 1999, while living in San Diego, he was indicted by a federal grand jury in Texas. He pleaded guilty to insurance fraud and was sentenced to four months in a California prison.

When he was released in October 2000, Mr. Elgindy resumed his position as a prominent short seller on the Internet. He also began assisting the government in investigating cyberspace scams, he said.

At a probation hearing last January, his lawyer told the judge that Mr. Elgindy was a good citizen who had traveled to Kosovo and helped resettle refugees in the United States.

His case was supported by a letter from Jeffrey A. Royer, an F.B.I. agent in Gallup, N.M., who said that Mr. Elgindy had ''gone above and beyond to assist law enforcement and civil regulatory agencies in combating fraudulent activities.''

The F.B.I. now says the letter, which was undated and not on official letterhead, is suspect. ''It is highly unlikely that as an agent Royer worked on any significant white-collar cases in Gallup,'' said H. Douglas Beldon, an F.B.I. spokesman.

Indeed, by the time of that letter, the Justice Department had opened an investigation into Mr. Elgindy's activities. After Sept. 11, the government said, a Wall Street broker told federal officials that Mr. Elgindy had tried to sell $300,000 in stock in anticipation of a market plunge. He placed his order on Sept. 10.

As part of that inquiry, the government said it uncovered a broader plot that involved Mr. Royer, who had left the F.B.I. in December to work for Mr. Elgindy.

In a 33-page indictment handed up over two weeks ago, the government portrayed Mr. Elgindy as a con man's con man. For the last two years, the government contends, Mr. Elgindy led a double life: He told people he was helping the government uncover stock market manipulation, but instead, the indictment charges, he was bribing F.B.I. agents to supply him with information to commit his own frauds.

Mr. Elgindy and four others, including Mr. Royer and another F.B.I. agent, were charged with obstruction of justice and securities fraud. They have all pleaded not guilty. Mr. Elgindy's lawyer, Ms. Knight, declined to comment except to accuse the government of using a ''race based'' notion to deny Mr. Elgindy bail.

Mr. Elgindy's Web sites have gone dark; his tip sheets are blank. But questions remain: Was he really tipped off to Sept. 11? Or is the government trying to get back at a longtime informant who proved untrustworthy?

Some people who know Mr. Elgindy best say that if he was tipped off, he would not have simply pulled his money out of the market, he would have taken out a big bet that the Dow Jones industrial average would fall.

''Tony was too damn selfish to be involved in anything that wouldn't turn into a buck in his pocket,'' said Richard Edward Hill, a lawyer in Texas who once represented Mr. Elgindy. ''Tony is a smart guy, very intelligent, very gifted. But he didn't seem to have a lot of guidance.''


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